ABOVE Mobile’s port sprawls behind Director Jimmy Lyons. Port officials hope a new RO/RO terminal being built by two South American firms will finally attract automotive shipping to the Port City. Photo by Mike Kittrell
The planned $60 million roll-on/roll-off facility in Mobile represents a major diversification for the nation’s 10th largest seaport by volume. But Jimmy Lyons, director of the Alabama State Port Authority, says it’s too soon to project which automakers will use it.
“Nobody will really talk to you until you have the facility built, so nobody’s going to guarantee that they will ship through us until they can see what we’ve got and what we’ve got coming through here, ” Lyons says.
Two of the big players in the RO/RO business, however, are optimistic enough to take on the project, called AutoMobile International Terminal.
Terminal Zarate of Argentina built the first vehicle terminal in Latin America in Buenos Aires in 1996. The RO/RO facility handled 625, 000 vehicles in 2017. The company is owned mostly by Grupo Murchison, which Lyons describes as primarily “stevedores and terminal operators with multiple locations in Argentina and one in Uruguay.”
SAAM Puertos SA is a subsidiary of the Chilean multinational company Sociedad Matriz SAAM SA. It operates 11 ports in Chile, Mexico, the United States, Colombia, Ecuador and Costa Rica.
“They will get a long-term concession to operate the facility, ” Lyons says of the two companies. “This doesn’t necessarily have anything to do with trade between Chile and Argentina. Our trade could be with Asia, with Europe, with Mexico.”
The Port Authority has been working on the project for about a year and a half. It put out requests for proposals for the RO/RO terminal and received two, with the second proposal from two stevedoring companies that operate in Mobile, Lyons says. “It wasn’t nearly as attractive.”
Grants were crucial to putting the deal together as well. The Port Authority was awarded a $12.7 million TIGER grant (Transportation Infrastructure Generating Economic Recovery) and a $28.8 million grant from the Alabama Gulf Coast Recovery Council under the Restore Act resulting from the 2010 BP oil spill.
Lyons says the deal for the new facility will work much like a lease at the Port’s container terminal, which is run by APM Terminals, he says. The Port Authority gets a flat amount of money per month plus a fee for each unit that moves through the RO/RO terminal. The South American partners will charge the ships and rail cars using the terminal for loading and unloading.
The site of the terminal is the 57-acre former Bulk Material Handling Plant on the far northern end of the docks. It once handled coal, iron ore and other materials, and was owned and operated by the Port Authority. It was shut down three times, Lyons says, the last time about three years ago. At that time it was handling coal destined for Mississippi Power in Biloxi, but Mississippi Power shut down its coal-fired units, Lyons says.
The Port Authority will demolish the old plant, probably beginning in the middle of this year. Construction on the new terminal should begin the fourth quarter and take about a year, so the terminal won’t be ready until 2019. Lyons says most of the property will be paved over for parking for hundreds of cars at a time.
The terminal also will be able to handle tractor trailers, utility trucks, farm tractors, construction equipment, heavy machinery and roll trailers. The port currently handles windmill parts destined for a facility in Pensacola that come in on roll trailers, but the only available parking lot is gravel and new car makers won’t accept a gravel lot, Lyons says.
How much Alabama auto manufacturing will benefit depends on who is exporting and which ships agree to use the Port of Mobile, he says. Mercedes, for example, exports a significant number of vehicles. The cost benefit to the ships also depends on the number of vehicles per ship. “A ship is not going to come in here to pick up five automobiles.”
The chief RO/RO terminal competition is to the east.
“The two big auto ports that are in this region are in Brunswick, Georgia, and Jacksonville, Florida, ” Lyon says. “They both have very large auto handling facilities and they’ve been in business for a long time. They have ships going in and out of there and they have ships going to a lot of places that Mercedes ships to.”
On the other hand, the Alabama port is much closer to Mexico, where Chrysler, Ford, General Motors and Mazda have a combined 11 auto or auto parts manufacturing plants. Ship transport would need to be more cost effective than rail for manufacturers, Lyons says.
“I think that’s a good possibility for us. If we do get ships going back and forth to Mexico, I think there’s a very good chance that we can pick up automobile volumes and go back down to Mexico.”
Lyons predicts that AutoMobile will employ about 100 people but the number will go up when ships are in port. Longshoremen who already work the container ships will be in the RO/RO pool, and they can make $75, 000 to $100, 000 annually.
The Port of Mobile already has another RO/RO facility that loads train cars for rail-ferry services to Coatzacoalcos, Mexico, and boasts that it saves several days compared to overland shipping. The CG Railway service is owned and operated by Seacor in partnership with Genesee & Wyoming.
The Port of Mobile depends heavily on coal, steel and forest products. In addition to generating additional revenue, AutoMobile will strengthen the port overall, Lyons says.
It also strengthens the South Alabama Mega Site located off Interstate 65 north of Bay Minette in Baldwin County. The 3, 000-acre site, owned by Baldwin County and marketed by the Baldwin County Economic Development Alliance, is a potential location for large industrial development such as an automaker.
“It’s definitely a positive asset for the mega site as it relates to automotive assembly, ” says Lee Lawson, president of the alliance.
Any port improvement complements the mega site, which has a direct rail line to the port already in place, Lawson says. The alliance stays in touch with port officials and has been talking with them about the possibilities introduced by the AutoMobile terminal.
Always cagey about what he might be working to lure to the mega site, Lawson says “there may not be a direct correlation” to automaking among current projects.
“But if there’s an automotive manufacturer that’s going to assemble cars and ship them internationally, then it’s definitely a positive thing for us.”
Jane Nicholes and Mike Kittrell are freelance contributors to Business Alabama. She is based in Daphne and he in Mobile.