Virginia Port authority wants to lease APM Terminals for 20 years

The state-owned Virginia Port Authority would acquire the right to operate APM Terminals Inc.'s Portsmouth marine cargo terminal for a 20-year period, according to preliminary terms of a lease agreement between the two entities, a top port official said.

Joseph A. Dorto, president and chief executive of Virginia International Terminals Inc., the port authority's operating arm, said talks between the state and APM regarding the private operator's 2-year-old, $500 million cargo terminal are progressing and nearing completion, but he noted that several legal hurdles remain.
Dorto, who declined to discuss other specifics of the agreement — including how the finances of the deal would work — made the comments in his annual State of the Port address to the Hampton Roads Foreign Commerce Club in Norfolk.

It was the first time officials discussed the proposed length of the deal. At 20 years, the lease would give the port authority additional temporary capacity to handle an expected influx of cargo while it develops Craney Island as a new, $2 billion marine terminal.

"Think about what a fantastic opportunity that would be for this port, to be able to bring all the terminals under one umbrella again and compete against the likes of New York and Charleston and Savannah," Dorto said. "I can't put down on paper or tell how good that would be for the port."

Ed McCarthy, a senior director at APM Terminals, declined to comment on the status of the negotiations or the terms of the preliminary agreement, citing a confidentiality clause.

But he did say APM's struggles to grow cargo volumes and decision to move forward in talks with the port authority stem from the company's inability to lure shipping lines away from Virginia International Terminals.

Over the past several years, VIT has been able to lock down its customers into multi-year agreements, an initiative that's provided a fair amount of stability for the port.

Port authority officials hoped to close the APM deal before the end of 2009, but legal issues have cooled the pace of negotiations.

"If we can move as many containers through that terminal as we have lawyers working on the (agreement), we'll be successful," Dorto said.

The deal would also allow the state to divert all containerized cargo to APM and Norfolk International Terminals, opening up the port authority's Portsmouth Marine Terminal for new uses.

Dorto's plan calls for the port authority's Portsmouth terminal to be converted to handle noncontainerized cargo, like heavy equipment, vehicles or perhaps bulk goods like grain. He said he's optimistic that APM would help the port authority steal business away from its competing ports.

Acquiring the operating rights at APM also would give the port authority a valuable bargaining chip with three private bidders that submitted proposals last year to enter into long-term, public-private partnerships with the port authority. With APM in the fold, the port's value would certainly increase.

Dorto said Wednesday that it's a "pretty safe bet" that the three proposals on the table "are all not even close to acceptable" and that the port would remain under state control through 2010.

Nonetheless, Gov. Bob McDonnell and his administration are in the process of determining the composition of an independent review panel that will study whether the state should consider entering into detailed negotiations with any of the bidders.

Source: www.dailypress.com