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First Foothold In US

Friday, 25 October 2019 | 16:00

PSA International, has secured its first terminal facility in the US, with Penn Terminals on the Delaware River. AJ Keyes looks at what this means to the Singapore-based company.

Singapore-based PSA Corp. is one of the leading container terminal operators worldwide. It has a network of over 50 coastal, rail and inland terminals in 18 countries. In 2018 the company handled an estimated 81 million TEU globally, an increase of 9.1% over 2017, with the PSA Singapore terminals contributing 36.3 million TEU and the operations outside Singapore collectively providing almost 44.7 million TEU.

Despite the global footprint, it is only in 2019 that the company finally secured marine assets in North America. In August, approval was gained for the purchase of Halterm at the
Port of Halifax, Canada and now regulatory authorities in the US have approved the purchase of Penn Terminals on the Delaware River.

The acquisition of Penn Terminals and Halterm were from Australian investment fund Macquarie Infrastructure and Real Assets (MIRA) has been approved by the necessary regulatory authorities in the US, although the global operator has also recently bought into the large-scale inland port facility, Ashcroft Terminal, in British Columbia, Canada.

Tan Chong Meng, Group CEO of PSA International, has already been quoted in various trade publications and news sources confirming that the Penn Terminals acquisition
represented “PSA’s very first foray into the US” before adding that he expected, “continued growth and expansion.”

Located on the Delaware River, Penn Terminals is a “well-equipped multi-purpose marine facility,” according to PSA. It comprises a 32ha site and currently handles around 200,000 TEU per annum, with an annual container capacity of 425,000 TEU.

Clearly, this means estimated utilisation is under 50%, so room to grow volumes will fall to major shipping line customers, Seaboard Marine, Independent Container Line (ICL) and Crowley, although the facility has generated double-digit growth annually over the past five years.

In addition, 200,000 tonnes of breakbulk cargo a year is handled, with facilities served by intermodal operators Norfolk Southern and CSX. Recent investment at Penn Terminals has been undertaken to increase capacity and operating efficiencies, with the addition of two new Post-Panamax cranes bringing the total available to four.

Aside from gaining its first terminal operation in the US, the appeal of Penn Terminals is its location and ability to serve the localised specialist markets.

The geographic positioning on the Delaware River offers access to the surrounding logistics clusters that focus on perishable supply chains. With 2.85 million ft3 (80,400m3) of
on-dock reefer warehouse space, Penn Terminals can play an important role in helping to service the estimated 40% of US fruit imports, an estimated 4 million tonnes per annum, that enter the country in the competitive Philadelphia area.

PSA endorsed the potential by confirming that there are more than 40 refrigerated warehousing and logistics operators supporting the chilled and frozen foodstuffs industries “within 1 hour’s drive” from the Delaware Port complex it now operates.

It does mean that the main competitors for cargo are Packer Avenue Marine Terminal, which is the largest container handling facility on the Delaware River and the Port of Wilmington (DE), which now has Gulfport as the new concession holder.

The one key differentiator of Penn Terminals, according to Dean Davison, Technical Director at WSP’s Maritime Advisory group, when compared to the regional competition is its status as an independent terminal, not part of the ILA labour arrangements that are dominant on the East Coast.

“Penn Terminals can operate in a niche in the broader regional market due to its potentially lower cost structure than other ILA terminals. We believe that it could ultimately see savings of more than 20%,” he said, although a word of clarity was also provided.

“Not being part of the ILA union means that the number of liner customers is reduced. This is important because while it means that the terminal’s shipping line customers are unable to call to ILA terminals, it also precludes those carriers who use ILA terminals also then calling to Penn,” Davison added.
Source: Port Strategy

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