Expansion proposed for Port of Wilmington on the Delaware

Wilmington is the second-largest banana port in the world. ED HILLE/ Staff Photographer
Wilmington is the second-largest banana port in the world. ED HILLE/ Staff Photographer
Posted: May 21, 2012

In a game-changing move for both the Port of Wilmington and the state of Delaware, officials are pursuing a partnership with a private company or investment group to operate the publicly owned terminal and to expand the port by constructing ship berths on the Delaware River that could cost as much as $500 million.

The state-owned Wilmington port touts itself as the largest handler of imported perishable cargo, fruits and vegetables in the United States and as the largest banana port in North America, second only to Antwerp, Belgium, in volume of bananas in the world.

The port is now mostly accessible by docks on the Christina River. Expanding on the Delaware with container ship docks, cranes, and cargo facilities would open Wilmington to deeper-bottom vessels that cannot navigate the shallower Christina.

Delaware economic development office director Alan Levin said the administration of Gov. Markell wants a long-term lease or partnership deal that would include development of a new, deepwater container terminal on the Delaware to attract ships that require 45 feet of water. The Delaware's main navigation channel is presently being deepened by the U.S. Army Corps of Engineers from 40 feet to 45 feet between the Atlantic Ocean and Philadelphia.

"We are looking for individuals, an entity, that can help us get to the Delaware River," said Levin, chairman of the Diamond State Port Corp., which runs the port for the state. "The State of Delaware and the port do not have the funds to do that."

"We have estimated the cost to build the berths that are necessary on the Delaware would be a half-billion dollars," Levin said. "Our hope is to have a partner that will not only maintain the port's business, but grow it — bring in additional business and additional workers from the International Longshoremen's Association."

The state has received a proposal from Kinder Morgan Inc., a publicly traded energy company based in Houston with operations at the Tioga Marine Terminal in Port Richmond and Fairless Hills, Bucks County.

Another bidder is Delaware Terminal Operating Co., a new firm formed by the owners of Penn Warehousing and Distribution Inc., the stevedoring firm Murphy Marine Services, and Port Contractors Inc. in Wilmington.

Penn Warehousing president John Brown, who operates Piers 78 and 80 in Philadelphia, confirmed that he submitted a bid on behalf of Delaware Terminal Operating Co. and "signed a confidentiality agreement" not to discuss the details.

Kinder Morgan spokesman Joe Hollier likewise responded, "We have nothing to say at this time."

Private investment in the nation's seaports is a growing trend, said national port consultant John Martin, based in Lancaster. "It's the wave of the future because the federal government has not been able to provide the necessary funding, nor the states, required to keep our ports operating, the lights on and the doors open."

Following the September 2001 terrorist attacks, ports shifted "significant funding away from maintenance and new capital projects" to security, Martin said. "Couple that with the impact of the recession, funding has really become an issue. So it's necessay to look for private-sector investment. It's pretty much the way it works all over the world, that ports are developed by private investors."

Ports in Los Angeles, Long Beach and Oakland, Calif., and Portland, Ore., are run by private terminal operators, as are ports in Baltimore, Jacksonville, Fla., and Philadelphia. Private companies either lease the piers or partner with governments to make improvements.

In Baltimore, Ports America Chesapeake is building a 50-foot container berth at a cost of $100 million to $150 million under a contract to run operations there, Martin said. "By going this route, the state is leveraging private-sector money to create much more economic activity."

With new docks in Wilmington, the port would be able to handle 150,000 to 300,000 additional truck-size containers carrying cargo by 2015, said Thomas Keefer, the port's deputy executive director. The port handled 94,000 containers in fiscal year 2011, he said.

"We are a niche port right now. We handle a good number of containers, but they are exclusively with perishable cargo," Keefer said. "Getting a partner with sufficient capital would enable the port to grow and expand, increase jobs, revenue, and, of course, increase taxes."

Levin said Delaware would like to keep the current ILA union workers and a role for the current port management.

Dole Fresh Fruit Co., which hauls 3.3 billion bananas annually, or 65 million a week, into Wilmington, would welcome private investment. "If a partner comes in and makes the investments in cranes and warehouses that the port hasn't been able to do, that would be a tremendous benefit to us," said Dole vice president of operations Stuart Jablon.

"The real gem is the ability to build on the Delaware River because of the deep water," he said. Dole has a long-term lease at the port until 2025. On the Christina River where seven berths and a jetty are now located, the port cannot accommodate larger ships expected to come from Asia to the East Coast after the Panama Canal is widened and deepened in 2014.

The state-owned Philadelphia port has long leased its Tioga Marine Terminal to the Delaware River Stevedores Inc., and Packer Marine Terminal in South Philadelphia to Astro Holdings L.L.C., run by the Holt family.

The Philadelphia Regional Port Authority has begun negotiations with Astro on a new annual rent. Astro pays $1.3 million a year for use of six ship berths and 112 acres owned by Pennsylvania. The Philadelphia port authority says that rate is not competitive with other terminals in the Philadelphia port or on the East Coast. If a new annual rent is not set by October, the issue will go to an arbitrator whose decision will be binding.

Delaware River Stevedores and its parent companies, Ports America Group and SSA Marine, which are global marine terminal operators, will be developers of Southport on the eastern end of the Navy Yard, Philadelphia's first new marine terminal in 50 years. Construction is not expected to begin until 2013.

"Southport is taking a brownfield and making it into something entirely new," said Robert Palaima, president of the Delaware River Stevedores. "In Wilmington, you have 80 to 90 years of a port with an existing base of business. In addition to Dole and Chiquita, you have Chilean fruit, automobiles, bulk cargo, and dry bulk commodities which are pretty substantial. They have a long history of being a port."

Contact Linda Loyd at 215 854 2831 or lloyd@phillynews.com.

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