The Port of Wilmington, Delaware is trying to pull off something unusual: the outsourcing of the entirety of port operations to a contractor under a long-term lease. Under the scheme, the contractor would be obligated to invest in port improvements and expansions.
The Port Authority commissioned a strategic master plan last year, and the outcome of that process suggested that a public-private partnership would be the best way for a small state like Delaware to fund port improvements. Delaware’s population is less than one-million.
“Out of the master plan process,” said John Haroldson, a port spokesperson, “came the direction to pursue a public-private partnership.” The Port Authority is a state-owned entity that currently depends on the state for funding.
The improvements and expansions to be undertaken by the contractor are focused on the potential for a new container terminal on land - the site of a former chemicals factory - the Port Authority acquired earlier this year.
Bids from potential port operators were submitted in August and are currently being reviewed. The port did not outline a detailed plan for how the public-private partnership would work but is relying on the bidders to come up with ideas. The process is supposed to be finished by the end of this year. The names of the bidders have not been made public.
A scheme to privatize container operations at the Port of Dar es Salaam, Tanzania, in the 1990s met with success, according to a 2013 report out of Mzumbe University. That study showed that congestion at the port has been eased, average ship dwell times have been shortened, and the number of ship calls and freight volumes handled at the harbor have increased. The move also spurred the growth of inland container deports.
In a somewhat different situation, the Virginia Port Authority (VPA) put the kibosh on a privatization scheme in 2013. In that case, the Netherlands-based APM Terminals made an unsolicited bid to take over management of Norfolk International Terminals from the port’s operating arm Virginia International Terminals (VIT), a state-owned instrumentality. A politically appointed board considered the offer for several months before asking for others.
JP Morgan Chase, the private equity organization Carlyle Group and the real-estate investment arm of Deutsche Bank all responded and VIT offered its own bid. The board eventually voted unanimously to reject all of the privatization offers. Despite being Republican-led, the board was reportedly concerned about the loss of jobs under privatization, even though it also promised the infusion of private capital to improve terminal infrastructure.
At the Port of Wilmington, Delaware, they are hoping for the best.
“We are looking at some potential major changes in the way we operate if this works out,” said Haroldson.
“If it does work out, it will be better for everyone. It will bring in investment to Delaware and it will create jobs.”