Still Trying to Figure Out Why Davisville got (Eim)skipped

Back in August, it was reported by various outlets (and commented upon by me) that the Quonset Point Development Corporation had apparently nixed a deal with Eimskip, an Icelandic shipping company that was looking to relocate its U.S. East Coast hub.  The story generated some finger-pointing and confusion over why, exactly, the QDC let such an apparent golden opportunity for job generation slip by.

Kevin Mooney, writing for the The Current, looked further into the matter:

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.

According to a press release from Steven King, Managing Director of the QDC, the issue lay in Eimskip’s insistence on control of operations at Davisville:

Eimskip is welcome to bring any amount of cargo to the Port of Davisville, at any time, beginning today. No cargo vessel has ever been turned away from the Port here. We would welcome Eimskip as a customer, and have communicated that to them.

A separate matter is Eimskip’s proposal to be granted an exclusive, private lease to operate the proposed container terminal at the Port of Davisville. Their proposal included a 10-year agreement that could be ended at their option, at which point QDC would have to reimburse them for any and all improvements the company made to the Port. Further, the proposal envisioned the creation of 3 jobs (3.1 full time equivalents). This proposal was obviously unacceptable, and QDC rejected it on behalf of the taxpayers, and the other port customers.

As King continued, the task of operating the port would be decided after a standard RFP (request for proposals) was issued and any bids analyzed.

As Mooney later reported, some thought the QDC was, essentially, leading Eimskip on and then reversed course.  According to SeaFreeze, a local seafood shipper, and Rhody Transportation and Warehousing, a trucking and storage operator:

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.

Then things stopped and the RFP was introduced into the conversation.  As Mooney wrote, “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.” Yet, again, Seafreeze and Rhody disputed this:

 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 end result was the awarding of port services to a Rhode Island–based company, R.I. Port Services. As Mooney reported:

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.

So what happened to Eimskip’s relocation?  They moved to Portland, Maine instead with the first ship arriving this past March.  As the Bangor Daily News reported:

The company will be carrying products from Europe, primarily refrigerated seafood at first, destined for the North American market, according to Larus Isfeld, the company’s Virginia-based senior manager.

Once unloaded at the International Marine Terminal, Eimskip’s ship then will be able to carry containers of products from Maine businesses, whether seafood, wood products or agricultural goods, back to northern European ports, such as Rotterdam, Netherlands; Hamburg, Germany; Helsingborg, Sweden; Immingham, England; and Reykjavik, Iceland, Isfeld said.

“There’s a lot of fish coming from the northern coast of Norway, out of Russia, out from Iceland and from the Faroe Islands, and those are all markets we touch,” Isfeld said. “And to connect the fishing industry in Portland with those markets in Europe I think will be very beneficial for the port of Portland.”

There was no mention of Eimskip insisting on managing the port as a requirement for relocating to Portland, only that they’ll operate a warehouse and an office.  Apparently they didn’t insist that they operate the port as part of the deal. They did like the facilities and the rail access, though, as reported by the Portland Press Herald:

Eimskip, an Icelandic shipping company, chose to move to Portland to expand its presence in New England and cut its shipping time to Northern Europe.

The company had looked at other ports, such as Davisville, Rhode Island and expanding its facility in Everett, Mass., but ultimately chose Portland because of the city’s equipment and its culture.

“New England was an area where we wanted to have a bigger presence,” said Larus Isfeld, Eimskip’s general manager. “All of the infrastructure was pretty much in place here. But the biggest factor that drove us here was the culture and the people.”

“We know cold winters. We know snow. We know the heritage of the seafood industry. There’s something about the Scandinavian heritage, something that made us feel good about being here,” Isfeld said.

Maybe it was just a more natural fit, after all.  It’s also important to note that, short term, the move to Portland has generated around a dozen longshoreman jobs, not the 150 cited by proponents of bringing Eimskip to Davisville (but also more than the 3 quoted by the QDC, too).

Ironically, while the infrastructure at the Port of Portland may have been attractive to Eimskip, the Portland area has both a cold-storage shortage and the rail service is a bit limited.  Neither of these were problems in Davisville with the presence of SeaFreeze at  the Port and the rail infrastructure investments made over the last few years.  Perhaps Rhode Island will get another crack at Eimskip?

Meanwhile, in a related note, apparently the Port of Portland is also being eyed as a potential new hub for shipping thanks to the recent opening of the Northwest Passage.

Maine can take advantage of a “historic shift” happening in global commerce to become a major logistical hub for North America, the president of Iceland said on Friday at an event organized by the Maine International Trade Center.

In the last four years, polar ice in the Arctic Ocean has receded to the point where northern shipping routes can be used to reach Asia from the North Atlantic.

“We in Iceland and you in Maine and Portland are fortunate to be located in a strategic position that enables us to make use of these extraordinary opportunities,” said Olafur Grimsson, president of Iceland, a country of roughly 320,000 people in the North Atlantic.

Interesting idea. Why was the President of Iceland in Portland? Oh yeah…..Eimskip.

“The presence of Eimskip and its plans for using Portland in the coming years and decades as a major hub is proof that this is already an economic and commercial reality,” Grimsson said. “And therefore the plans that the city and the state need to do are not speculative. They simply need to adjust to an up-and-running commercial reality. … This could allow Portland to receive cargo from Europe, from Russia, the northern countries and in 10 years or so also from Asia and distribute it throughout the United States.”

Grimsson’s talk received a standing ovation from the crowd.

Disclaimer: The views and opinions expressed in The Ocean State Current, including text, graphics, images, and information are solely those of the authors. They do not purport to reflect the views and opinions of The Current, the RI Center for Freedom & Prosperity, or its members or staff. The Current cannot be held responsible for information posted or provided by third-party sources. Readers are encouraged to fact check any information on this web site with other sources.

YOUR CART
  • No products in the cart.
0