Dispute Over Proposed Shipping Venture in Quonset’s Davisville Port Continues to Rage

What is the real story behind a potentially lucrative business arrangement between companies concentrated in Quonset Point and a container shipping line from Iceland?

Talk to Geir Monsen, vice president of Seafreeze, an exporter and supplier of frozen fish, and Kevin J. McDonough, sales manager of Rhody Transportation and Warehousing, a trucking and storage operator, and they will tell you that government officials badly mismanaged negotiations that could have resulted in high paying jobs.

But talk to those same government officials who are part of Quonset Development Corporation (QDC), the public-private real estate entity charged with attracting business and development to the area, and they will describe how the Icelandic container shipping line made unreasonable demands that would do harm to taxpayer interests.

Top company officials who favor the proposed partnership with Eimskip, the container line based in Iceland, also claim QDC failed to secure business contracts when it applied for and received a $22.3 million TIGER Grant that included a heavy duty crane. The crane can only be used for barge shipments between Quonset’s Davisville Port and the Port of New York, and for container lines operating small vessels with their own cranes, according to a joint press release from Seafreeze and Rhody.

QDC has used a portion of the TIGER grant, which was part of the federal stimulus package, to refurbish and improve the dock and the road in the port terminal area of Davisville. But the future remains uncertain.

“Without seeing a detailed plan from QDC, we fear that his project might be dubbed the ‘crane to nowhere,’ ” the release said. “How does the QDC intend to have the infrastructure improvements they made with the TIGER Grant generate increased business that will justify this taxpayer funding?”

Attracting one of the larger container lines into Davisville would mean “massive dredging and multiple expensive gantry cranes,” Seafreeze and Rhody explain in the release. Eimskip is uniquely suited for Davisville, they argue, because it operates small vessels with onboard cranes. Eimskip’s now has several ports of call in North American including its headquarters in Norfolk, Virginia, but it would like to consolidate its operations,  Seafreeze and Rhody claim.

“We’ve done business with them for over 20 years,” Monsen said in an interview. “We were talking about a perfect fit for Davisville since Eimskip’s ships are small and unobtrusive.”

There is another advantage.  If the heavy lift crane were ever to break down, Eimskip could step in with its own equipment, McDonough said.

“Most steam ships would not be willing to take this risk,” he explained. “But Eimskip has ship cranes that could also work to unload the ships. They would go a little slower than the land-based equipment, but in an emergency it could work, and that’s another benefit.”

Some news reports have included speculation that union pressure may have disrupted the business arrangement. Eimskip is not party to agreements forged by International Longshoreman’s Association (ILA).

“But Eimskip uses union ports all over the world,” McDonough points out. “I don’t believe this [a union agreement] would have been a dealbreaker.”

This is how SeaFreeze and Rhody describe the initial set of negotiations between QDC and Eimskip.

When QDC learned that Eimskip operates six container terminals in Northern Europe with the same cranes as in Davisville they asked Eimskip to operate the container part of the port business. QDC also offered Eimskip a parcel of land on the pier around the crane operation to store containers and install electric plugs for reefer containers. They also offered Eimskip the lease of a large warehouse on the pier that was built for the construction of the Jamestown Bridge. Eimskip could use it as is or tear it down and build a new building. The negotiations progressed and QDC sent a representative to Iceland to make a presentation to Eimskip’s management and board of directors. QDC took Eimskip’s U.S. manager around the state to meet various potential users of their freight services. The top management of Eimskip came to Davisville twice, and everything seemed to progress nicely.

This past June, QDC abruptly reversed course and called off negotiations for inexplicable reasons, according to the Seafreeze/Rhody release.

“The storyline from QDC is that they did not do 180 and that they were never negotiating in the first place, and that they were just having informal conversations,” Monsen said. “This means they are saying no thank you to jobs on behalf of all Rhode Island at a time when the state’s economy is on its knees and unemployment is high.”

Monsen estimates that a business relationship with Emskip would initially bring 150 well-paying jobs to Rhode Island. He also said the jobs would pay about $100,000 a year.

“As Eimskip expands the number ships in the region, these well-paying jobs would continue to grow and flow into Rhode Island,” Monsen said.

But there is another side to the story that Seafreeze and Rhody have omitted in their various statements to the press, David Preston, a spokesman for QDC told the Ocean State Current.

“There is no obstacle to Eimskip coming into the Port of Davisville, they can come in any time they want” Preston said. “They had expressed a desire to operate the terminal, which is great, and we had conversations about prospective business arrangements.  But they wanted exclusive rights to the pier. Taxpayers would not be pleased, and rightly so, if we gave exclusive rights to an outside entity, who can use the port and who can’t.”

Preston also said that Eimskip refused to participate in a competitive bidding process known as the RFP — request for proposals.

“Imagine the news coverage this would have gotten if we turned everything over to Eimskip without competitive bidding,” Preston added.

The exclusive, private lease Eimskip sought included a 10-year agreement that could be ended at any time by the company, Steven King, managing director of QDC, claims in a statement. Moreover, QDC would need to reimburse Eimskip for any improvements the company made to the port whenever the lease ended, King said.

Unlike Eimskip’s proposal, the RFP would maintain Davisville as a public port open and receptive to all shipping customers, and to the most competitive business arrangements, according to QDC.

Seafreeze and Rhody dispute this explanation in their release:

 QDC claims that Eimskip wanted to have exclusive rights to operate the container business in Davisville. This is not true. Eimskip has explained in written detail how they would service and cooperate with all potential port users and also stated that QDC needs more than one container shipping operation to get an appropriate return on investment.

The Current attempted to reach Eimskip multiple times, but did not receive a response.

QDC claims that Eimskip’s proposal would only produce about three new jobs. Munsen stands by his estimate of 150 new jobs.

Meanwhile, QDC has selected a Rhode Island–based company called R.I. Port Services to become the new terminal operating outfit in charge of container handling in Davisville.

In a press release, King, the QDC managing director, says the recommendations of the Legislative Port Commission figured prominently into the decision making. It was important to maintain Davisville as a public port “open to all shipping customers,” he said

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