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April 16 2018

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4 The Journal of Commerce | April 16 2018 Mark Szakonyi AMID HIGH MARINE terminal compe- tition, Robert Yuksel Yildirim sees opportunities in Gulfport, Mississippi, and other less flashy markets. His goal is to propel the Turkish company he runs to the top 10 among global terminal operators and counter carrier pressure by partnering with other operators that lack container line backing. Promising to invest hundreds of millions of dollars at the Port of Gulf - port, Yilport Holding is looking for a 50-year concession with a 49-year extension, Yildirim told The Journal of Commerce at Turkey's inaugural International Maritime Summit in Istanbul in March. Yilport, part of the conglomerate Yildirim Group, signed a memorandum of understanding with the Mississippi State Port Au- thority at Gulfport in February. "We believe that we have the know-how and the expertise, and we see lack of investments in the US ports. There are many things that we can bring to the US to upgrade the terminals, improve productivity, and improve service," Yildirim said. With seven Iberian terminals, two in Scandinavia, and holdings in Turkey, Yilport is the world's 13th-largest terminal operator, according to Lon- don-based Drewry Shipping Consul- tants. Yilport's ability to drive growth at its terminals and willingness to make major investments is impres- sive, said Jonathan Daniels, executive director and CEO at the Port of Gulf- port. He said both sides will engage in due diligence for the next several months before determining whether to enter into negotiations. Following Yilport's model of pro- viding inland logistics via its door-to- door logistics provider subsidiary, Transitex, in addition to stevedoring, Yildirim said he sees potential to feed volume, particularly refrigerated goods, between Gulfport and Yilport terminals in Ecuador and Peru. There's further potential in leveraging the company's trading subsidiary to handle containerized liquid and bulk products out of the US Gulf Coast region for medium-sized shippers. "I go to niche markets where the operation is harder and needs a lot of investments, but we potentially try to get a long-term concession through capex investment to protect our investments," Yildirim said. Gulfport is in the final stages of a $570 million project to rebuild and expand the port after it was devastated by Hurricane Katrina's 24-foot storm surge in 2005. The port is trying to build a diversified portfolio of business anchored by long-term contracts with its three Central America liner carriers: Chiquita, Dole, and Crowley Maritime. The state-owned port's laden volume jumped 18.9 percent in 2017 to 135,882 TEU, reflecting the late- 2016 return of Chiquita's Great White Fleet after two years in New Orleans. Volume through all Gulf ports last year rose 11.4 percent, to 3 million TEU. If the deal goes through, Gulfport would mark Yilport's entry into North America, after its talks to acquire Ports America — the largest US stevedore and terminal operator — recently fell apart. Yildirim said his investors backed away last year because of concerns about carrier consolidation, the power of alliances, decreasing port valuations, and how the Trump administration would view foreign investment. He added that he has little concern about his Gulfport proposal being blocked. Other plans include producing low-carbon ferrochrome and chrome metals for the defense and aerospace industries, building on existing metal production in Arkansas and Pennsylva - nia. Mississippi Governor Phil Bryant has expressed support of Yilport's planned terminal and metal produc- tion investments, Yildirim said. Beyond pursuing deals at ports needing investment and less con- gested markets, Yildirim, who owns a 24 percent stake in CMA CGM, envisions increasing partnerships among terminal operators to compete with APM Terminals, Cosco Shipping Ports, and others affiliated with con- tainer lines. But as carriers increasingly deploy mega-ships, terminal operators face growing pressure to provide deep drafts and post-Panamax ship-to- shore cranes, Yildirim noted. "They force reduction of tariffs regardless of our investments. If you cannot slash your tariffs, then you have to give them some kind of returns," he said. Looking at the passenger airlines as an example, Yildirim said marine terminal operators can balance the pressure from carriers by creating alliances of operators without carrier backing. "We can sit down and say, 'OK, we are operating in this region; we will sit down with the liners as one port alliance team to negotiate tariffs for each terminal.' " Now is the time for bold moves, he said. Yildirim expects many state-run terminals to be privatized over the next five to seven years, and single or family owned terminal operators will sell because of rising competition. In addition, infrastructure and pension funds are seeing their returns shrink from double digits to single digits and are looking for an exit strategy. Deutsche Bank, for example, in 2016 sold Maher Terminals, the Port of New York and New Jersey's largest terminal, to Macquarie Infrastructure Partners III and a subsidiary of NYK Line. Deutsche Bank took a loss of more than $1.5 billion on the deal, according to The Wall Street Journal. "So, we observe difficult times are coming in the industry that will push big terminal operators to acquire all those distressed terminal assets or merge with them," he said. JOC email: twitter: @szakonyi_joc Yilport eyes Gulfport The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, April 16, 2018, Volume 19, Issue No. 8. The Journal of Commerce is published bi-weekly except the last week in December (printed 25 times per year) by JOC Group Inc., 450 West 33rd St., 5th Floor, New York, N.Y. 10001. Subscription price: $595 a year. Periodicals postage paid at New York, N.Y., and additional mailing offices. © All rights reserved. No portion of this publication may be copied or reprinted without written permission from the publisher. POSTMASTER: Please send address changes to The Journal of Commerce, Subscription Services Department, 450 West 33rd St., 5th Floor, New York, N.Y. 10001. Letter From the Editor "We believe that we have the know-how and the expertise, and we see lack of investments in the US ports."

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