Posted on December 22, 2020
The Port of New Orleans oversight board voted Thursday to move ahead with the purchase of land for a long-planned, $1.5 billion second container ship terminal to be located in St. Bernard Parish.
The board approved the purchase of nearly 1,100 acres in Violet at Mississippi River Mile Marker 83, adjacent to the existing St. Bernard Port, which is currently operated by the private sector firm Associated Terminals.
The land purchase, to be completed by the end of the year, kicks off a two-year period of due diligence to assess the feasibility of the project, the impact on the environment and consultation with the community.
The port has been looking to expand its presence to accommodate fast growth in container-based imports and exports, which have rapidly outpaced the growth in bulk cargo.
However, while Port Nola maintains a dominant position among U.S. ports in bulk cargo like metals and machinery, it lags well behind the largest container ship ports in the country, like Los Angeles and Newark, and even has been losing ground against Gulf Coast rivals.
Port Nola’s volume growth of both imports and exports from 2015 through 2019 was around 20%, but that was only about half that seen by Houston, which has increased its Gulf Coast market share to nearly 70%, according to data from IHS Markit, which tracks trade data. The port at Mobile, Alabama also has grown much quicker than Port Nola in volume terms, especially for imports, and has pulled nearly even with Port Nola overall.
Brandy Christian, Port Nola CEO, has argued that the port needs the investment in order to compete.
St. Bernard currently allows ships with water draft levels of up to 33 feet. Unlike the Napoleon Avenue terminal, which is restricted by the 170-foot ceiling of the Crescent City Connection, it does not have an air draft.
“A new terminal would complement the Port’s existing Napoleon Avenue Container Terminal by exceeding water draft levels and completely eliminating air draft restrictions,” Christian said.
Gov. John Bel Edwards noted that the U.S. Army Corps of Engineers began work three months ago to dredge the Mississippi River to a depth of 50 feet from the mouth to Baton Rouge. That will allow much larger ships to travel to the river ports to deliver their cargoes.
“The Corps believes that work will pay for itself quickly by bringing larger vessels and more commerce to our state,” Edwards said in a prepared statement welcoming the port’s move.
The port had been looking since 2018 at an alternative site in St. Bernard Parish but that didn’t work out.
“We had previously assessed the Sinclair property in Meraux,” said Jessica Ragusa, Port Nola spokeswoman. “Navigational challenges made that site unsuitable for the industry’s largest container vessels.”
“The Violet site has historically been used for a range of maritime activity, including ship repair and breakbulk. It features naturally deep draft water clearance with no air draft restrictions, existing rail and road infrastructure, and is located within $14 billion Federal flood protection system,” she said.
St. Bernard Port acquired the maritime property being purchased by Port Nola from Violet Dock Port LLC under Louisiana’s eminent domain law in 2010 for $16 million.
Ragusa said Port Nola’s will enter into a land purchase agreement with St. Bernard Port for approximately 89 acres (85 owned and 4 leased) in Violet, as part of a settlement agreement that resolves longstanding litigation vs. Violet Dock Port LLC.
“To fund the settlement, St. Bernard Port has partnered with the Port of New Orleans in a Cooperative Endeavor Agreement which outlines the parameters of the transaction. Port NOLA will provide $18 million of the $21 million settlement, then take title to the Violet property and lease it back to St. Bernard and its current tenant, Associated Terminals, for a five-year period,” she said.
Port Nola will lease Berths 1 & 2 at Violet to St. Bernard Port for a term of five years. St. Bernard Port will sublease those berths to Associated Terminals.
Separately, the backlands property that Port Nola is acquiring from private landowners will be purchased at $25,000 an acre with approximately 1,037 acres subject to a survey which will determine the exact acreage. The final purchase price will be dependent on a survey that will be conducted.
This story has been updated (on Dec. 18, 2020) with additional detail about Port Nola’s land purchase.