America sees the private benefit
Galveston is the latest in a string of US ports to consider a public-private partnership. Credit - Nsaum75
The public-private partnership model has become more attractive in the US in recent years.
"For pension funds and other investors looking for long-term revenues, the commercial seaport terminal market is attractive.”
States such as California, Washington and New York have a tradition of private terminals with public port authorities acting as landlords, says Mr Bingham.
“Traditionally the private terminal operating companies in those states were associated with steamship lines or stevedores. In more recent years, the financial investment organisations have entered the market in partnership with terminal operating companies to provide capital and earn returns from the port sector.
“The private sector US terminal operating companies themselves have been around a long time, just not in all major seaport states. With the increasing financial challenges faced by governments around the country, public private partnerships are seen by the public as a approach that can work to improve public finances and attract new capital to infrastructure purposes.
“In states that long had the major commercial seaports operated by public port agencies they are frequently now turning towards private operators,” says Mr Bingham. “For the public, the concession payments by the private sector can bring substantial needed revenues immediately, in exchange for giving up some of the future revenue associated with continued or expanded port operations. The pace of adoption of public private partnerships (or the continuation of long-held landlord port authority practices) depends in part on individual state laws, and therefore politics, with some governors and state legislatures moving faster than others.”
A clear trend is evident, he says, “with the US following the global trend towards increasing public private partnerships for ports, with foreign port operators (except DP World who the US chased away five years ago) increasingly holding the leases and providing investment capital for US ports."
Portland, Oregon is one of the most recent deals, giving a 25 year lease to International Container Terminal Services Inc.
ICTSI paid $8m, coupled with annual lease payments of $4.5m. Payments to the port will increase as container volumes increase.
Galveston, Texas is discussing a 50/50 joint venture with The Carlyle Group and Hutchison, which want a 75-year master lease that would involve the development of a 100-acre terminal; a 20-acre ro-ro terminal and port land on Pelican Island.
The port would get $60m in debt paid off; 10 years of capital expenditures; annual expense payments and a share of profits from both cruise and freight revenues.
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