Bob Watters, a senior vice president at SSA Marine said NEWCO is supported by the Georgia Port Authority and South Carolina Port Authority, and that "the purpose of such new entity will be to: improve customer service; provide a secure, safe and stable environment for employees; and strengthen the ports’ competitive positions within the global container market."
“It’s almost mimicking some of the behavior of the ocean carriers in trying to gain some efficiencies and economies of scale by working together. I think that the service providers saw that as an opportunity for them to somewhat do the same thing.”
She also believes the South Carolina Ports Authority could “gain additional operational efficiencies because you don’t have three different ways stevedoring companies may work or how they relay information, ... how they hire the labor, how the gangs work. We feel there are some efficiencies that can be gained.”
“We think that type of thinking should be rewarded,” she said, but added the authority will negotiate with NEWCO to make sure ocean carriers at the port get the same level of service and are not subject to unreasonable rates.
Melvin clarified, “We did not cook this up with Georgia,” and said that the idea of forming NEWCO originated with the three stevedoring companies.
Under the agreement filed with the FMC, the three companies say in Savannah and Charleston “NEWCO shall provide marine terminal services and conduct container stevedoring, terminal, container freight station and activities incidental thereto.”
They added, “Specifically, the parties agree that, during the term of this agreement, NEWCO will assume responsibility for providing those facilities and services currently provided by the parties in their individual capacity in the ports, including marine terminal gate operations and vessel loading and unloading operations and the operation of equipment and technology-related thereto.”
They expect “to enter into long-term license agreements with each of the ports for the use of facilities in those ports.”
Meanwhile, TOTE says the proposed Puerto Nuevo Terminals venture in San Juan. would combine two facilities – one international handling international cargo, Luis Ayala Colon, and one handling domestic cargo, Puerto Rico Terminals.
“This ability to operate more efficiently and share assets and investments – including cranes, equipment, technology, energy, gates, paving, security and other infrastructure – is essential to maintaining reliable and competitive service for domestic and international trade at the Port of San Juan for decades to come. Equally important, it enhances competition by providing domestic carriers options for another modern and well-maintained terminal.
"TOTE firmly believes that the proposed venture will enhance the efficient flow of cargo though the Port, providing significant benefits to Puerto Rican consumers and businesses. We are fully committed to continuing the dialogue with the FMC and Puerto Rican officials to demonstrate the advantages that this proposed terminal will provide the Port of San Juan and the island of Puerto Rico.”
There has been pushback from some business interests and legislators.
Resolution 1371 in the House of Representatives of Puerto Rico calls for rejection of the agreement, saying it would create extraordinary control over the port terminals in San Juan to the detriment of the people of Puerto Rico.
Jorge Argüelles Morán, the president of Puerto Rico’s United Retailers Center (CUD), and Manuel Reyes, the executive vice president of the Chamber of Food Marketing, Industry & Distribution, spoke against the proposed joint venture at a hearing arranged by Aponte, Caribbean Business said.
It quoted a joint statement from CUD as saying, “Right now, we have four shipping companies that serve Puerto Rico individually. With this merger, the TOTE company would end up dominating 70% of the transportation. This would leave in the hands of TOTE and Crowley absolute control of tariffs, container offloading and schedules to lift merchandise from the dock, as well as who can enter the port of San Juan. Undoubtedly, this commercial union would imply a nefarious monopoly for the country.”
Agreements filed with the FMC normally take effect after 45 days, but the commission's request for additional information "stops the clock" while the stevedores provide information with additional information. Once that information is provided, a new 45 day period begins to run and the agreements will go into effect unless the agency seeks an injunction.
Drewry recently held a webinar describing what it sees as the key ingredients for successful terminal alliances.