Port seeks new container facility


Jacksonville Business Journal - by Tony Quesada Staff Writer

NORTHSIDE -- The Jacksonville Port Authority is developing a concept for an intermodal container transfer facility near Dames Point.

Such a rail yard would eliminate the need to haul containers from the terminal being built there for ocean carrier Mitsui O.S.K. Lines Ltd. and one the authority hopes to build near Dames Point to rail yards on the Westside.

The authority's vision for 10 years from now includes the port handling 3.2 million 20-foot-equivalent units (TEUs) of containerized cargo -- about four times the port's container throughput last year. Most of the increase would come through Mitsui's 158-acre terminal on Dames Point and one about a mile east that Hanjin Shipping Co. is said to be nearing a deal to build.

But while the authority's vision of being a major container port is coming into focus, one thing potentially blocking the view is the steady stream of containers being trucked across town to get to rail. About a third of the containers coming through Mitsui's terminal, which will be operated by its subsidiary TraPac Inc., will be bound for rail, port authority Executive Director Rick Ferrin estimates.

An intermodal container transfer facility, along with a deeper channel and improved highways, would greatly enhance Jacksonville's ability to capture more of the East Coast containerized cargo market, said John Koch, director of international sales for CSX Transportation Inc. (NYSE: CSX).

"This growth is coming, and what drives the growth is, does your market have the capability to handle this business?" Koch said. "There's a large segment of cargo that will have to be moved, and an ICTF offers capacity to move that by rail."

The idea for an ICTF is taking shape as the authority gathers information to write a request for proposals seeking a partner or partners to develop and operate one. The authority wants to issue an RFP by Jan. 1, Ferrin said.

He envisions a roughly 250-acre terminal -- which could cost more than $100 million, including buying land -- with multiple tracks long enough to assemble trains several thousand feet long. Although a site hasn't been identified, the authority has a general idea of where it needs to be.

An ideal site, Ferrin said, would be on property owned by Zion Jacksonville Limited Partnership that is adjacent to and north of Zion-owned property that the authority is negotiating to buy and lease, possibly to Hanjin. That would give immediate access to containers handled at a potential Hanjin terminal and would be a short drive from Mitsui's terminal.

New to Jacksonville, ICTFs have been critical elements at other ports for years.

At the port of Savannah, Jacksonville's major competitor for containerized cargo, Norfolk Southern Corp. (NYSE: NSC) removes containers from a 25-acre ICTF that opened in mid-2001. About 20 percent of containers coming through Savannah leave the port from the ICTF. In April, the port began construction on a second ICTF that would be for containers bound for a nearby CSX Intermodal Inc. yard.

At the port of Oakland, Calif., Burlington Northern Santa Fe Corp. (NYSE: BNI) and Union Pacific Corp. (NYSE: UNP) operate side-by-side ICTFs. Together, they give the port capacity to transfer about 1.2 million TEUs to rail within a mile and a half of any dock.

Before Burlington Northern Santa Fe began operating the Oakland International Gateway in March 2002, its nearest terminal was about 15 miles away. Trucks "had to go through about 10 miles of one of the most congested freeways in the United States," said Gay Joseph, general manager of maritime administration and finance for the port of Oakland. "It put an enormous amount of trucks on the highway. It was not a good business model."

The distance from Dames Point to CSX's and Norfolk Southern's yards on the Westside is similar to Oakland's prior situation. Jacksonville's roads are not as congested, but they would be strained with the kind of volumes the port authority is hoping to achieve.

The drayage or trucking fee to rail yards on the Westside is considered very affordable at less than $80 per container. But increased demand and road congestion are likely to prompt increased drayage fees and to increase transit time.

The authority is looking for ways to share the costs of an ICTF, Ferrin said.

"We thought we were creative with MOL," Ferrin said, regarding how the authority negotiated to have Mitsui pay $200 million of the $220 million to build its terminal. "This is one step past that in using other people's money."

One development the port is studying is the CenterPoint Intermodal Center in Illinois. Oakbrook, Ill.-based CenterPoint Properties steered the project involving different levels of government, several public agencies and private industry. The 2,200-acre project includes a 770-acre intermodal yard operated by Burlington Northern Santa Fe. To date, total investment is approaching $1 billion.

Koch said CSX -- the only railroad with track near Dames Point -- is working closely with the authority and is open to working with state and federal government agencies "and any third party with an interest" in making an ICTF a reality.

"The issue," Koch said, "is building a cost-effective model for vessel operators to move their cargo in a way that makes the port competitive."