A few more months will pass by, probably until November, before the management of the Port of Virginia will take a decision on whether or not it will accept a Maersk Group bid of up to USD 4 billion to operate the large American East Coast port. Ahead lies a period which guarantees a much heated debate on the issue which, seen in relations to the size of the investment, is one of the most important investments recently for the Maersk Group’s port operating business unit, APM Terminals, one of the four most important investment areas in the group, and an investment which, according to Group CEO, Nils Smedegaard, is to generate a profit of at least USD 1 billion per year.
Since APM Terminals presented its spectacular bid to the board of the Port of Virginia including the right to operate the port for the next 48 years in May, the case has developed dramatically and involved both the Virginian Government, the Federal Government, Maersk Line competitors and the many companies operating from the port.
Over the summer, The Virginia Maritime Association which represents approximately 400 port-related businesses, carried out a survey showing that 71 percent of the interviewees oppose a change in ownership while only 16 percent support a privatisation. Furthermore, a new website, www.coalitionforvirginiasport.org, has been launched. The website is a platform on which all the affected parties might express their support or opposition to selling the port’s terminals on Hampton Roads. According to the intro on the website the mission of the “Coalition For Virginia’s Port” is to “insure that a fair and transparent process takes place under the Virginia Public - Private Transportation Act (PPTA) leading to an outcome that will best serve the interests of all the Port's users, the supporting Virginia maritime industry, and the citizens of the Commonwealth”.
The founders of the website leave no room for doubt that they strongly oppose APM Terminals to relinquish control with the Port of Virginia.
"No other major U.S. Port has relinquished 100% of its operations to a single terminal operator. This concept is unprecedented and requires much thought by both the executive and legislative branches of the Commonwealths government”, the website says while indirectly warning against giving the control of the port to APM Terminals:
“Recently a proposal to lease the State owned terminals was submitted by APM Terminals, a business unit of Copenhagen, Denmark based A.P. Moller-Maersk Group. That group also includes Maersk Line, the largest container shipping company in the world, which competes with other Port of Virginia ocean carrier customers. Other business units of the A.P. Moller-Maersk Group having operations in the Port of Virginia are: DAMCO, a supply chain management and freight forwarding company; Bridge Terminal Transport, a trucking company. These too compete with other Virginia businesses”, the website further says before encouraging Virginia legislators to thoroughly reconsider a privatisation taking other competing offers into consideration and pointing to the fact that in its bid, APM Terminals has included a paragrapgh stating that it targets to end negotiations and start operating the port by 1 January 2013.
According to the Virginia-based newspaper Daily Press, the Mayor in the district of Portsmouth in which APM Terminals’ activities at the Port of Virginia today is located, has warned about the financial repercussions to the state income if Maersk should succeed in taking over the terminals. According to the Mayor, Kenny Wright, the bid includes a paragraph transferring the APM Terminals facilities in Portsmouth to the State as part of the deal. If this was to happen, Portsmouth would lose a million dollar income from real estate taxes which would harm the city as public properties in Virginia have favourable tax conditions.
Following the widespread criticism claiming that the state government has rushed a decision, the Chairman of the Board of the Port of Virginia, Mike Cullen, points out to Daily Press that a decision will not be taken before November and that the board is in no hurry and that every interested parties will be heard.
In a response to the criticism from the top management in the biggest container carrier active in the Port of Virginia and Maersk Line competitor, South Korean Hanjin Shipping, the President of APM Terminals’ activities in North America, Eric Sisco (photo), has reassured critics and media, including ShippingWatch, that the foundations of APM Terminals’ activities are and always have been to maintain a fair relationship to all its clients and that since the presentation of the first offer, APM Terminals has made further additions.
The Port of Virginia is considered a corner stone in the State economy and an engine of growth and employment and it is one of the most important ports on the American East Coast. The newest figures on the port traffic show that traffic is increasing and furthermore, the prospects of an expansion of the Panama Canal and new trade routes have created expectations of a massive growth in container traffic to and from Virginia over the coming decades. Seen as a business unit, the Port of Virginia has presented running with losses for several years.