Shippers: What recession?

Jacksonville Business Journal - by Mark Szakonyi Staff Writer

JACKSONVILLE — The Port of Jacksonville’s newest terminal operator and another operator expected to open shop in 2012 are making bold moves to expand internationally and ready themselves for a pick-up in trade.

Hanjin Shipping Co. Ltd.’s unveiling of a remotely automated port in Busan, South Korea, and its plan to build three new terminals, including a $208 million terminal at Dames Point, reflect the company’s aggressive mentality in spite of the recession, said Roy Schleicher, senior director of trade development and global marketing for the Jacksonville Port Authority. That and Mitsui O.S.K. Lines Ltd.’s own plans for expansion show confidence in the industry’s upturn and cements their current and future operations in Jacksonville.

Hanjin’s “attitude is, ‘We’d be foolish not to push things forward and get things done,’ ” Schleicher said. “We thought they might want to slow things down, but instead they want to push forward faster.”

Hanjin’s revenue has fared better than Mitsui O.S.K Lines Ltd.’s, with nearly

30 percent growth to about $8 billion in fiscal year 2008, compared with the same period a year ago. Despite a drop in cargo volume, the sixth-largest shipping company’s profits grew by more than 60 percent to about $198 million within the same period.

But the international slump caught up with the company in the first quarter of 2009, when it reported a $191 million net loss, according to the Journal of Commerce. In response, the company pushed back some of its orders for ships.

Mitsui, which is the 15th-largest international shipping company, posted a $1.3 billion profit in fiscal 2008, down nearly 32 percent. It blamed the decline in profits on the international trade slump, high fuel prices and a strong yen. The company’s revenue declined by about 4.1 percent to $18.6 billion.

Hanjin is opening a terminal in Spain in 2010 and another in Vietnam with Mitsui in 2011. With the opening of its terminal in Jacksonville in 2012, Hanjin will have five terminals in South Korea and eight abroad.

Hanjin plans to expand its vessel capacity from about 375,000 twenty-foot equivalent units, or TEUs, to about 575,000 TEUs within the next few years, said William Rooney, managing director of the company’s American headquarters.

Similarly, Mitsui, the parent company of the Dames Point terminal operator TraPac Inc., is looking to spend millions of dollars to buy an overseas bulk shipping line. The slump has lowered the valuation of potential acquisitions.

The Japanese company plans to increase its fleet of bulk carriers, tankers and car carriers by 6.5 percent to 740 ships by the end of this fiscal year. Mitsui plans also to open a new terminal in Rotterdam, Netherlands, in late 2013.

In Jacksonville, the company has added three services, bringing two weekly services that open Jacksonville to new Asian markets and strengthening European container service. Mitsui’s service calls on Busan and there will likely be an increase in trade between Jacksonville and South Korea when Hanjin begins service, Schleicher said. South Korea is a large exporter of consumer electronics and a strong importer of consumer goods, lumber and citrus.

Schleicher said he was impressed with Hanjin’s technological capability after attending the opening of its Busan terminal May 21 with Rick Ferrin, the authority’s executive director. The terminal gives a glimpse of how the remotely automated terminal planned in Jacksonville will operate.

“I’ve never seen a terminal business as sophisticated as this one,” Schleicher said.

The Busan terminal can handle up to 2 million TEUs annually, compared with the planned Jacksonville terminal that can handle about 800,000 TEUs annually.

The Jacksonville terminal will be similar in that it will also use rail-mounted gantry cranes to transport containers between the yard and the ship, Rooney said. The crane travels on rails and is controlled remotely by an operator.

The terminal at Dames Point will have 12 to 15 rail-mounted gantry cranes. One operator can handle about three cranes at a time. Rooney said that the containers will be kept in a yard with sensors that will shut it down if they detect human motion.

He said the company hadn’t decided the exact productivity rate Hanjin expects from the Jacksonville terminal, but it aimed for world-class productivity levels, which is about 40 container moves per hour per crane, Rooney said.

Hanjin is expected to meet with the International Longshoremen’s Association’s Local 1593 and 1408 in June or July. Jess Babich, president of ILA Clerks & Checkers Local 1593, said his union and ILA Local 1408 are negotiating with the company on positions that Hanjin wants its employees to handle but the union says it can handle instead.

The union’s two gangs averaged about 33 moves per hour per crane when they unloaded a ship at the TraPac terminal May 23. That is one move away from the company’s goal, which needs to be met before TraPac will allow the union to expand its gangs, Babich said.

TraPac was not available to confirm the rate of moves. The agreement between TraPac and the union comes after the terminal operator threatened to leave if productivity didn’t improve. | 265-2239