Jaxport’s Terminal Velocity

Jaxport’s Terminal Velocity

Hanjin Shipping’s planned terminal at the Port of Jacksonville is several years from being completed but it’s already busy with activity — just not the cargo handling the Florida port is looking for.

The new management teams at Hanjin Terminals and the port recently rewrote the timeline and conditions for building the highly automated container terminal at Dames Point, likely delaying the site’s completion for a couple of years.

Hanjin Shipping’s game plan for the terminal changed since it first signed a contract to build it in 2008, as the carrier began to order much bigger post-Panamax ships for deployment on Asia-Europe lanes. As a result, Hanjin plans to shift smaller, but still post-Panamax ships onto the trans-Pacific and all-water routes from Asia to the U.S. East Coast that would be too large for Jaxport’s current harbor depth of 40 feet.

 Although Jaxport’s contract with the South Korean container line specified the port would seek legislation to deepen the harbor to 50 feet by 2020, a new management team at Hanjin’s terminal operating group wants the work done sooner.

“We are spending around $300 million on this terminal, and we need deep water to bring big ships in,” said Mike Radak, senior vice president of sales, marketing and operations for Hanjin Shipping North America. “We’re looking for 50 feet of water so that we can bring ships that range from 6,500 TEUs to 8,000 TEUs into Jacksonville. We’re not building the terminal for 4,500-TEU ships.”

The tensions at Jacksonville are the latest signs of stress up and down the East Coast as ports wrestle with the regulatory, funding and environmental issues surrounding channel-deepening projects even as vessel operators begin to bring in the larger ships that promise to change the scale of maritime operations.

The world’s ninth-largest container line by capacity, Hanjin took delivery in January of container ships with capacities of 8,600 20-foot containers, the second and third of the five such ships on order. Hanjin also has four 10,000-TEU vessels due for delivery later this year and is considering orders for even larger ships.

“The landscape changed, and they got bigger ships and want to bring 8,000-TEU ships in here, so they needed deeper water sooner than they thought and came back to us to ask for an accelerated schedule,” said Roy Schleicher, the new executive vice president at Jaxport.

Jaxport’s new chief executive, Paul Anderson, promoted Schleicher to his position last month, and the new port leaders stepped right into the deep water of the problem. When Jaxport started serious negotiations on the project in 2006 and 2007, Hanjin anticipated bringing in Panamax vessels and others that were only just barely post-Panamax in size. “But now that Hanjin is anticipating building larger ships -- they are going to 13,500-TEUs -- they are going to bump larger vessels into Jacksonville.”

New management took office at Hanjin’s terminal operations group in South Korea at the start of 2011. “Just like me — I’m a new guy — they wanted to take a fresh look at everything,” said Anderson, who took his new role last month. “They said: ‘It doesn’t make sense for us to build the terminal until we know we’re going to get the deeper water.’ ”

Jaxport agreed in January to delay the schedule for design and construction of the $300 million terminal by up to two years, pushing the timeline for completion from the original 2014 toward the end of 2016, the earliest that Jaxport thinks it can orchestrate the deepening of its St. John’s River harbor. The Army Corp of Engineers is due to issue its cost-benefit analysis of the deepening on April 29.

“That will tell everybody how far toward the 50 feet depth the Army Corps will agree to dredge,” Radak said. If the corps finds the benefits justify the cost, it will move on to the environmental impact study, which Anderson thinks can be completed by the end of this year. The corps then will have to go to Congress for appropriations of the U.S. share of the $500 million to $600 million project cost. Jaxport and Florida will have to raise the rest.

If the Corps of Engineers authorizes deepening the harbor only to 48 feet, the original target depth, Jaxport and the state will have to raise the added funds to deepen the channel the additional two feet.

Jaxport planned to award a design contract this year in hopes of opening the terminal in late 2014, in time for the opening of new Panama Canal locks that will be able to accommodate container ships with a capacity of 12,600 TEUs. The port still plans to proceed with the terminal design and engineering while it completes the environmental study.

The terminal, which will open with a capacity of 1 million TEUs a year, is to be built on Dames Point, next to the existing terminal operated by MOL’s Trapac. Jaxport is in discussions with CSX about a new intermodal container transfer facility on Dames Point that would provide on-dock rail service for both terminals.

Contact Peter T. Leach at pleach@joc.com.