Delaware port looks at public-private partnership

   The Port of Wilmington in Delaware is reviewing proposals for public-private partnership to expand the port.
   Gene Bailey, executive director of Diamond State Port Corp. (DSPC), the state entity that owns and operates the port, said it’s seeking investors who can help the port expand its facilities on the Delaware River.
   The port is currently reviewing submissions solicited on its behalf by BMO Capital Markets GKST, an affiliate of the Bank of Montreal.
   Bailey would not reveal how many or which companies have submitted proposals, but the Philadelphia Inquirer newspaper said the state has received proposals from Kinder Morgan and a firm called Delaware Terminal Operating Co. that it said was formed by the owners of Penn Warehousing and Distribution Inc., the stevedoring firm Murphy Marine Services, and Port Contractors Inc. in Wilmington.
   Bailey said the port believes it’s in its best interest not to release information about potential partners until it is ready to proceed.
   “We have a facility that opened in 1923, and we have made tremendous improvements since then. But in this day and age, there is a continuing requirement to improve your facility so you have the service levels your customers deserve,” he said, adding that the state has provided the port with $177 million in capital funds since 1995, including $10 million in each of the past two years.
   “These projects are extremely expensive. The state, though it has been a good provider and supporter of the port, is not in a position to fund a program like this,” he said.
   While the port has an automobile berth on the Delaware River that can accommodate ships drawing 39 feet of water, most of its facilities are located on the shallower Christina River where depths range from 35 to 39 feet.
   With the Army Corps of Engineers currently dredging the main shipping channel on the Delaware River to 45 feet, Bailey said Wilmington would like to have new facilities that can take advantage of the deeper water. He expects the dredging project to be completed in about four years.
   The request from private companies asked for proposals for:

• Greenfield or brownfield development of undeveloped or underdeveloped acreage berths, or warehouses at or adjacent to the port.
• An operating and capital partnership with DSPC.
• An operating lease of the full port or selected terminals under a master lease agreement, including the option for the investor to develop new facilities along the Delaware River.

   Bailey said one option might be to extend the port’s existing automobile berth on the Delaware River south, and fill the area behind it to create additional port acreage.
   In 2011, the port handled 189,940 TEUs, 2.9 percent more than the prior year. The port is a leading handler of bananas and other fruit, being a major gateway for both Dole and Chiquita.
   Dry bulk volumes more than doubled in 2011 to 1.45 million tons, while breakbulk, roll-on/roll-off and livestock cargoes totaled 487,770 tons last year, a 26 percent increase over 2010.
   Bailey said refrigerated cargo has been a major niche for the port, and he does not expect that to change going forward.
   Expansion could result in increases in traditional cargoes at the port such as fruit, automobiles, breakbulk, or bulk cargo, or involve construction of a general purpose container terminal.
   The request for proposals distributed by BMO Capital said an analysis by the port consulting firm Martin Associates concluded that a 125-acre new container terminal along the Delaware River could realize a 600,000-TEU throughput.
   Although the document distributed by BMO Capital said it was expected a potential investor would be recommended to the port’s board and state assembly this past winter and then take up to a year to complete the transaction, Bailey said there was not a fixed timetable for completing a transaction. He said the port had the option of not concluding a deal if it feels it’s not beneficial to the state. – Chris Dupin