Historic MOL deal for Jaxport

Updated 11:06 a.m. ET, Mon Jul 18, 2005
By Peter T. Leach

The JOURNAL of COMMERCE ONLINE

The Jacksonville Port Authority said today that MOL (schedules) has announced its intent to sign a 30-year lease agreement to start a direct Asia container service that will make the North Florida port one of the largest container hubs on the East Coast.

The deal will boost Jacksonville's container volumes by 50 percent and mark the first time a carrier will establish regularly scheduled liner service between Asia and the North Florida port.

MOL's plans call for a new terminal to handle 360,000 TEUs annually, which could increase to more than 800,000 TEUs and push the port's yearly container volumes past 1.5 million.

The agreement is the culmination of the port's effort to diversify beyond its historic trading partners in Latin America and the Caribbean, which currently account for about 75 percent of all maritime trade in Jacksonville.

The Aug. 3 signing also will include groundbreaking for the MOL terminal at Dames Point in northeast Jacksonville.

This opportunity is consistent with our strategy of expanding our terminal operations in the U. S., as well as enhancing service for our customers by providing them with multiple, cost-effective service alternatives," said Hiroyuki Sato, deputy president, MOL, Ltd. "We believe the new terminal at Dames Point will become a major gateway for service between the rapidly growing Southeast U.S.-Asia and U.S.-Latin America markets."

The agreement will create about $7 million annually in new revenue for Jaxport and makes MOL the largest Jaxport tenant by acres leased, annual revenue generated and containers handled.

The estimated cost for terminal construction is approximately $200 million, including the cost for cranes and equipment. MOL will pay principal and interest on debt issued to pay for construction, said Ron Baker, Jaxport's deputy executive director and chief financial officer.

"Financially, this stands to be a very lucrative deal for both our shipping line partner and for Jaxport," Baker said.

Construction will begin in the coming months and take about two years to complete. The terminal will be operated by Trans Pacific Container Service Corp., the container terminal operator and vessel stevedoring company owned by MOL.

Roy Schleicher, Jaxport's senior director of marketing and customer service, said the deal is the largest ever signed by the authority in terms of revenue and economic impact for the city.

"Securing Asian container service fulfills a major strategic goal we've been pursuing for many years, and it instantly makes Jacksonville's port one of the most significant Asian connections on the U.S. East Coast," Schleicher said.

In choosing Jacksonville, the company cited Jaxport's strategic location, proximity to inland markets via I-10 and I-95 and CSX rail service, experienced labor force, and the authority's ability to structure a contract with good financial terms for both sides.