Public and private sector responsibilities in constructing and managing container terminals in North America
In North America there are two basic types of institutional arrangements for container terminal construction and management: the Facility Service Provider model and the Landlord model. The Facility Service Provider model can be looked at as a general port. The public sector provides overall inter-port services including stevedoring. This type is represented at the Port of Portland on the U.S. West Coast and is similar to the “new system” for container terminals in Japan.
Landlord Model
The Landlord model exists in terminals in Los Angeles (6), Tacoma (6), Long Beach (8), Oakland (8), Seattle (6), and Vancouver, Canada (3) for a total of 48 Landlord terminal type systems on the North American West Coast.
According to data from the World Bank 88 out of 100 major ports in the world are “Landlord Ports”. This is one type of institutional arrangement that the Japan Government is considering in its deregulation of ports and harbors. There are several definitions of a landlord port. One definition is where the port provides only the berth (and depth) and leases out the land to be improved at the expense of the lessee. This is the simplest arrangement but not the most common. In the United States, the term “landlord port” has a broader definition and generally means that the port builds and owns the terminal and leases it to others (the carriers/shipping lines, stevedore companies, etc.) who operate the terminal.
In the United States and Canada, all the major ports are Landlord Ports in that they own and lease out for operations all of their container terminals. However, there are not many examples in the United States or Canada of the first type of arrangement where the port leases land only to be improved at the expense of the lessee to a private firm for the purposed of building a container terminal. One of the few examples in the U.S. was the Port of Oakland's lease arrangement in the 1980's where a shipping line put in a large share of money toward the cost of constructing the terminal and the Port put in a smaller share. They then constructed the terminal and leased it to the carrier for a long period at a much lower rate than normal. This type of arrangement that was negotiated reflected the “up front” funding of construction as a lump sum up front payment to reduce future lease payments.21
Most of the landlord ports in the United States are of the second type of construction and lease arrangement for container terminal projects. These tend to be partnership or joint efforts, using the definition of “landlord port”. APL's Container Terminal #300 at Port of Los Angeles is a good example. The Port entered into an agreement with APL to build a terminal to APL's specifications on Port land and when completed the terminal was leased for a long term to APL. As part of the negotiations and agreement, the Port required that APL buy/own the cranes and some other handling equipment. Other container terminals examples that were constructed/leased in almost an identical process include the Port of Tacoma's Sea-Land terminal and all the other newly constructed terminals built in LA and Long Beach.22
There are several reasons why U.S. ports do not lease out the land to be improved at the expense of the lessee. From the Port's standpoint the major reason is that they need to retain ownership of their properties. For example, in California, ports are precluded by State law from selling tideland properties. From the standpoint of the Lessee, which in most cases is a shipping line, a major reason is that if they leased the land and built the terminal facility with their own money, the terminal would be on the tax rolls.
