APM lease buys time on Craney Island plan
- July 1, 2010
The Virginia Port Authority (VPA) accelerated its efforts to become the preferred shipping port on the East Coast by cutting a deal with APM Terminals Virginia. The port authority will lease APM Portsmouth Terminal for $40 million a year over 20 years. The 291-acre, $450-million facility, which opened in 2007, is the third largest container terminal in the country and will increase the VPA’s cargo capacity by 1 million 20-foot-equivalent units (TEUs), or one-third of its current maximum capacity.
The VPA Board of Commissioners and its counterpart at APM, which is headquartered in The Hague, still must approve the arrangement.
“We are getting the most modern, most technologically advanced terminal in the northern hemisphere,” says VPA spokesman Joe Harris. “It is also the most efficient, and we think those efficiencies are going to draw even more business and interest to Virginia.”
The deal brings other benefits as well, says Harris. For example, VPA customers now will have access to two rail carriers, Norfolk Southern and CSX Rail, instead of just Norfolk Southern.
The deal also will provide VPA officials the time and flexibility they seek to develop and finance a new marine terminal on Craney Island. That multiphase project is expected to cost more than $2 billion.
“The APM lease is going to provide a relief valve for us as we build Craney Island,” Harris says. “Because at the end of the 20 years, the company might want its terminal back, and if that’s the case and we have a bunch of business over there, we’re going to have to put it somewhere and at that point we will hopefully have Craney Island available to us.”
Before the lease arrangement, the state had received three bids from several private companies to operate and manage VPA’s terminals in Newport News, Portsmouth and Norfolk, as well as its inland port in Front Royal. The APM lease, however, could affect the fate of those bids. Gov. Bob McDonnell’s office has indicated that any decisions on the bids will have to wait until the lease deal is approved by the boards of VPA and APM.