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FMC approves Virginia/Savannah “Gateway” agreement

The Federal Maritime Commission permits wide-ranging agreement that includes ports discussing “optimizing service offerings to ocean carriers.”
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The US FMC has approved the “East Coast Port Gateway Terminal Agreement” between the Virginia Port Authority and the Georgia Port Authority. “Under the terms of the agreement, the port authorities will be able to discuss matters related to joint marketing; the acquisition, utilization, and best practices relating to operating systems and equipment; cargo handling practices and terminal operations; and optimizing service offerings to ocean carriers,” the FMC stated.

The last part of the agreement is particularly important as carries look to deploy more neo-Panamax vessels to the USEC and, in some cases, even larger ships on Suez routes. The depth in the channel to the GPA’s Garden City Terminal in Savannah is currently 42ft. Dredging work to increase the depth to 47ft is now 55% complete, but the GPA needs to manage the depth constraint in the meantime - it earlier announced it expects to handle a 13,000 TEU vessel in May. 

“Optmising service offerings” to carriers would appear to pave the way for both ports to work with carriers on vessel rotations that best manage Savannah’s current draft limitation. The FMC was clear, however, that “This agreement does not permit the two port authorities to jointly negotiate, set, and approve terminal rates or charges”.

On the operational side, jointly developing best practices relating to operating systems and equipment is certainly an area where the ports could benefit. Both use the same TOS supplier (Navis), though GPA has not yet migrated from SPARCS to N4 (which Virginia has completed). Both ports are also among the largest operators of Konecranes equipment anywhere in the world. Virtually all the STS and RTG cranes at Savannah have been supplied by Koneccranes, and when its VIG and NIT expansions are complete Virginia will have over 100 ASCs from the Finnish supplier. 

In their joint announcement the port authorities mentioned that the agreement does not cover discussions “regarding purchase or lease prices for containers or chassis”. This is more likely explained by the FMC trying to show consistency with its recent decision to reject the Port of New York/New Jersey Equipment Optimization Discussion Agreement for “failing to meet the clear and definite disclosure standard required by law”. 

The FMC decision was welcomed by the port leaders. “Our industry is changing rapidly and as a result increased collaboration between ports is necessary to provide the service excellence our customers expect and deserve,” said Griff Lynch, GPA's executive director. “It is clear that both Georgia and Virginia are East Coast gateway ports and this step further allows us to create jobs, economic development and improve safety. I would like to thank our respective employees and partners in the ILA as we move forward together.” 

“The agreement enables Georgia and Virginia to work together to find ways to become more efficient and effective, which will benefit the citizens of our respective states, as well as shippers and the carriers,” VPA CEO and Executive Director John Reinhart. “We are making significant investments at our respective ports to handle the larger vessels and cargo volumes coming to the East Coast. Now we will begin discussing about how to best leverage these assets, collectively and position Georgia and Virginia as the East Coast’s primary cargo gateways.” 

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