“We are transforming the Port of Virginia to meet a changing and increasingly competitive environment,” said William Fralin, chairman of the VPA board.
Virginia International Terminals (VIT) will be converted from a non-stock corporation to a single member limited liability corporation under more direct control by the VPA. The new structure will eliminate duplication, increase efficiencies and reduce costs.
The board will also begin the process of recruiting the permanent executive director and chief commercial officer to lead the streamlined organisation, and expects to have the permanent leadership in place as early as autumn 2013.
The board also weighed the reorganisation plan against two unsolicited proposals from APM Terminals (North America) and J P. Morgan that were each seeking a long-term concession to be the VPA’s terminal operating company. Those proposals were submitted to the state’s secretary of transportation last April and December respectively.
After a “careful analysis and consideration,” the board determined that the retention and improvement of the public sector operator is a more attractive opportunity for the Commonwealth of Virginia. As a result it has terminated the review of unsolicited proposals submitted by APM Terminals, Inc. and Virginia Port Partners (VPP), noting that neither proposal accurately reflected the potential net present value of the state’s terminals and revenue potential.
In making its decision the board took into account a number of factors which showed that revenues and cargo volumes forecast by the public sector were comparable to those of APMT and VPP under a concession. In addition, the board believes that the public sector can generate sufficient revenue over time to allow the VPA to service its existing debt and fund future capital expenditures.
Moreover, while the proposals presented an opportunity for VPA to acquire APMT’s marine terminal in Portsmouth, the VPA already has control of this facility until 2030 through a lease between the VPA and APMT;
Accordingly, given the port’s position on the US East Coast, cargo volumes at the Port showing an improvement following several years of slow growth, the changes in shipping trends as a result of the Panama Canal expansion and increased use of the Suez Canal and the move to substantially larger vessels, now is not the time to implement a concession at the Port of Virginia.