A company is seeking a partnership with the state of Delaware to invest $580 million in the state's shipping economy.
International port operator Gulftainer wants to invest $574 million to retool the existing Port of Wilmington and build a new container terminal on the Delaware River at Edgemoor, Peter Richards, CEO of the company, said in an interview.
Secretary of State Jeffrey Bullock said an agreement for the company to take over the existing Port of Wilmington could double the estimated 5,700 port-related jobs in Delaware. The past decade has seen Delaware hemorrhage blue-collar jobs and state officials see Gulftainer's proposal as a relief.
"This is a really big deal," Governor John Carney said.
Gulftainer is based in the United Arab Emirates and operates 15 ports around the world. The company opened its first terminal in the U.S. in southern Florida in 2015 and is a subsidiary of Crescent Enterprises, a privately held conglomerate.
"We see Wilmington and the Delaware River as the future and a major gateway import and export to the east coast of the United States," Richards said.
Under the terms of the pending 50-year agreement, the company will take over operations at the Port of Wilmington at the confluence of the Christina and Delaware rivers. The port is currently operated by the semi-public Diamond State Port Corp.
The deal also calls for development of a new container facility on state-owned land that was home to DuPont Co.'s Edge Moor chemical production facility – and 200 jobs – before it was shuttered in 2015.
Construction of a new container terminal on that property is to begin by 2022. Richards said his company will invest some $400 million in the facility. The state bought the 114-acre property from Chemours for $10 million in 2016.
Preliminary plans call for a 2,000-foot berth built on the Delaware River to be serviced by eight of the largest cranes on the river, Richards said. The terminal will be able to unload larger ships than the existing port which is on the shallower Christina River.
Richards said Gulftainer also seeks to invest millions in the existing Port of Wilmington.
Currently, the state spends about $15 million a year subsidizing operating losses and capital expenses at the facility, which needs more than $100 million in investment to stay competitive in the coming decades, according to a study commissioned by the port's operating board.
Richards said his company will be able to make the necessary investments to satisfy the port's current major customers, which primarily import fresh fruit and juice from Central and South America.
Those customers, Dole and Chiquita primarily, are moving toward greater reliance on containerized shipping, which is a third of the port's current tonnage.
The proposed agreement between Gulftainer and the state calls for $73 million in investment in the existing port through the next decade. Richards said the investment will allow the facility more efficiently handle containers.
"We can't afford to sit still (at the current facility)," Richards said. "It is losing money and the investment has not been there to do the modernization it needs."
Richards said his company has spoken to the port's major customers and in response is planning to spend $85 million to build a cold storage distribution and fumigation center on the Edgemoor property.
The agreement sets benchmarks for traffic growth in and out of Delaware. The port now moves about 375,000 TEUs – or the equivalent of 200,000 20-foot-long shipping containers – each year. The goal is to double that in 10 years, Bullock said.
Such growth would see Wilmington surpass the current 500,000 TEU annual container traffic at the Port of Philadelphia about two hours upriver. Investments in that facility have targeted doubling its container traffic in the same period.
The agreement calls for a 75 percent increase in traffic for non-containerized goods like liquids and automobiles.
Dennis Rochford, president of the Maritime Exchange for the Delaware River and Bay, said Pennsylvania and New Jersey have committed hundreds of millions of dollars in Delaware River ports.
This is largely being driven by the dredging of the Delaware River as well as aging infrastructure on the river's ports. He said it is necessary to protect business from going to larger East Coast ports.
Richards said his company has business agreements with 19 of the top 20 shipping lines in the world. He said leveraging that will grow the local business and he sees "huge potential" for food exports to Europe and West Africa.
"We are already working their vessels and working their customers at our facilities around the globe," Richards said. "That gives me a tremendous marketing advantage."
Under the proposed partnership, the state would become more of a landlord, initially receiving annual payments from Gulftainer of $6 million, according to Secretary of State Jeffrey Bullock. The state would also receive royalties based on the quantity of goods moving through the port.
Bullock and Richards said there is no expectation for the state to aid in the planned capital investments. As a matter of policy, Carney said it is important for the state to get largely out of the port business.
"The state has been subsidizing the port since we have been the owner," Carney said. "This agreement enables the state to get out of the business of subsidizing the port. That is the business model up an down the river."
Richards said such a long-term partnership would also see his company play some role in the establishment of a maritime technology training college in Delaware.
"We are giving our lives to this," he said.
Some members of the General Assembly have expressed skepticism about how the company will deal with the local union labor. The agreement stipulates that the company must keep unionized labor at its facilities at least at its current level, Bullock said.
The state was in a similar position with a proposed agreement to turn the port over to Kinder Morgan in 2013 only to have the deal scuttled after pressure from local labor. International Longshoremen's Union Local 1694 President William Ashe indicated this situation is different.
"We are happy with the proposal and everything that is in it," Ashe said. "If we don't do something, we are going to lose what we have."
Gulftainer was chosen after the state solicited requests for proposals. Bullock said the state received about 10 proposals and winnowed the choices down with the help of a selection committee comprised of members of the port's operating board.
The proposed agreement will be debated at the April 6 meeting of the port's governing board. Bullock said he expects legislators to debate the agreement in the weeks after.
State Sen. Harris McDowell, D-Wilmington, said he was briefed by Richards on the proposal briefly last week. He said he was optimistic about the potential but said there needs to be a thorough process once the agreement is put to the General Assembly.
He said he needs to see more detail on how the company will drive growth, protect union labor and specifics on how the deal is structured.
"We will have to rely on the expertise of those who put the deal together if we can't develop our own sources of expertise," McDowell said. "I think we have a deeper responsibility than that."
Rich Heffron, president of the Delaware State Chamber of Commerce, said Delaware is playing catch up with ports upriver but called Gulftainer's interest "positive."
"If you are going to bring in more ships and bring in more cargo you are going to bring in more jobs," Heffron said.