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Front Page » Top Stories » Seaboard Marine Signs New Lease Plans For Expansion In Miami

Seaboard Marine Signs New Lease Plans For Expansion In Miami

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Written by on June 12, 2008

By Shearon Roberts
Seaboard Marine Ltd., one of the Port of Miami’s three terminal operators and shipper of more than half the cargo that leaves the port, expects its new lease agreement with the port to support its plans for double-digit freight growth and expansion here.

"We’ve been at the port since 1987. We’ve continued to steadily grow," said Bruce Brecheisen, Seaboard executive vice president. "We need a modern and efficient facility to be able to increase our volume and meet the growth required of our customers."

Over the past decade, Seaboard has increased its productivity at the port from handling about 2.2 million tons or 247,000 TEUs — 20-foot-equivalent units, the standard measure for cargo shipping containers — to 3.1 million, or 360,000 TEUs. The company’s high level of shipping cargo accounts for 40% of the port’s total cargo throughput and 60% of exports heading out of the Port of Miami.

The Miami-Dade County Commission on May 20 approved the new lease for 20 years with the possibility of two additional five-year terms. The port will oversee infrastructure improvement of Seaboard’s roughly 70 acres of freight handling space, will modernize an additional 55 acres along the south side of Seaboard’s terminal and sublet another 14 acres currently operated by another cargo line.

Seaboard will work with the county on redesign plans for the terminal and the port will assume maintenance responsibilities typical of a port landlord by demolishing older buildings or facilities, providing paving and drainage, configuring new wharves for berthing, slope designs and lighting.

Once the county’s infrastructural improvements kick in, Seaboard will increase throughput by 18%, exceeding the total volume of throughput other leading carriers produce at rival ports.

The infrastructural benefits of the new lease position Seaboard well at the port where sailings already average 70 a month, shipping seven days a week, all year round, according to Mr. Brecheisen. The company places a strong emphasis on exporting, strengthening trade with Latin America and the Caribbean, more so than any other cargo carrier at the port, he said.

The other two terminal operators are the Port of Miami Terminal Operating Co. and P. Moller-Maersk Group. Port of Miami Terminal Operating Co. has been based at the port about 10 years and handles 500,000 TEUs there annually. A.P. Moller-Maersk Group, based in Copenhagen, has 50 terminals in 31 countries. Figures for its Port of Miami freight volume weren’t available.

Seaboard’s strength lies in regional dominance, focusing on Central American and Caribbean ports, and the new lease will provide more dockage and wharf space for the company’s vessels and cargo, increasing productivity to the ports the carrier currently serves.

Under the new agreement, Seaboard will commit to grow at a 2% rate in the first five years, averaging a minimum of 4,000 TEUs per acre of its current 70 acres of terminal space — a task Seaboard is already accomplishing as it averaged 5,100 TEUs per acre at its Port of Miami terminal in fiscal 2007.

"We’ve had a long-term relationship with the port and this certainly strengthens it," said Mr. Brecheisen, "It fits well into our business model."

Port officials and the county commission see the potential growth of Seaboard at the port as mutually beneficial as the carrier employs residents countywide and generates $9 million annual revenue for the port. Securing Seaboard’s stay at the port for another two decades would increase revenues to $13 million, a figure that can increase 4.1% over the course of the new lease. The revenue from the new lease will come from tariff rates on tonnage and from newly added tenant land rental fees.

"It’s not a simple renewal, it’s a partnership for years to come," said Andria Muniz, port spokesperson.

The increased business will come at a good time for the port, which has seen two consecutive years of declining imports and exports.

In 2006, the port handled 8,654,371 tons of cargo, down 8.6% from 2005. Last year the tonnage was down 9.5% from 2006, totaling 7,835,132.

Ms. Muniz, the port spokesperson, added that Seaboard’s ability to grow its operations at the port complements Port Director Bill Johnson’s plans to strengthen the economic viability and modernization efforts at the port. Having a strong, thriving cargo carrier supports his plans to attract future commerce through such major projects as the Miami Harbor project to dredge the port channel to 50 feet and the Miami Tunnel project, which would redirect truck traffic off downtown streets through a 1.1-mile underground tunnel.

Seaboard will make a one-time payment of $1,150,350 for all of the acres it will use. An additional one-time payment of $500,000 will go to settle disputed charges from 1997.

The port, which still has to make good on outstanding infrastructural improvements from its prior lease with Seaboard, has agreed to $26 million in capital improvements for Seaboard’s terminal, much of which is already included in the port’s Five-Year Capital Improvement Program. Revenues from the Seaboard deal and federal and state grants will pay for the new infrastructure.

Miami-Dade Inspector General Christopher Mazzella said his office was pleased with the criteria in the lease, but he has expressed concerns about the 20-year length of the lease.

"We don’t like to see these very long leases that lock us out of renegotiating a few terms for the county," said Mr. Mazzella, whose office is designed to avoid and tackle mismanagement in county business, among other responsibilities. he said he has presented these concerns to Mr. Johnson, given incomplete infrastructural milestones in the past on the part of the seaport.

In Seaboard’s past contract, the port failed to bring the carrier’s terminal up to minimal standards, completing only one project and never starting the remaining eight that called for paving, draining and re-grading the terminal, the inspector general said in an April report to the county commission. These terms have been passed on to the new lease, with Seaboard now contributing to infrastructure costs, a fee it did not incur in the old lease.

"The math looks good, but you don’t know what the future brings and I just want to look after the welfare of the county when we’re all gone," Mr. Mazzella said.

The new lease with Seaboard, according to Mr. Brecheisen, is aimed at giving the port incentives to complete its infrastructural improvements this time, in order for the port to achieve different revenue thresholds over the course of the lease. If the port falls behind this time on maintenance, Seaboard will reduce its share of infrastructure fees by $100,000 each month past the milestone date.

"There’s enough carrots and sticks that the port will fulfill these obligations," Mr. Brecheisen said. "This secures our future for the next 30 years at a site or port that we’ve been at for 20 years now." Advertisement

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