Letter to the Editor of the American Journal of Transportation
January 7, 2013
To the Editor of the American Journal of Transportation,
It’s the middle of the night and there’s a guy at my front door. He wants to buy my house and he’s offering a lot of money.
He says all the right things and I’m tempted to say yes. But how can I?
I haven’t even considered what it’s worth – today or in the future. And I have to wonder: Why does this guy want to buy my house so badly that he’s at my door in the dead of night?
He must know something I don’t. So I tell him I’ll wait until the light of day and consider what I should do with my house.
Turns out, there’s a couple of “guys” knocking at the Commonwealth of Virginia’s door right now.
They’re private companies, and they want the Commonwealth to turn over control of our port, the state’s most important asset, for the next 50 years.
They’re both offering about $4 billion. That sure sounds like a lot of money for a state that could really use it.
But is it? How do we know? How much are our ports worth? And why their sudden interest anyway? Do they know something we don’t?
As Virginia considers handing over control of its port to a private company, the Coalition for Virginia’s Port is urging caution and careful consideration.
We owe it not only to taxpayers, but to port customers and businesses that depend on the port, and the people whose livelihoods are connected to the port.
Make no mistake. We are not a coalition of “No” on this issue.
We are a coalition of “Why?”
• Why should we relinquish control of our future?
The decision to halt manufacturing Ford trucks in Hampton Roads was made in Michigan. Defense cuts are made in Washington. This region has lost business in the past because of factors out of our control. Now the Commonwealth is considering a move to surrender control of one of our most vital economic engines. A decision that we will have to live with for the next five decades. Why now? And, why on their terms?
• Why should we allow a company with a conflict of interest to run the Port?
Both of the unsolicited private proposals on the table are from companies with existing potential conflicts of interest that endanger the competitive nature of our operation. Whether it takes the form of preferential treatment to an affiliated company or diversion of cargo to another port, the likelihood of a reduction in Virginia port volume or competitiveness exists if one of these deals moves forward.
• Why should we risk losing the relationships we have built?
The majority of the Port’s customer base, including steamship lines, freight forwarders, and trucking companies, have come out in support of the existing management model. Relinquishing control of the Port to a private owned company, with its own priorities and interests, risks alienating customers who can simply take their business elsewhere.
• Why are these unsolicited proposals better? Standard & Poor's Ratings Services has just affirmed its 'A+' long-term rating on the Virginia Port Authority's facilities revenue bonds. S&P cites growth, a good competitive position, strong historical debt service, and the Heartland Corridor as points in the Port’s favor. The Port just concluded the second best year in its history in terms of volume. VIT is paying its bills, has aggressively reduced operating costs and is running full steam ahead. There is nothing to indicate a new operating structure will be a better one.
• Why are we rushing?
Before we even begin to consider these unsolicited bids, we have to know the actual value of the Port. Is it $4 billion? Or is it $10 or more billion? We know the Port of Virginia is well positioned for larger container ships set to come through the expanded Panama Canal. And, we know that we are also well positioned to handle shipping from the evolving manufacturing trends in South and Southeast Asia. Add to this our superior offshore depth and it becomes extremely difficult to know what this “house” is worth.
• Why are we willing to let the bidders make the rules?
The Commonwealth is allowing the bidders to set the price and determine the level and list of services they are willing to provide. And one of the bidders, A.P. Moller-Maersk Group, holds the right to veto any deal that would involve a change of management at its terminal in Portsmouth. It’s as if the state is ready to go all-in without even looking at its cards.
If we are seriously considering restructuring the management of the Port of Virginia, we need to take a serious look at the short-term and long-term implications involved.
If we want to invite bidders to submit offers to run the Port, then let’s get some qualified experts to do the analysis to tell us what the Port’s operations are worth, decide on a framework and terms most beneficial to Virginia, and solicit proposals from bidders without competing interests.
Until then, let’s be thankful that we have an asset that others find attractive and enjoy the fruits of living with it until we decide if and when we want to turn it over to someone else.
Just because people have come knocking on the door, it doesn’t mean we have to sell.
Coalition for Virginia’s Port