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Business Developments: Canaveral, Redwood City, Virginia

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The Canaveral Port Authority expects to sign contracts with Norwegian and Royal Caribbean cruise lines next month after recently reaching terms that expand commitments from both companies. The Redwood City Port Commission has approved a three-year lease with Boxer Industries, Inc., for a carbon black pilot production facility. The Virginia Port Authority expects to benefit from the G6 vessel-sharing consortium’s transatlantic services.

Canaveral Reaches Terms with Norwegian and Royal Caribbean 

Canaveral Port Authority expects next month to sign contracts with Norwegian and Royal Caribbean cruise lines after recently reaching terms that expand commitments from both companies. 

The agreement with Norwegian Cruise Line (NCL) would continue port of call visits from the Breakaway and Gem for the next three years, with options for two additional years. In addition, NCL will homeport a ship at Port Canaveral in 2015-2016 for a partial-year deployment.

A new letter of intent with Royal Caribbean Cruise Line (RCCL) outlines a 10-year contract with two five-year options and financial guarantees. The current agreement expires on the last day of this year and is valued at $7 million. Under the new terms, minimum passenger fees increase to $9.7 million this year and grow to $16.7 million by 2024. The cruise line will pay an additional terminal fee of $48 million during the next decade as the priority berth user of the cruise terminal that is now under construction in the Cove area of Port Canaveral and scheduled to open in November. Royal Caribbean also will continue some use of Cruise terminal 10.

Total combined value is an average of almost $20 million per year in minimum passenger fees during the next 10 years. Ship deployments are flexible; RCCL will decide and announce new deployments when appropriate. 

Currently, Enchantment of the Seas and Freedom of the Seas sail year round from Port Canaveral. This winter, Explorer of the Seas and Grandeur of the Seas are scheduled for port of call stops at Port Canaveral and the new Quantum of the Seas will start making transit calls starting this November. Also in November, Explorer of the Seas will homeport at Canaveral, offering 26 sailings of 9- and 5-day cruises. 

"These agreements are the results of hard work and pencil sharpening to finalize the costs and terms and our Board looks forward to considering these contracts during our meeting next month," said Tom Weinberg, chairman of the Canaveral Port Authority Commission. "We applaud the efforts of our staff and are delighted that our cruise line partners see the value of expansion and long-term commitments to Port Canaveral from which our community will continue to experience the economic benefits."

Redwood City Port Commission Approves Lease for a Carbon Black Pilot Production Facility

The Redwood City Port Commission on February 26 approved a three-year lease with Boxer Industries, Inc., for a carbon black pilot production facility.  Boxer Industries develops innovative, cost effective, and environmentally sustainable technologies that convert abundant domestically produced natural gas resources into high-value chemicals and materials for customers around the world.
Boxer's process utilizes natural gas instead of crude oil as a feedstock. Carbon black is used as a strengthening and conductive material in a variety of products, including plastics, tires, belts, hoses, toners and printing inks.

The pilot plant will be located at the port adjacent to the Sims Metal Management facility. The lease area is approximately 0.67 acres.

The plant is designed to produce 90 kilograms of carbon black per hour (190 tons per year). The carbon black will be placed in large bulk bags and stored in 20 foot or 40 foot containers prior to delivery by truck.  During the initial production period, carbon black will also be trucked to the site to mix with carbon black produced by the pilot plant.  

The plant will be outdoors, with the exception of the bag house, packaging, and storage of the carbon black. A laboratory/office trailer will be installed on the site. The approximately three to four employees at the pilot plant will be supported by 10 to 11 engineers located in offices nearby.

The Boxer Industries carbon black pilot plant is a "green" industrial research and development project that is compatible with other industrial uses at the port. It will be able to use the port's industrial area, as well as its geographic location near centers of R&D and venture capital, to develop new green technology for industrial manufacturing. 

The port commission adopted a mitigated negative declaration and the Mitigation Monitoring and Reporting Plan (MMRP) in November 2013. The MMRP identified several mitigation measures to reduce impacts of the project, specifically with regard to air quality from construction activities, geotechnical investigation and design criteria for seismic considerations, and a soils management plan for current/past soil contamination. 

Virginia Gains Two New Last-Out Calls on G6’s Realigned Transatlantic Services

The Virginia Port Authority (VPA) foresees potentially significant business opportunities from the realignment of a transatlantic vessel-sharing alliance that currently accounts for more than one-third of the container business at its Hampton Roads marine terminals. 

On February 20, the G6 Alliance, a vessel-sharing consortium composed of six ocean carriers, announced changes to its transatlantic services that connect Europe, Mediterranean and Asia with the U.S. East Coast. In its announcement, the G6 partners said four of the five realigned services will call the Virginia port. Two will be last-out calls, meaning Virginia will be the last U.S. East Coast stop before the ships head overseas to their foreign destinations. 

"These last-out calls will be of interest to export customers in the Mid-Atlantic and Midwest because the Port of Virginia will be able offer some of the best transit times to Europe, the Mediterranean and Asia," said John F. Reinhart, VPA’s executive director and a former ocean carrier executive. "For those customers with just-in-time inventory models, transit times are crucial. It is our opinion that these last-out vessel calls will create opportunities for customers that have not been able to use Virginia in the past simply because of their business models.

The G6 Alliance accounts for 37 percent of the Virginia port’s business, with three first-in vessel calls (which benefit importers), and six last-out calls, not including this most recent announcement. 

The realigned services will begin operating in April. 

The G6 carriers are Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK, APL and OOCL. The G6 Alliance was formed in late 2011 through a merger of the Grand Alliance (Hapag-Lloyd, NYK and OOCL) and New World Alliance (APL, Hyundai, and MOL).  It began operation in March 2012 in the Asia/Europe and Mediterranean trade lanes.

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