Major port deal went from a whisper to a welcome

Port observers say Jacksonville's pact with the Asian shipping line is excellent news for the region.


By TIMOTHY J. GIBBONS, The Times-Union


The idea that another Asian shipping line would set up shop in Jacksonville floated around the waterfront almost from the day that the Jacksonville Port Authority signed a deal with its first Asian carrier.

Whispers on the waves aren't the same as containers on the dock - but those hopes took a step toward becoming reality with Thursday morning's announcement that Hanjin Shipping Co. Ltd. will open a terminal in Jacksonville by 2011.

Combined with the business soon to be generated by the terminal under construction at Dames Point for Japan-based Mitsui O.S.K. Lines Ltd, the Hanjin announcement could propel the First Coast into the ranks of major port cities.

"It's a big deal," said Peter Leach, senior editor at the Journal of Commerce, where he writes about ocean transportation, ports and logistics. "Jacksonville looks to be positioning itself as a major contender on the East Coast."

The numbers themselves are somewhat staggering: The terminal will encompass 170 acres, cost $360 million, handle up to 1 million containers a year and generate 6,000 jobs - all slightly more than the long-anticipated Mitsui terminal.

"From a container shipping perspective, this essentially triples our volume," said Ron Baker, chief financial officer of the port. "It triples the impact, triples the job growth. At the end of the day, it's just a win for the city."

Jacksonville has benefited from a confluence of events, particularly the expansion of the Panama Canal, congestion on the West Coast, rising surface-transportation prices and land crunches at other East Coast ports.

"Cargo has been growing faster to the East Coast than the West Coast," said Anne Marie Kappel, vice president of the World Shipping Council. "There's a need to add capacity system-wide."

Jacksonville was particularly attractive because of its proximity to the Panama Canal, which is under expansion. When that project is completed in 2015, more and larger ships will be able to transverse the canal, with Jacksonville being their first port of call once they get through.

That geographical proximity led to the strategic decision to set up shop in Jacksonville, Hanjin Shipping's chief executive officer, J.W. Park, said in a release announcing the deal.

The memorandum of understanding signed Thursday in Seoul, South Korea, represents only the first step in the process. Hanjin and the Port Authority have six months to hash out the details of the contract, but Baker said much of it should be similar to the deal with Mitsui, which he helped negotiate.

The hallmark of that deal was the way costs were shared, with the Port Authority being reimbursed for almost all of the money it lays out for construction of the Mitsui terminal, which should open at the end of 2008.

"The way people show they're interested in a long-term relationship with us is to make a long-term capital investment," Baker said.

One major hurdle is finding land for the 170-acre terminal, a process Baker said is under way. "We don't expect land to be a challenge when it comes to fish or cut bait."

And the deal will bring more announcements in its wake, said Jerry Mallot, executive director of the Cornerstone economic development program.

"We're on a roll. We're serious," Mallot said. "This is a very confirming type of decision, that Jacksonville is a major intermodal distribution point in the United States. We truly are becoming a major port."

That's why the next deals to be announced will probably be for customers of the steamship lines, those who own the goods being carried on the ships.

"We believe when you have large container growth, you need to have larger warehouse and distribution centers," Baker said. "That's part of the puzzle we need to refine and put a lot of energy and effort into."