Post by HardTimeTrucker on Sept 16, 2009 15:57:33 GMT -5
dailypress.com/news/dp-local_port-sale_0915sep16,0,6262754.story
Virginia Port Authority expected to take over Portsmouth terminal
By Peter Frost
September 15, 2009
State-owned port operator Virginia International Terminals Inc. is preparing to acquire the right to operate the Portsmouth marine terminal owned by competitor APM Terminals Inc., several sources confirmed to the Daily Press this week.
The deal, which has not been finalized, would essentially eliminate VIT's major local competition and place in its hands one of the world's most automated and efficient cargo terminals.
It might also send the three proposals to establish a public-private partnership at the port back to the drawing board. All three proposals cover VIT's current operations. None address the possibility that VIT's assets might include a 2-year-old, $500 million facility capable of handling a million additional cargo containers a year.
Virginia Transportation Secretary Pierce R. Homer said Tuesday that an arrangement between the VIT and APM "would do nothing but enhance the value — both short-term and long-term — of the combined port entity in the global marketplace."
"It's a win-win opportunity for all parties, but it is only an opportunity at this point," Homer said. Both the state's review process on the privatization bids and the talks between the Virginia Port Authority and APM "have many months to grind through."
Homer is in the process of assembling an independent review panel that will determine whether the state should enter into detailed negotiations with any of the three bidders. Any final outcome is expected to be more than a year away.
Under the proposed terms of the agreement, VIT, the Virginia Port Authority's tax-exempt operating arm, would enter into a long-term operations lease with APM.
The preliminary deal would mark a dramatic shift at the Port of Virginia, where the state and APM have been locked in a battle for maritime business since the private company opened its terminal in Portsmouth in July 2007.
Under the proposed agreement between APM and VIT, APM would receive payments from VIT for use of its cargo-handling terminals and VIT would gain access to a more advanced facility where ships would be able to turn quicker and more efficiently, sources said.
Because terms of the agreement have not yet been finalized, its value and length have yet to be determined. The two parties have signed a letter of intent to work on an arrangement and its structure, the product of several months of talks, said sources, who agreed to discuss the matter only on the condition of anonymity.
In a statement, APM Terminals spokeswoman Allison M. Enedy said the company has been engaged in discussions with VIT since December about "what we can do to increase the competitiveness and attract additional business."
"We understand all of the rumors are sparking a lot of curiosity, but in fairness to our stakeholders, we will not be commenting on market rumors or speculation, and we encourage others not to speculate, as well," Enedy said.
Joe Harris, a Virginia Port Authority spokesman, declined to comment.
A potential deal also marks a dramatic turnaround for a company that was so optimistic about the Port of Hampton Roads that it was willing to invest $500 million to build a new, state-of-the-art marine terminal.
A year later, APM Terminals Americas, a unit of Danish shipping giant A.P. Moller-Maersk, moved its North American headquarters from Charlotte, N.C., to Portsmouth.
Upon the terminal's opening, APM began to slowly siphon away business from VIT. In summer 2008, APM snapped up a portion of VIT's cargo business when it wrangled away one of its largest customers, Evergreen Line — a contract worth about 80,000 container units a year. But a deep economic recession and sharp downturn in global trade have severely restrained APM's growth.
The local terminal, showcased as one of the world's most automated, has the capacity to handle about 1 million container units a year. In its first year of operation, it moved about 290,000 units, operating at less than 30 percent capacity, according to figures obtained from the port authority.
While APM does not release figures, the port authority provides monthly port-wide data as well as totals from Hampton Roads' three state-owned terminals.
APM's parent company last month reported a $540 million loss in the first half of 2009, compared with a $2.46 billion profit a year ago. It forecast second-half results would be at roughly the same level, leading the company to its first annual loss in its history. If APM and VIT agree to a deal, APM could temporarily cut its losses while holding onto the long-term ownership of the facility.
VIT would re-capture the Evergreen business, as well as cargo from APM sister company Maersk Line and a host of other shipping consortiums, boosting its volume and, in turn, revenues.
The arrangement also could have a bearing on the future of the nearby state-owned Portsmouth Marine Terminal. The port authority would have little incentive to continue loading and unloading vessels at its Portsmouth terminal, a cramped, dated facility that's far less efficient than APM. Based on current cargo volumes, APM would be able to handle most, if not all, cargo now destined for the Portsmouth terminal.
Because of the high level of automation at APM, a shift in cargo could mean fewer jobs for the region's longshoremen, many of whom already are struggling to find hours amid a deep global trade slowdown.
But such a move also would allow the port authority to seek new uses for the Portsmouth terminal, including reconfiguring it to handle non-containerized goods like heavy equipment and automobiles.
The port authority plans to announce its intentions today, said industry sources with knowledge of the discussions.
What happened?
The Virginia Port Authority's operating arm, Virginia International Terminals Inc., is preparing to acquire the operational rights of a Portsmouth marine terminal owned by competitor APM Terminals Inc.
What does it mean?
The deal would allow VIT to build on its extensive Hampton Roads footprint with access to one of the world's most automated and efficient cargo terminals. It could have a significant effect on Virginia's review of three separate port privitization/partnership proposals.
