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Tuesday, September 17, 2019

Maritime Logistics Professional

Public/Private Port Partnerships Face unexpected Strain

Posted to Martin Rushmere (by on March 18, 2010

Virginia leads the way in breaking trust

Virginia Ports Authority could be setting a bad example for all US ports by entertaining second thoughts – which could be equally well termed second guessing – over the private/public partnership for its cargo terminals.
Three investment outfits, mixed in with terminal operators, are competing to secure a lease of up to 60 years at, essentially, Hampton Roads. Their offers vary in the form of upfront payments of between $200 million and $600 million, with the rest as yearly payments during the lease.
It seems that the governor and his advisors say the proposals are "lacking". Exactly what, they have not spelt out but it's obviously money. The main beef is that the offers were made at the lowest point of the international trade depression, when ports were frightened stiff and in a panic that the end of the world had come.
Now that trade is shooting up and everything seems rosy again, the ports have the idea they have the whip hand and can dictate terms. Adding to Virginia's cockiness are the negotiations with APM over leasing its terminal.
Another description of the state's  attitude is that it is breaking its word, and breaking a hallowed tradition in maritime circles.
A disturbing aspect of it is the involvement of Sean Connaughton, former head of the Maritime Administration and a graduate of the Merchant Marine Academy and the Naval War College. Sadly, he has shed the maritime upbringing and has taken on a politician's cloak as Transportation Secretary for Virginia. His statements, as reported in news articles, give every appearance of casting off implied pledges during the negotiations with the bidders.
The discussions have dragged on for more than a year. The most likely next step is that a new state panel will take another look, which will extend the process for at least another year.
The outcome will be a pointer for the private/public port system for the rest of the country. Investors will themselves have second thoughts and become much tougher to deal with in future negotiations.
More than this, the vital element of trust could be lost. As terminal operators have confided to Maritime Professional, ports should realise that when the next traffic slump comes around, it will not be so easy to call in the cavalry in the form of outside investment.
 

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