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US Gives Terminal Merger Green Light

US Gives Terminal Merger Green Light

The Federal Maritime Commission (FMC) has approved a joint venture between two adjacent terminals at the Port of San Juan, Puerto Rico, despite being concerned about its effect on the market place.

The plan will see terminal operators Luis Ayala Colon and Puerto Rico Terminals to form a new company called Puerto Nuevo Terminals (PNT) of which they will each own 50%.

PNT will acquire the assets of each party, including leases and equipment and fully operate the combined terminal.

For the operators, it will also mean a consolidation of service agreements and sharing of yard equipment, including cranes.

EXCLUSIVE PAPER: Big Ships and Densification of Container Terminals

It will see result in the formation of a single management team and board of directors who will negotiate and enter all future service agreements, including equipment leases and labor negotiations.

The parties expect this will see an easing overcapacity in terminal services and the rationalization of services, which will make operations more efficient.  

As a consequence of the agreement, PNT and Crowley will be the only two container terminal operators in San Juan and the FMC expressed concern that this will mean a fall in regional competition.

 In a statement, the FMC said it is concerned that “once the agreement takes effect and the new PNuevoT begins operation, the resulting reduction in competition may produce an unreasonable reduction in transportation service or an unreasonable increase in transportation cost.

“Though allowing the agreement to go into effect, the Commission intends to examine available options to ensure the PNT Agreement does not violate the Shipping Act.

“Under its authority, the Commission will order an enhanced monitoring regime for the Puerto Nuevo Terminals LLC Cooperative Agreement with extensive disclosure of business and marketplace information required.”