‘Land is plentiful’ for APM Terminals Mobile seaport growth

APM Terminals Mobile wants more companies to see what Alabama’s Gulf Coast has to offer.

It said several major corporations — from Airbus to Amazon, BendPak to Bombardier, Honda to Hyundai — already use the Port of Mobile as a global logistics hub. 

Brian Harold, APM Terminals Mobile’s managing director, said the region has it all — “available land near the port to grow manufacturing and DCs, five Class I railroads for inland supply chains, three interstate highways and a cargo airport near the port for sea-air and e-commerce needs.”

APM Terminals Mobile said its ambition is to grow from the 419,000 twenty-foot equivalent units (TEUs) it handled in 2018 to 1.5 million TEUs. 

“The infrastructure is ready, with an expanding truck gate in 2020 to handle growing container volumes. This comes on the heels of the container berth expansion in March 2020 and a November 2019 container yard expansion,” APM Terminals Mobile said. 

Most U.S. port tenants share ties with large transportation companies and infrastructure investors, according to a Moody’s report released last week on financial viability during the coronavirus. APM Terminals, part of A.P. Møller – Maersk, operates at 74 terminals globally. Its key U.S. locations in addition to Mobile are Los Angeles, Miami and New York.

Moody’s noted that unlike airports or toll roads, U.S. ports primarily engage with and receive revenue from third-party operators rather than from the principal users of the facility. 

“U.S. port tenants are facing significant declines in throughput and cash flow as a result of the coronavirus, challenging their ability to meet volume guarantees to the port authorities at which they operate,” Moody’s said. “However, we expect most tenants will endeavor to preserve their lease agreements and meet their contractual obligations to landlord ports, particularly where there is an expectation that cargo and cruise demand will return to pre-crisis levels.”

Moody’s said performance in past economic cycles has shown long-term port tenants are resilient.

“Tenants have generally remained at ports and performed under their lease obligations in past economic cycles. The main container, cruise and general cargo tenants at most of our rated ports have decades-long tenures and a number have recently extended their leases. A reluctance to forfeit port capacity combined with an expectation of healthy long-term demand will limit turnover.”

Similar to the container shipping industry, terminal operating companies have undergone significant consolidation over the past 20 years, according to Drewry, which estimated seven terminal operating companies, including APM Terminals, accounted for 40% of global throughput in 2018. 

While the number of operators has decreased, the size of container ships has increased. COSCO and the 2M Alliance of Maersk and MSC have announced that they are upsizing the vessels that call Mobile. 

To fuel economic expansion, the Alabama Renewal Act allows companies with more than 75 employees to get up to $3 million in tax deferral credits, according to APM Terminals Mobile, which said other business incentives include tax credits for cargo owners on incremental cargo volumes.

“Land is plentiful and open for investment with two logistics parks currently in operation and more to come. Foreign trade zone status in many designated locations near the port and business parks also increase the attractiveness of businesses looking for a new distribution center or manufacturing site,” it said. 

California-based BendPak, which manufactures and sells automotive lifts used in car dealerships and parking garages, recently opened a 100,000-square-foot distribution center 11 miles from APM Terminals Mobile and is able to deliver same-day or next-day products to more customers in the eastern half of the United States.

“This new distribution center will enhance our ability to get our customers what they need when they need it,” said Jeff Kritzer, BendPak’s executive vice president. “Today’s consumer expects immediate delivery and we’re focused on helping that become a reality.”

Jimmy Lyons, director emeritus of the Alabama State Port Authority, said upon BendPak’s opening in June, “The economic outlook is stressed and uncertain. BendPak investing in Mobile shows economic confidence is out there and the public gets some good economic news.”

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Click for more FreightWaves/American Shipper articles by Kim Link-Wills.