[caption id="attachment_31643" align="alignleft" width="1000"] Gulftainer, a shipping company based out of the United Arab Emirates, plans to revitalize the Port of Wilmington.[/caption]

By Ken Mammarella
Special to Delaware Business Times

The Port of Wilmington's budget for the current fiscal year is $1.4 million earnings before interest, taxes, depreciation and amortization on revenue of $38.4 million, according to the Diamond State Port Corp., a corporate entity of the state that owns and operates the port.

Diamond State figures $15 million a year covers capital improvements and losses, said Jeffrey Bullock, secretary of state and chairman of Diamond State. A 2016 strategic plan concluded it had to spend $300 million in the next 20 years "just to keep pace with current customers and natural growth."

Why would a for-profit firm sign a preliminary agreement to lease the port for 50 years and promise to invest more than $580 million in the next nine years?

"The profit will come from business growth. What the port needs is investments in modernization," Peter Richards, CEO of Gulftainer, said in an interview. "We're coming to add value to the community, not just the port. There's a tremendous knock-down effect when it's revitalized."

Gulftainer, the world's largest privately owned port operator, serves 19 of the world's 20 biggest shipping lines and could offer package deals that include Wilmington, he added.

Gulftainer was established in 1976 and is based in the United Arab Emirates. It operates 15 ports and logistics facilities, in Brazil, Iraq, Lebanon, Saudi Arabia, the UAE and the U.S. In 2014, it signed a 35-year lease for the Canaveral Cargo Terminal in Florida, its only American facility. The introduction of new container and containerized cargo services at Canaveral contributed to an increase in cargo volume of more than 150 percent in 2017, according to Delaware officials.

In a meeting before Diamond State's board approved the preliminary agreement, Richards ended his presentation by addressing head-on innuendo about Gulftainer's corporate structure. "I object to people lying about us," he said. "I can't believe people can be so simple-minded to believe the trash out there." Gulftainer, he said, has been vetted after a nine-month screening by seven federal Cabinet departments and a dozen federal agencies. It is not, he insisted, involved in terrorism, dirty money or Russia.

In Wilmington, there's a lot to be done. The port dates to 1922, and some elements are original. Gulftainer is planning beyond the existing port. Of that $580 million, $410 million is going to a new container facility at the former DuPont Co. Edge Moor site, acquired in 2016 by Diamond State.

Expansion to Edge Moor will involve containerized shipping, which means it fits into the current Coastal Zoning Act. And the port will not serve liquefied natural gas.

Outside the deal, Gulftainer is talking to Harvey Hanna for warehouses and freight facilities in what Bullock called an inland port at the old GM Boxwood Road.

If the expansion goes strong - and there was talk about doubling some types of cargo in 10 years - there is expansion potential at the Pigeon Point and River's Edge sites nearby. The state will ensure that nearby infrastructure, such as I-495, will be able to handle the growth, Bullock said.

The deal must be approved by the state Legislature. According to the preliminary agreement, GT USA Wilmington LLC, a new Delaware subsidiary of Gulftainer, would:

"¢ Pay royalties to the state, based on cargo volume, starting at about $6 million annually and reaching an estimated $13 million by 2027.

"¢ Establish a training facility on the Edge Moor site for jobs in the ports and logistics industries, with a goal of training 1,000 workers each year. "Not just blue-collar training, but a full career into port logistics. My dream is taking this to the next level - a college campus," Richards said, adding that there's no college curriculum anywhere else in ports and logistics. "We're not angels. We're business people" who would benefit from having so many well-trained people so close.

"¢ Guarantee that the number of jobs held at the port by International Longshoremen's Association members would not fall below current levels. The union's two locals have a membership total of about 1,500, including the basic member unit plus casual workers, according to Diamond State. "It might not be the same job, but a better job" Richards said of workers' assignments in a more modernized era.

[caption id="attachment_31644" align="alignleft" width="1000"] Roughly 500 attendees came to hear about Gulftainer's commitments to job retention and creation.[/caption]

Diamond State figures the port in 2017 supported 2,951 direct jobs, plus 2,439 indirect and induced jobs. Various figures about job growth have been floated since the tentative deal was announced. "I'm cautious about the numbers," said Bullock, citing his training as an economist. "But whether it's 1,000 or 5,000, it will create an economic expansion. And if we don't do anything, we'll lose what we have."

"Technology is becoming a larger part of ports," said Dennis Rochford, president of a trade group called the Maritime Exchange for the Delaware River and Bay. "It's no different than other industries."

Technology can potentially save lots of money. "Ships only make money while they're at sea," Richards said. "The average ship here costs about $100,000 a day to run. If we can cut port time down from 24 hours to 12, think how much they'll save in a year" of weekly trips.

In that Diamond State board meeting, Richards talked about his 33 years in the industry, starting on the dock, and stressed that technology is necessary to become "the best of the ports on this river."

Responding to fears that technology will cut jobs, William B. Ashe Jr., vice president of the International Longshoremen's Association, said "it will not be an automated port. Everything will be monitored" by a person (admittedly using a tablet).

Several speakers hoped more jobs will improve the nearby community. "The best crime prevention is a job," said Ronald "Komiko" Harris, business agent for the ILA's clerks and checkers union.

Wilmington's 308-acre port handles 6.8 million tons of cargo from 400 ships a year. It has North America's largest on-dock cold storage complex and is the continent's largest banana port.

Rochford said the port needs to modernize to just keep competitive and secondarily to attract new businesses. Strong competition is not far upriver. Philadelphia's port is in the middle of a $300 million upgrade. The Paulsboro (New Jersey) Marine Terminal opened in 2017, funded largely through $175 million of South Jersey Port Corp. bonds issued in 2009, and that multi-port agency in November announced a sale of $255 million in bonds, for capital work and other items.

About 2,400 vessels were served on the Delaware in 2017, Rochford said, slightly above figures for ports to the south but only about half the count for the Port of New York and New Jersey.

Once a deal is finalized, Richards said his first order of business is to meet with all the stakeholders, including present customers (Dole and Chiquita are the biggest), shippers, land consigners, the labor force and local authorities. "By working together, it will be a win-win-win," he said.