One U.S. Port Wants a Bigger Payday From Surging Ocean Trade
The Port of New York and New Jersey is seeking a greater share in cargo company profits, and more investment from tenants
The East Coast’s busiest port is flexing its muscle as it tries to grab a bigger share of the enormous profits and multibillion-dollar land deals flowing through the shipping industry.
The Port of New York and New Jersey is demanding a slice of transactions when terminals are bought and sold and looking for a larger piece of the revenues for business moving across its docks. It is also requiring cargo-handling tenants to spend more of their own money upgrading infrastructure.
The port’s more aggressive approach is taking shape as ocean carriers report booming profits and multinational companies spend billions of dollars to acquire prized space at major ports. France-based CMA CGM last year bought two terminals at the Port of New York and New Jersey for $2.8 billion, one of the largest in recent deals that amount to a land rush at global gateways.
The New York-New Jersey port is tied into multidecade leases, so it is looking to terminal sales and lease renewals to tap in to more of the revenues from the large volumes of goods moving through maritime trade.
Like other seaports around the world, the port raises revenue through its leasing agreements with various private terminal operators. The leases provide a steady source of revenue, but the port doesn’t reap the gains when cargo volumes surge.
The value of cargo facilities has grown as global trade has expanded and big terminal operators have sought to consolidate ownership of container terminals. Big shipping lines including CMA CGM, Denmark’s A.P. Moller-Maersk and Switzerland-based Mediterranean Shipping are investing in more port facilities to gain greater control of goods moving through their transportation networks.
Leases at the New York-New Jersey port’s two largest terminals will be expiring over the next several years, including that of Maher Terminals, the port’s most valuable facility. Maher’s current lease holder, Australia-based infrastructure fund giant Macquarie Asset Management, is negotiating an extension of its agreement so that it can upgrade the terminal or sell it.
Shipping industry officials say Maher’s potential sale, which could come as early as next year, is attracting interest from some of the world’s largest ocean carriers, infrastructure funds and terminal operators. The property would fetch several billion dollars in a sale, observers say.
“It’s the largest terminal in the largest port on the East Coast and a gateway to one of the largest consumer markets in the world,” said Matthew Leech, chief executive of Ports America, an operator of one of the port’s other terminals.
The port is also negotiating with APM Terminals, a Maersk subsidiary, which operates a terminal at Elizabeth, N.J., according to a person familiar with the matter. Its lease expires at the end of 2029.
Representatives for Maersk and for the public agency that runs the port declined to comment.
Cargo-handling terminals are in high demand as terminal operators and infrastructure funds pursue prize assets and as ocean carriers spend billions of dollars to snap up terminals and take greater control of landside operations for their vessels.
In 2022, CMA CGM bought out a partner’s 90% stake in Fenix Marine Services, one of the largest terminals at the Port of Los Angeles with an enterprise value of $2.3 billion. China’s Cosco Shipping Ports has expanded its terminal operations around the world in concert with expansion by state-owned Cosco Shipping Lines, this year taking stakes in terminals at Thailand’s busiest port and opening a $3.5 billion megaport in Peru.
The Port of New York and New Jersey is the primary gateway for imports to the northeastern U.S. The gateway handled the equivalent of almost 6.6 million containers in the first nine months of this year, 13.8% more than in the same period in 2023.
Striking dockworkers shut down the port for three days in October as part of a wider walkout by unionized longshore workers at ports from Maine to Texas. Importers and exporters fear dockworkers could walk out again if a lasting deal isn’t reached before a Jan. 15 deadline.
The port’s more muscular terminal strategy was evident in the concessions it wrung from the sale last year of the two terminals to CMA CGM.
The carrier paid Canada-based Global Container Terminals $2.8 billion for the facilities in New Jersey and Staten Island, according to CMA CGM financial documents. As part of the terminal deal, the port received a fee of $20 million, according to a person familiar with the transaction.
CMA CGM agreed to pay higher rents based on container throughput and to pay a share in container storage fees over a baseline amount. It also agreed to invest $600 million in dockside infrastructure, such as wharf and berth repairs.
Shipping industry officials say the port’s ambitions have swelled since the Covid pandemic, when a surge in demand for ocean shipping delivered enormous profits to the maritime industry.
Ocean carriers collectively earned more than $400 billion in the 2021 to 2022 period, according to marine consulting firm Sea-Intelligence, roughly 10 times their combined operating profit over the prior decade. After falling back last year, ocean carrier profits in the most recent quarter totaled just over $17 billion, Sea-Intelligence says, a sevenfold increase from the same period last year.