Jaxport Makes the Big Leagues

November 5, 2007
Peter T. Leach

The Port of Jacksonville, Fla., is swinging for the fences. Long a second-tier port for auto imports and the container trade with Puerto Rico, Jacksonville is now positioned to vault into the ranks of the top East Coast container ports as a result of the preliminary agreement it reached this month that calls for Hanjin Shipping Co. to build a 1 million-TEU-a-year container terminal.

Hanjin will be the second Asian carrier to build a container terminal at the Florida port. TraPac, the terminal-operating arm of Japan’s MOL also is building an 800,000-TEU terminal. There may be more: The Jacksonville Port Authority is said to be negotiating with a third private terminal operator, although no official announcement has been made.

“We’ve been after Hanjin for a long time,” said Rick Ferrin, Jaxport’s executive director. “They started to get interested in us after we signed the deal with MOL.” He said Jaxport has been in discussions with a number of other carriers about the possibility of other container terminals in the port and also has received letters of intent from several terminal operators expressing interest in building terminals there. He declined to identify the interested parties.

Ferrin said Jaxport has signed a 30-year agreement with MOL, the 10th-largest carrier by capacity, to provide container services from Asia that will call at its new TraPac terminal. He expects to sign a similar agreement with Hanjin, the eighth-largest container line, once the details of the new terminal are worked out.

In addition to the Jones Act carriers that use Jaxport for their services to Puerto Rico and the Caribbean, Jaxport has agreements with Mediterranean Shipping Co., Hamburg Sud, Evergreen, Grimaldi and Hapag-Lloyd. Ferrin said the port hopes to land calls by two Maersk Line services by the beginning of next year.

“It’s a very clear sign that the East Coast is attracting an increasing level of interest as far as the carriers are concerned,” said Neil Davidson, a consultant for Drewry Ports, a division of Drewry Shipping Consultants in London. “For so many years, the West Coast was the focus of carriers’ interest, and just about every one of them has its own facility in at least one port on the West Coast. It was pretty rare on the East Coast, but now these sorts of deals are starting to come through. It’s not just the big names like Maersk, but all the main players that are showing interest.”

To accommodate the current generation of Panamax ships that use the canal and the much larger post-Panamax ships that will use the expanded canal, the port has two dredging projects in the works. Ferrin said the port has bipartisan support in Congress and is likely to get funding for both projects.

Hanjin’s decision to locate in Jacksonville was probably a question of which port could provide it with the opportunity. “Which port was prepared to do a deal determined where it would locate,” Davidson said. “It suggests that the port authority decided, ‘Here’s an opportunity for us to get into the game in a bigger way than before by offering these deals to the lines.’ ” He said its competitors in the South Atlantic — Charleston and Savannah — were not in position to offer the same deals for a dedicated facility because they are both operating ports. “Jacksonville can carve out an advantage by offering carriers the opportunity to build dedicated terminals.”

The memorandum of understanding allows Jaxport, the city of Jacksonville and Hanjin to proceed with contract negotiations regarding construction, financing and operations of the facility. The MOU calls for the 170-acre container terminal to begin operations in 2011 with the capacity to handle 1 million TEUs a year. Ferrin said Jaxport is trying to acquire land for the new terminal from a private owner that is at the apex of a loop in the St. John’s River northwest of Dames Point, where MOL is building its terminal.

Jaxport handled 768,239 TEUs in fiscal 2006, which ended on Sept. 30; most shipments were attributed to the Puerto Rican trade. The TraPac terminal will have annual capacity of 800,000 TEUs when it opens in early 2009. Jaxport operates its own 700,000-TEU container terminal on Blount Island and has container-handling facilities at its Talleyrand Marine Terminal.

The combined 2.5 million-TEU capacity of all its terminals will turn Jacksonville into a major East Coast container port, eventually ranking fourth behind the Port of New York and New Jersey, which handled 3.6 million loaded containers in 2006; Savannah, with 2.3 million TEUs in fiscal 2007; and the Port of Virginia, which handled 2.1 million in fiscal 2007, but which will handle more than 3 million TEUs when the initial 1 million-TEU capacity of the new APM Terminal in Portsmouth hits full stride.

Jaxport could match or surpass the Virginia ports’ capacity if it succeeds in landing a third private terminal.