Port Makes Another Major Deal In Attempt To Get Back In Black
Written by Risa Polansky on June 19, 2008
By Risa Polansky
A pending agreement with a team of major players at the Port of Miami — the second key deal in the past month — could bring the floundering seaport back into the black.
The 15-year pact with current terminal operator AP Moller-Maersk and shipping line CMA CGM, combined with a newly approved agreement with Seaboard Marine, would eliminate the port’s annual $10 million deficit, Port Director Bill Johnson told Miami-Dade County commissioners at a transit committee meeting last week.
"Your port this year, ending Sept. 30, will have a balanced budget," he said, later adding that "cruise is no longer subsidizing cargo."
The committee OK’d the plan, which includes two five-year renewal options. The full commission is scheduled to vote July 1.
The deal would mean an annual net increase of $4 million for the seaport, county documents say. It’s to generate $15.3 million in revenue during its first year, $11.9 million of which would be guaranteed.
Maersk, the world’s largest cargo shipping line and third-largest cargo terminal operator, generates about $6.4 million for the port, with $3.4 million guaranteed.
The party named in the proposed agreement is Terminal Link (Miami) LLC, an entity of CMA CGM’s terminal operating unit.
CMA CGM and AP Moller-Maersk Terminals are to jointly operate the terminal — Maersk’s existing 72 acres —as "South Florida Container Terminal."
CMA CGM, the third-largest shipping line in the world, now ships through another major operator, Port of Miami Terminal Operating Co.
The agreement calls for shifting its cargo to the newly dubbed South Florida Container Terminal.
It allows the new entity to do third-party business — something proponents say will increase competition and bring more cargo through the port.
Representatives of Port of Miami Terminal Operating Co., now the only terminal operator serving third parties, say it will kill their business.
The deal is a win for the county, Mr. Johnson insisted, noting that "both organizations (involved in the new agreement) could very easily have left our port."
Maersk considered moving its South Florida operations to Jacksonville, and CMA CGM was searching for equity at a South Florida terminal.
County Inspector General Christopher Mazzella raised a handful of concerns with the deal, including a planned county contribution of up to $16 million toward a new crane system and other related improvements to the terminal area.
"The seaport is making an enormous contribution here," he said.
Mr. Johnson maintained "the deal makes financial sense."
Now, Maersk does not pay rent. Terminal Link (Miami) is to pay $1.25 per gross square foot with a 3% compounded annual increase.
Mr. Mazzella said the port could charge more for the premium land, but he’s "happy somebody’s finally paying rent."
The port would glean more than $1 million through a one-time infrastructure improvement fee, the agreement says.
Transit committee members were concerned by points raised by the inspector general but ultimately approved the pact.
Katy Sorenson said the deal represents a step forward for port policy.
The old practice of "handshakes instead of contracts" is out with the tide, she said. "We recognize it’s not a friendship — this is a business."