With $15 million in investments planned, here’s why Ceres is betting on Jacksonville

With $15 million in investments planned, here’s why Ceres is betting on Jacksonville (Courtesy of the Jacksonville Business Journal) — As the new owner of the 158-acre container terminal at Dames Point, Ceres Terminals will focus on cargo flowing into the Southeast, aiming to bring new carriers to the area. 

“There are many carriers that aren’t in the mainstream looking for alternative gateways,” Ceres Terminals CEO Craig Mygatt told the Business Journal earlier this month. “They’re going to be looking for opportunities, and we have an opportunity right here.”

In February, Tennessee-based Ceres Terminals bought the TraPac Jacksonville operation from Mitsui O.S.K. Lines Ltd and signed a 20-year lease with the Jacksonville Port Authority. 

The terminal was Jacksonville’s first major connection with Asian shipping lines when it opened its doors 13 years ago. More recently, though, Trapac scaled back service, saying volumes going through the terminal had fallen.

Under Ceres’ ownership, the terminal will start out mainly handling cargo from Europe, the Mediterranean and South America, attracting ships bearing goods for the Southeast region.

“It’s more about what destinations we are competing for,” Mygatt said. “We think Jacksonville is perfect for Orlando, Tampa. You can even get to Atlanta. You can cover a big population through Jacksonville, so we are competing for those markets.”

BUILDING ON HISTORY

Ceres has some 60 years of history in the industry, including providing stevedoring services — loading and unloading ships — at the South Carolina State Port Authority terminals in Charleston and the Georgia Port Authority terminals in Savannah. Since 2016, it has operated Jaxport’s Intermodal Container Transfer Facility, which handles cargo coming in and out of the port on rail.

The company’s expansion in Jacksonville comes as its parent company, Australia-based Macquarie Infrastructure and Real Assets, looks to ramp up investments in American industry, telling Reuters last year that it raised $6.9 billion for its latest fund.

Jaxport began negotiating with the Nashville-based company last summer. In February, Ceres announced the new agreement and said it would invest at least $15 million in infrastructure improvements to the property over the life of the lease.

The deal is one “that mirrored our strategic plan and spoke to our contingent of diversification,” Jaxport CEO Eric Green said. “(It’s a) partnership that will represent 20 years of positive growth and job creation for our community.”

The agreement guarantees the port $700,000 for the first two years, increasing by year five to a payment of $2.2 million and 10% of what Ceres earns before interest, tax, depreciation and amatorization. The guaranteed income helps the port in funding capital projects, Green said

“In tough times, and good times, the number is consistent,” Green said. “You can see the growth potential.”

That growth could come in part by attracting carriers that aren’t calling on Jacksonville now.

“We have relationships all through Asia and Europe. We know the carriers, through Macquarie, or ourselves directly. We have a lot of conversations going on right now,” Mygatt said.

SMOOTHING THE WAY

Attracting more carriers to the port will require making sure the cargo they’re carrying will flow smoothly through the area. As the logistics industry continues to deal with congestion, shippers are focused on how many days vessels will have to sit at anchor in ports across the world, Mygatt said.

While ports like Savannah and Long Beach in California have seen delays, Florida has sought to capitalize on that, with Gov. Ron DeSantis and port officials touting that the state’s ports were “open for business.”

That could be a winning strategy, said Andrea Patrucco, an assistant professor of supply chain management at Florida International University

“Florida was able to respond very well when the peak was up,” Patrucco said. “Florida ports are flexible. They were able to handle it very well. It makes me think there might be more companies that use Florida directly as their point of contact instead of Los Angeles.”

For Ceres, which works in ports across North America, making the local operation as efficient as it can be will be paramount.

“If it’s easier to move cargo through Savannah, that’s where the customers are going to go. Jacksonville has to compete,” Mygatt said. “You can’t just hope that people will come. You have to enable it and make it efficient.”  

Photo courtesy of Offshore Energy