APM Terminals reached a tentative agreement Thursday to lease its showcase $500 million terminal in Portsmouth, Va., to the Virginia Port Authority for 20 years.
VPA will put it under the wing of its operating entity, Virginia International Terminals, which operates the other three terminals in the Hampton Roads area at Portsmouth, Norfolk, and Newport News and an inland terminal in Front Royal.
The terminal-operating division of Denmark’s A. P. Moller-Maersk, APM Terminals opened its highly automated Virginia Terminal in of 2007, just before the onset of the global economic recession caused container volumes at all the Virginia terminals to plummet.
With its heavy use of technology and high productivity, the terminal has been cited as a model for container operations.
Volume at APMT's Virginia Terminal was flat in 2009 over 2008 while VIT's volume declined 17.3 percent, but the gap is misleading because the APMT site benefited from a full year of calls from a new Evergreen Line service that started halfway through 2008, offsetting a decline in its existing business in 2009. The terminal handled 427,000 20-foot equivalent units in 2009.
“The facility, like the other facilities in the ports of Hampton Roads is underutilized,” said Eric Sisco, president of APM Terminals Americas in an interview.
“Ours is North America’s most advanced terminal and the (VPA’s) Portsmouth facility is the oldest generation, so it (the deal) really does create a lot of value for all the stakeholders.”
Sisco said APMT’s Virginia Terminal operated with great productivity, “but the volumes did not sustain it. It’s a facility that cries out for high utilization and high volumes.”
Although details of the agreement still have to be worked out, the transition process will probably begin sometime this summer, Sisco said.
The deal will relieve APM Terminals of the cost of running the terminal and provide an unspecified financial settlement, while the VIT would have a lock on all the Virginia port terminals when Norfolk Southern’s Heartland Corridor opens in mid-2010, giving shippers shorter rail access to the Midwest.
The deal announced Thursday is seen as a much better deal for the Commonwealth of Virginia than the three bids for the VIT terminals the state is currently entertaining from private investment groups, because the VPA would retain control of the terminals.
Virginia has received bids seen as “too lean” from CenterPoint Properties, Carlyle Group and a partnership between Carrix and Goldman Sachs about buying leases on the three terminals operated by VIT, Norfolk International Terminals, Portsmouth Marine Terminal and the Newport News Marine Terminal.
The state’s talks with the three bidders continued in parallel with the discussions between the VPA and APM. The bidding contest was touched off by CenterPoint’s unsolicited $2.2 billion offer in March 2009 to operate the existing facilities in partnership with the VPA and another $1.3 billion investment in the planned Craney Island terminal.
Contact Peter T. Leach at email@example.com