The Board of Commissioners for the Port of Palm Beach District in the US has approved the signing of a new 10-year contract with its tenant, Tropical Shipping.
The new deal includes options for both the parties to extend the partnership with four additional five-year terms.
Tropical Shipping is currently responsible for around one-third of the Port of Palm Beach’s overall net revenue and is the port's largest tenant.
Port of Palm Beach District board of commissioners chairman Blair Ciklin said: “The Board continues to take action to sustain the growth we have experienced in recent years, and we’re excited that Tropical Shipping will be onboard to become a large part of our future growth.”
The last fiscal year saw the port handle 1,750 vessel calls, 260,000 twenty-foot equivalent units (TEUs), and 2.5 million tons of cargo.
Tropical Shipping is set to add six new vessels to its fleet by next year, raising its minimum tonnage by 170,000t, while providing a $500,000 reservation fee and a $500,000 capital contribution to the Port of Palm Beach under the new arrangement.
Wharfage rates are estimated to increase 11.5% by 2027, including the handling of shipments at the port. This will lead to a realisation of around $10m in additional net income, as well as more than $12m in cash flow for the Port of Palm Beach during the course of the newly signed agreement.
In addition, the deal will enable Tropical Shipping to add more space for its refrigerated container units.
The company’s former headquarters at the port will be demolished to make new space for a new three-acre terminal facility. Engineering design plans for the building's removal are expected to begin next month.
The project is estimated for completion between March and September 2020.
Image: Tropical Shipping facility at Port of Palm Beach, US. Photo: courtesy of Port of Palm Beach.