January 14, 2020
(Courtesy: Jacksonville Business Journal)
Eric Green has been CEO at Jaxport for just over 2 years. Since then, the port has undergone some new endeavors, including harbor deepening, terminal improvements and opening new markets for Jacksonville. Jaxport saw its fourth consecutive record year for cargo sales in 2019. The port moved more than 1.338 million twenty foot-equivalent units, a 5 percent increase from 2019.
Despite the rapid growth, the port still faces challenges, including availability of land for the ports growing auto imports and moving tenants around so that they can take advantage of the deeper water.
What has contributed to Jaxport’s sustained growth?
One of the things that we tout is the diversification of our business. What I mean by that is we sort of play in all the commodity markets; autos, containers, cruise, break-bulk. We have been told by rating agencies that we are probably the most diversified port in the country, along with Houston. So, if there’s ever a recession or a commodity gets hit in some form or fashion, we don’t suffer a major blow because we’re spread out so much. We’re not concentrated so heavily in one particular area. When I started, one of the things that I thought was important for the port was to have long term contracts with minimum annual guarantees. What that means is, regardless of what the contracts say, you still have to pay us a minimum baseline every year. So, we’re enjoying contracts of 20 to 25 years with renewal options of five years. Essentially, a minimum of about 25 years on our contracts, our tenants they like it, because they get to build they business model and we like it because we get to look at our financial trajectory over a period of time. The other is obviously to increase in the Asian container market. Back in 2008, we were not in the Asia market. Now, it’s 2019 and we are at half a million containers. That’s pretty impressive. And the growth of our Puerto Rican carriers, they are not just serving Puerto Rico, they are also serving the Caribbean and Latin America markets. And of course, the start of the harbor deepening project. That signals that we are in the major leagues on the East Coast and people are chomping at the bit to get here and have some foot print at the port.
When you look at the Port, one of the things that the board has challenged me with is – how creative can you get with the current land that you have? Land is obviously important to any port because that’s not something that you can just create. Either you have it or you have to acquire it. As we sit today, we have enough land and capacity to fulfill our current economic impact study. To get beyond that, we are going to need more land. Our goal is to get beyond what our economic impacts study is saying, which is roughly about 2.2 to 2.3 million containers a year, is what we would be moving. We’re moving about 1.3 to 1.4 as we currently speak. Land becomes a premium commodity for us that we need, not for our projected growth, but beyond that.
Are you concerned about a lack of land now?
No but it’s always good to have. I’m not concerned about a lack of land now because we have the ability to diversify. We signed two long term agreements with Amports, our auto processor, which would give us the ability for probably another 200,000 moves on automobiles. We are talking and negotiating with some private land owners in references to acquiring more land, which I can’t disclose, because in the middle of negotiations. But if we have it, we will fill it.
How is harbor deepening going?
So first I want to thank our partners in that endeavor; the governor, Florida Department of Transportation and the federal government, the city and SSA. Everybody’s stepped up and participated at a very high level and seeing the success of this getting done. This is an authorized 13 miles project. We built the financial model for 11 miles. As we sit today, we’re ahead of schedule to complete the 11 miles project in 2023. It was originally estimated to be done in 2025. That is if all funding continues to flow as it’s been flowing, we will complete the 11-mile project ahead of schedule and the additional two miles, we’re reviewing for future financial participation to see which way we want to go. It’s under review. So, the last contract of the 11-mile project, which is Contract C, will start in the fourth quarter of 2020.
What has led to the increase in military cargo?
Well, we enjoy a great relationship with the military. We were considered one of 17 ports of national significance for military cargo. I think our efficiency and ease of doing business is one of the reasons. We have great access to two major interstates I-95 and I-75, just up the road. We have to class A railroads, CSX and Norfolk Southern and FEC rail lines that has the ability to service the entire state of Florida. Ease of doing business, interstate access as well as a great rail, rail connectivity and our relationship with the military is just phenomenal. So I think that accounts for the growth that you see on the military side.
How is the moving of tenants going?
It’s going very well. I think it’s safe to say that you probably will not see any tenants, as far as trying to access deep water, being shuffled around or anything of that nature. I think we’re in good position today and its really less about the optimization of space and more about ensuring that each terminal reaches its greatest potential, that’s really what it’s about. You don’t want to have cars sitting where a deep-water terminal is. You want to make sure they all fit, like a puzzle. So that has been one of our goals and I think we will accomplish that very well.
Are you concerned about international trade flows?
No. If you’re talking about the China market because that’s really what’s on the table, right? If we were hit on every commodity from China, it would be 8 percent of our revenue. That’s really sort of a prick. To other ports, it would be damaging because it will be much higher. And what we’re beginning to see on the international market is people are diverting to Vietnam, Thailand, they’re going other place where those tariffs won’t be imposed. And it’s a gradual shift. But I think we’re in a pretty good position. I’m not too concerned about that at all.
Are you concerned about Savannah deepening their harbor faster?
Jaxport is not trying to be a Savannah. We’re trying to be the best niche port on the East Coast. What that means is to fulfill what our economic impact study says. And that sweet spot of 2.2 to 2.3 million container. So, whether or not Savannah is deepening faster, it depends on who’s writing that story. We can that if all things being equals, we’ll both finish at the same time. What I mean by all things being equal is; if the funding continues to flow, the way the funding has been flowing and there are no major hiccups, then it’ll be okay. But the most important thing is and what people need to understand is Jaxport is deepening and we’re deepening to the same depth.
Are you looking to sign a deal with WWS, similar to Amports?
Yes, we are currently in the middle of negotiating with WWS, as we speak.
Will they be moving off Blount Island?
I think WWS will stay where they are. WWS would like to grow in Jacksonville and hence lies the whole conversation about land. You don’t want to put autos where you can work containers because containers you can enjoy more revenue. There’s an upside to containers. So, it’s really about making sure that we have the appropriate land that will to accommodate our auto customers. We have three great auto customers here, you’ve got Amports, WWS and Southeast Toyota and we enjoy a great relationship with all three.
What does the future of TraPac look like?
I think the future of TraPac is bright. We consistently and constantly have meetings and conversations with them. We’re talking to them today as we speak, we talk with them on the regular about the possibility of taking the dredge project down to TraPac. So, our relationship with them couldn’t be any stronger and our communications with them are frequent.