FMC Commissioners Call for Review of Ports America Sale to Canada

Federal Maritime Commission (FMC) commissioners Carl Bentzel and Louis Sola have written a letter to Treasury Secretary Janet Yellen expressing serious concern over the sale of U.S. terminal operator Ports America to a Canadian pension fund.

As reported in September, CPP Investments, an independent asset manager responsible for the Canada Pension Plan, will acquire 100% ownership of Ports America from Oaktree Capital Management at a reported valuation of more than $4 billion.

The FMC is the independent federal antitrust regulator for international shipping in the United States.

The commissioners’ letter points that Ports America is the largest terminal operator in North America with diverse operations in 70 locations in 33 ports “on each of this Nation’s coasts.” The company reports handling annual volumes of about 13.4 million TEUs, 10 million tons of general cargo, 2.5 million vehicles and 1.7 million cruise ship passengers, and provides services including terminal operations, stevedoring and cargo handling.

Ports America also holds approximately one-third of the U.S. container market share, with a network of 28 container terminals in 18 ports in Los Angeles, New York/New Jersey, Baltimore, Miami, Tampa, New Orleans, Tacoma and Houston. CPP Investments has been an existing minority investor in Ports America since 2014.

“This proposed acquisition is an all too familiar repetition of a U.S. transportation and supply chain asset being acquired by foreign investors,” the commissioners write. “Our supply chain assets directly impact our domestic economy and our national security. They should not be treated as an ordinary resource to be sold to whomever can pay the highest price.”

Since the sale of Ports American will result in CPP holding “an exclusive interest in a strategic United States enterprise” that is responsible for managing “critical infrastructure,” the letter urges that the change of ownership should be “carefully scrutinized.”

“Such a review is not without precedent,” the letter says. Bentzel and Sola recall that in 2006, a Congressional committee famously voted to block the sale of P&O Ports’ North American operations to Dubai-based DP World, a move that ultimately led to the creation of Ports America.

“When dealing with strategic infrastructure such as commercial deep-water ports, railroads, airports, telecommunications, or electrical power generation, we as a Nation should be hyper- vigilant when allowing foreign interests to obtain control,” write Bentzel and Sola. While a review could ultimately determine the sale to be appropriate, to “allow acquisition of such a significant portion of our national supply chain without review would be a dereliction of duty.”

The letter also points to Canadian Pacific Railroad’s proposal to acquire the Kansas City Southern railroad, giving the railroad company greater access to U.S. markets “could have severe impacts on port competitiveness in the Pacific Northwest.” The commissioners question whether efforts to pursue the deal are “intended to increase cargo diversion, and we question whether CPP Investments is in fact committed to growth of U.S. based maritime infrastructure,” the letter says.

“If the current pandemic has illustrated anything it is just how vital our global and domestic supply chain is to our way of life. We therefore request [that the Committee on Foreign Investment in the United States] exercise its authority and launch a full and thorough review of the national security implications of Ports America’s acquisition by the Canada Pension Plan Investment Board.”

Unlock Exclusive Insights Today!

Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.

Sign Up