After 18 months of review, the board of commissioners of the Virginia Port Authority has decided to drop all bids for port privatization.
“We are transforming The Port of Virginia to meet a changing and increasingly competitive environment,” said William Fralin, chairman of the VPA board in a prepared statement. “We will move forward as a stronger, leaner organization that is better-positioned to serve the ocean carriers and port customers, attract cargo to Virginia and be more accountable to Virginia taxpayers.
Keeping the ports public will provide better cash flow to the commonwealth than either of the two private sector proposals, the VPA said. Moreover, cargo volumes are picking up after the recession and the port is likely to benefit from changes in shipping patterns resulting from of the Panama Canal expansion.
Instead of privatizing the port, the board decided it was possible to maintain a strong competitive posture under a public ownership structure. The board will convert Virginia International Terminals (VIT) from a non-stock corporation to a single member Virginia limited liability corporation under more direct control by the VPA. “The new structure will eliminate duplications, increase efficiencies and reduce costs,” the VPA states.
Next steps include hiring a permanent executive director and chief commercial officer, and overhauling the strategic plan with an eye to making major capital improvements, reducing debt levels and attracting new distribution centers and manufacturers “to help drive increased cargo and economic development across the Commonwealth of Virginia.”
Bacon’s bottom line: Governor Bob McDonnell initiated the move to explore port privatization and replaced every member of the previous board but one. If a new board consisting of McDonnell’s hand-picked appointees decided that maintaining public ownership represents a better deal for the commonwealth, I am not inclined to disagree.
Update: McDonnell has issued a statement: “In the coming days, the Secretary of Transportation and I intend to review the letter and materials sent to me by VPA Chairman Fralin regarding the board’s action. After that review is completed, I will issue a statement regarding my position on the board’s actions.” Hmmm. This may not be over yet.