Gulftainer will make its U.S. debut at Canaveral as the operator of the new box terminal.
Port Canaveral will inaugurate its first dedicated container terminal at a public ceremony on Friday, but so far there is no cargo for the cranes and other equipment to lift because new terminal operator Gulftainer has not signed up any ocean carriers to call the East Coast Florida port .
Gulftainer USA, the U.S. division of the United Arab Emirates-based company, is still trying to attract an anchor customer by promoting Canaveral’s geographic advantages and its parent’s track record for productivity, Group Managing Director Peter Richards told American Shipper in an interview.
“It’s the chicken and egg thing. We’ve got the shippers that say they would love to use port if they have shipping lines, and lines that say we’d love to use port if you have the customer base,” said Richards. “At this time we have no firm commitments by any of the carriers to come to Canaveral. We are working through the sales process, supplying them with specifics of the port and the initial marketplace in Central Florida, and the carriers are doing their own internal review.”
Determining new ports of call is a fairly involved process for carriers, which must decide if there is enough volume to justify making adjustments to their global route network. Network design has increased in complexity in recent years as carriers have formed alliances with other carriers in which they don’t control all the ships carrying their cargo.
Gulftainer, which won the concession last fall to operate the new terminal for up to 35 years, would welcome diverted cargo from anywhere, but is initially targeting imports destined for Central Florida that currently enter the country through the ports of Savannah, Ga., and Charleston, S.C., according to the company’s top executive. Latin American and Caribbean trade lanes offer potential near-term opportunities, but port and terminal officials say they are also trying to secure business from Asian carriers.
Richards said the port operator, which has committed to invest $100 million in infrastructure, equipment and personnel, will be able to leverage its reputation for performance to offer service on par with those Southeastern ports.
Savannah and Charleston, he noted, offer some of the best service in the United States, which has led many shippers to utilize them as import gateways instead of ports such as Jacksonville, Miami and Everglades (Fort Lauderdale) to reach the Florida market.
“So we’re saying try the new facility” and save the five-to-six hour truck trip and related costs, Richards said.
Industry sources say drayage costs from the Southeast ports to Central Florida are about $500 to $700 more per container than from Port Canaveral.
The equivalent of 3 million standard shipping units with international cargo move in and out of Florida each year by truck or rail and state officials say, based on studies by port economist John Martin, that they can get a quarter of that volume to stay at home if ports are made more competitive. That means building the infrastructure to handle bigger ships that will be able to reach the East Coast from Asia when the Panama Canal expansion is completed next year. Since 2011, Gov. Rick Scott has made trade and logistics centerpieces of his economic plan and has gotten the legislature to commit $850 million to fund port infrastructure upgrades, including money in the pending budget.
The Canaveral Port Authority, for example, received $24.4 million in matching funds from the Florida Department of Transportation to support widening the turning basin and deepening of the navigation channel so it can accommodate larger cruise and cargo vessels. The outer harbor is being dredged two additional feet to 46 feet, while the inner harbor is slated to go from 41 feet to 44 feet deep. The port and the state are paying for the project rather than waiting for lengthy federal approvals and congressional appropriations to accelerate expected economic gains.
Port Canaveral is the second-largest cruise port in the United States, but is a relatively minor player in the cargo area. To date, the port’s cargo business has centered on bulk commodities such as petroleum, salt and industrial equipment. The port sometimes transfers containers for multi-purpose vessels, but until now has never had a terminal primarily geared for container vessels. The investment in a new facility, including more than $50 million to turn a section of port property into a container terminal and install used post-Panamax cranes, is part of CEO John Walsh’s ambitious strategy to diversify Canaveral’s business.
Earlier this year, the port authority lost a bid to become a processing center for Volkswagen imports. The port was prepared to a multi-level garage and a processing facility to meet Volkswagen’s requirements.
Gulftainer officials estimate that the 20-acre terminal will handle 40,000 to 60,000 TEUs in the first year of operation, and close to 100,000 TEUs the second year. At full build out, the terminal eventually will be capable of handling 750,000 TEUs per year. But Richards admitted that initial volume projections are based on container throughput generated from shippers that say they would use Canaveral if there was liner service to the port.
In an interview last year, Walsh insisted that the port’s new container business was aimed at capturing cargo that currently bypasses Florida, rather than stealing it from other Florida ports. He and other port directors insist there is enough out-of-state cargo for all the major Florida ports to share.
Richards said Canaveral offers shippers and carriers many advantages. It is only 45 minutes from the pilot buoy to berth compared to several hours at many ports. Ports such as Jacksonville and Savannah are situated on rivers miles from the coast. The quicker turn time saves ocean carriers money because they generate revenue by keeping vessels moving and getting to the next load center.
Canaveral is also located near millions of consumers. It is 60 to 90 minutes by truck from Canaveral to distribution centers in heavily populated, and fast growing, Central Florida and the tourist mecca of Orlando.
Among the terminals operated by Gulftainer is Khorfakkan in the UAE, which is rated by the Journal of Commerce, as the fifth most productive terminal in the world in terms of vessel container moves per hour. Gulftainer last year handled 6.4 million TEUs across nine ocean facilities in the Middle East and South America.
Gulftainer investments during the contract period will include plug-in stacks for refrigerated containers, cargo handling equipment, a second set of ship-to-shore cranes, RFID tracking for containers, a gate system, and information technology.
Richards expressed confidence that Gulftainer will gain traction at Canaveral once cargo owners become aware of the port’s value proposition. “If you look at the countries we’ve invested in, we’ve not shied away from competition,” he said.
Gulftainer began running the container terminal at the Port of Recife in Brazil in 2012 and initially focused on breakbulk and general cargo because the Port of Suape reduced parking and other vessel fees below breakeven in an effort to retain container business. “We refused to do that,” said Richards, and Gulftainer recently picked up a commitment from an undisclosed regional carrier, to call at Recife.
The Canaveral terminal, likewise, will not limit itself to container business, he added.
Gulftainer USA, which engaged in commercial discussions with the Port of Jacksonville at one point before settling on Canaveral, is interested in expanding in North and South America through joint ventures, partnerships or acquisitions, Richards said.
The mid-size containership CMA CGM Jamaica will be at berth to provide a back drop for Friday’s ceremony, but the French container line has not made any decision about adding Canaveral to its network, according to Gulftainer and CMA CGM officials.
Gulftainer expects to receive an approved security plan from the U.S. Coast Guard by July 1, Commercial Manager Joe Cruise said. Until then, no cargo can be lifted on or off vessels.
(For more details about Port Canaveral’s new cargo strategy read the feature story “Canaveral ready for blastoff” in the October 2014 issue of American Shipper.)
Port Canaveral to open container terminal, but awaits first customers