What's next?
APM and VIT will continue to negotiate the terms of a contract, a process that could take months.
Virginia Port Authority expected to take over Portsmouth terminal
By Peter Frost
September 15, 2009
State-owned port operator Virginia International Terminals Inc. is preparing to acquire the right to operate the Portsmouth marine terminal owned by competitor APM Terminals Inc., several sources confirmed to the Daily Press this week.
The deal, which has not been finalized, would essentially eliminate VIT's major local competition and place in its hands one of the world's most automated and efficient cargo terminals.
It might also send the three proposals to establish a public-private partnership at the port back to the drawing board. All three proposals cover VIT's current operations. None address the possibility that VIT's assets might include a 2-year-old, $500 million facility capable of handling a million additional cargo containers a year.
Virginia Transportation Secretary Pierce R. Homer said Tuesday that an arrangement between the VIT and APM "would do nothing but enhance the value — both short-term and long-term — of the combined port entity in the global marketplace."
"It's a win-win opportunity for all parties, but it is only an opportunity at this point," Homer said. Both the state's review process on the privatization bids and the talks between the Virginia Port Authority and APM "have many months to grind through."
Homer is in the process of assembling an independent review panel that will determine whether the state should enter into detailed negotiations with any of the three bidders. Any final outcome is expected to be more than a year away.
Under the proposed terms of the agreement, VIT, the Virginia Port Authority's tax-exempt operating arm, would enter into a long-term operations lease with APM.
The preliminary deal would mark a dramatic shift at the Port of Virginia, where the state and APM have been locked in a battle for maritime business since the private company opened its terminal in Portsmouth in July 2007.
Under the proposed agreement between APM and VIT, APM would receive payments from VIT for use of its cargo-handling terminals and VIT would gain access to a more advanced facility where ships would be able to turn quicker and more efficiently, sources said.
Because terms of the agreement have not yet been finalized, its value and length have yet to be determined. The two parties have signed a letter of intent to work on an arrangement and its structure, the product of several months of talks, said sources, who agreed to discuss the matter only on the condition of anonymity.
In a statement, APM Terminals spokeswoman Allison M. Enedy said the company has been engaged in discussions with VIT since December about "what we can do to increase the competitiveness and attract additional business."
"We understand all of the rumors are sparking a lot of curiosity, but in fairness to our stakeholders, we will not be commenting on market rumors or speculation, and we encourage others not to speculate, as well," Enedy said.
Joe Harris, a Virginia Port Authority spokesman, declined to comment.
A potential deal also marks a dramatic turnaround for a company that was so optimistic about the Port of Hampton Roads that it was willing to invest $500 million to build a new, state-of-the-art marine terminal.
A year later, APM Terminals Americas, a unit of Danish shipping giant A.P. Moller-Maersk, moved its North American headquarters from Charlotte, N.C., to Portsmouth.
Upon the terminal's opening, APM began to slowly siphon away business from VIT. In summer 2008, APM snapped up a portion of VIT's cargo business when it wrangled away one of its largest customers, Evergreen Line — a contract worth about 80,000 container units a year. But a deep economic recession and sharp downturn in global trade have severely restrained APM's growth.
The local terminal, showcased as one of the world's most automated, has the capacity to handle about 1 million container units a year. In its first year of operation, it moved about 290,000 units, operating at less than 30 percent capacity, according to figures obtained from the port authority.
While APM does not release figures, the port authority provides monthly port-wide data as well as totals from Hampton Roads' three state-owned terminals.
APM's parent company last month reported a $540 million loss in the first half of 2009, compared with a $2.46 billion profit a year ago. It forecast second-half results would be at roughly the same level, leading the company to its first annual loss in its history. If APM and VIT agree to a deal, APM could temporarily cut its losses while holding onto the long-term ownership of the facility.
VIT would re-capture the Evergreen business, as well as cargo from APM sister company Maersk Line and a host of other shipping consortiums, boosting its volume and, in turn, revenues.
The arrangement also could have a bearing on the future of the nearby state-owned Portsmouth Marine Terminal. The port authority would have little incentive to continue loading and unloading vessels at its Portsmouth terminal, a cramped, dated facility that's far less efficient than APM. Based on current cargo volumes, APM would be able to handle most, if not all, cargo now destined for the Portsmouth terminal.
Because of the high level of automation at APM, a shift in cargo could mean fewer jobs for the region's longshoremen, many of whom already are struggling to find hours amid a deep global trade slowdown.
But such a move also would allow the port authority to seek new uses for the Portsmouth terminal, including reconfiguring it to handle non-containerized goods like heavy equipment and automobiles.
The port authority plans to announce its intentions today, said industry sources with knowledge of the discussions.
What happened?
The Virginia Port Authority's operating arm, Virginia International Terminals Inc., is preparing to acquire the operational rights of a Portsmouth marine terminal owned by competitor APM Terminals Inc.
What does it mean?
The deal would allow VIT to build on its extensive Hampton Roads footprint with access to one of the world's most automated and efficient cargo terminals. It could have a significant effect on Virginia's review of three separate port privitization/partnership proposals.
What's next?
APM and VIT will continue to negotiate the terms of a contract, a process that could take months.