VPA closes in on Richmond port deal

VPA closes in on Richmond port deal

   The City of Richmond has agreed in principle to turn over control of its underperforming port on the James River to the state of Virginia.

   The state plans to aggressively develop a container-on-barge service that connects to its main ocean port in Hampton Roads, according to local and state officials.

   The two sides are finalizing terms of a five-year lease with renewal options that would give the Virginia Port Authority rights to develop, market and operate the Port of Richmond, David McNeel, Richmond's port director, told American Shipper.

   Plans call for VPA to begin managing the river port on July 1, McNeel and VPA spokesman Joe Harris said.

   The Richmond City Council is scheduled to vote on the port lease within the next two weeks. VPA's Board of Commissioners will decide whether to approve the lease at its May 24 meeting, Harris said.

   VPA last summer offered to lease the Port of Richmond for $1 per year and assume responsibility for all infrastructure upgrades, business development and operating costs. Officials see an opportunity to create a river intermodal hub that reduces truck traffic on major highways for international freight similar to its inland truck-rail transfer facility in Front Royal, Va.

   Officials said the draft lease is similar to the original proposal, which included three five-year options. The biggest difference is that the state agency has agreed to pay the city $75,000 per year. Harris said VPA has also decided to retain Richmond's terminal operator, Port Contractors Inc., to load and unload the barges, and handle intermodal exchanges with trucks and freight rail.

   VPA increased its fee in an apparent attempt to win approval from city officials reluctant to appear as if they were giving the port away for nothing. The money could also help pay off the port's debt.

   Last July, the city of Richmond formally solicited interest from companies interested in operating the port. No concrete offers materialized.

   PCI has continued to work under a temporary arrangement after its contract expired last November.

      The Port of Richmond, which lies 100 miles east of Hampton Roads at the crossroads of interstates 95 and 64 and the CSX rail line, has fallen on hard times. It lost more than $1 million combined in the past four years and was bailed out by the city government in 2010 to cover operating expenses. Its only remaining business comes from the weekly barge service that runs between Richmond and the Port of Virginia.

   Two months ago, Eimskip Shipping pulled out of Richmond and now calls at the VPA's Norfolk International Terminal. The Icelandic carrier said the move increases its ability to expand service along the U.S. and Canadian East Coast, shortens vessel roundtrips by two days and moves warehousing closer to its Virginia Beach office. Eimskip had halved its Iceland/Canada service to once per month and International Container Line, a small transatlantic carrier switched its port of call in 2009 to Wilmington, N.C.

   The 64 Express, named for the Interstate 64 corridor it parallels and operated by James River Barge Line, moves about 100 to 160 boxes per week. Virginia transportation officials say they will be able to attract more shippers and triple the frequency of the subsidized service by leveraging their expertise, integrated intermodal network and relations with international carriers. Last fall, the U.S. Department of Transportation awarded VPA a $1.1 million grant to expand the James River container service and start a shuttle between terminals on opposite sides of the Elizabeth River in Norfolk and Portsmouth.

   Harris said VPA has received interest from some port users that want to use the barge for overweight containers that are prohibited on highways.

   The lease fits with VPA's strategy of consolidating international port and intermodal facilities under a single operator to gain ship handling and on-dock cargo efficiencies. Last year it agreed to rent the privately held APM Terminal container facility in Portsmouth for at least $800 million over 20 years.

   The VPA will rent one of Richmond's ship cranes and a special locomotive for switching railcars. The Port of Richmond is trying to sell its other Manitowoc crane and container-handling equipment, McNeel said. Virginia International Terminals, VPA's non-profit operating arm, will bring in its own equipment, he added.

   McNeel said his position will be eliminated as a result of the takeover and that port staff will revert to other agencies within the city government. The Richmond City Council must still decide whether to dissolve the Port Commission.

   The port gained a new tenant on May 1 when Appomattox Bio Energy LLC, a new ethanol producer in nearby Hopewell, Va., signed a four-year lease for an 80,000-square-foot warehouse to store barley-protein meal, a cattle feed additive derived from ethanol grain residue, McNeel said. The contract is valued at $720,000.

   Appomattox plans to sell the new product domestically and begin exporting within a year, he said. ' Eric Kulisch