Another showdown over Del Monte

Sun, Oct. 10, 2010

A fight stews over the Holt family's shift of business.

By Linda Loyd
Inquirer Staff Writer

Longshoremen aren't the only ones crying foul over Del Monte Fresh Produce Co.'s leaving
Camden for a competitor terminal in nearby Gloucester City.

The Del Monte container business rightfully belongs at Packer Avenue Marine Terminal in South
Philadelphia, and not Gloucester, under a 1991 provision in the Packer Avenue lease, says the
Philadelphia Regional Port Authority.

Maritime lawyers for the port have notified Packer Avenue lessee Astro Holdings Inc. and its
president, Thomas Holt Jr., that they have until Oct. 24 to send the Del Monte business to Packer
Avenue - along with a cargo crane in Gloucester that the port authority says should be in
Philadelphia.

It's yet another episode in a high-stakes drama that began in late August when Del Monte
severed a 20-year relationship with the International Longshoremen's Association to unload 75
ships a year in Camden, and move the work to a cheaper-labor terminal, owned by members of
the same Holt family with the lease to operate Packer Avenue, Pennsylvania's largest and
busiest container terminal.

The PRPA says the 1991 lease is quite specific that no affiliate, subsidiary, or company
comprising Holt family members can bring new container business to the river without first trying
to bring the work to Packer Avenue.

Containers are the trailer-size boxes used to transport goods by ship, rail, and truck - as
opposed to flat pallets or bulk cargo methods often used in shipping fresh food and other
products.

A lawyer representing Astro Holdings called the claims "frivolous" and said that any assertion
that Del Monte's moving to Gloucester breaches the Packer lease "is ridiculous," wrote Dilworth
Paxson L.L.P. attorney Lawrence McMichael.

After examining the lease with Holt Cargo Systems Inc., and later Astro Holdings, lawyers from
Marshall, Dennehey, Warner, Coleman & Goggin briefed the PRPA board Sept. 15, and nine
days later notified Astro Holdings that it was in violation of two provisions.

First, the letter said all new container business on the river attracted by a Holt company must go
to Packer Avenue terminal first, and not to an affiliate, subsidiary, or entity of the Holt family,
which owns private Gloucester Terminals L.L.C. and also operates Packer Avenue.

"It is Astro's obligation to accommodate and handle all new container business at the Packer
Avenue Marine Terminal," wrote Marshall Dennehey lawyers Daniel McDermott and Crystal
Moroney. "The PRPA was not properly notified by Astro that new container business was
obtained by a Holt affiliate company" and the business "has been wrongfully accepted" at
Gloucester.

Del Monte records show that since 2006, containerized fruit has increased each year in
Camden. Last year, 243,055 tons arrived in containers, while 345,451 tons came packaged on
wood pallets. The Astro lease allows "incidental" containers to be unloaded in Gloucester. But
the PRPA contends that 41 percent is not incidental cargo.

Another lease provision required that two container cranes from the Gloucester terminal be
moved to Packer Avenue. Currently, only one of those cranes is at Packer Avenue.

"We are responding and really attempting to work cooperatively with the PRPA to resolve the
issues," said Tom Holt Jr. "We don't really see it as an issue, and we don't think there's a breach
at all."

"I think it's just really a misunderstanding. Issues come up from time to time over the course of a
long-term lease," Holt said, "and you always work them out."

Astro Holding's attorney, McMichael, said in a Sept. 28 letter "that Astro has no business
relationship" with Del Monte and that the cargo was not primarily containers, but palletized fruit.
Further, Del Monte fruit ships are not new business on the river, since the cargo was handled
previously in Camden, he said.

With respect to the cranes, McMichael wrote: "There is a long history of discussion" involving the
cranes. "The issue was resolved approximately 12 years ago, and there has been no further
discussion since then."

In the early 1990s, both cranes were at Packer Avenue, but then one was floated back to
Gloucester on Dec. 10, 1994.

Later that month, on Dec. 28, Holt Cargo and other Holt businesses sued the Delaware River
Port Authority, the PRPA, and the Ports of Philadelphia and Camden, asserting a conspiracy to
"drive Holt out of business." U.S. District Judge Norma Shapiro dismissed the lawsuit in 1998.
Her ruling was upheld on appeal.

"As the PRPA knows, customers (and customers alone) determine which ports and which
terminals within those ports to utilize," McMichael wrote. "Irresponsible threats by the PRPA are
harmful to the economic interests of the Delaware River port community" and "will cost the
region hundreds of jobs."

It has cost union longshoremen jobs - 400,000 labor hours, or one third of the ILA work on the
river - with the shift of Del Monte to the non-ILA facility in Gloucester.

ILA Local 1291 president Boise Butler recently told the PRPA board that in a six-week sampling,
he found 343 longshore workers from Pennsylvania working on Del Monte ships in Camden.

"We are supporting the Holt family here at Packer Avenue by making all types of infrastructure
improvements, and for all the right reasons, to attract work to the state of Pennsylvania," Butler
said. "My concern is we are funding the Holt family here at Packer Avenue to put Pennsylvanians
out of work across the river."

Since 1991, the port authority, as landlord, has spent $56.1 million at Packer Avenue.
During that time, the terminal operator has paid Pennsylvania $17.4 million in lease revenue,
PRPA records show.

Gregory Iannarelli, the PRPA's chief counsel, said the container provision was in the lease to
ensure that new business was not steered to a competing, Holt-owned company.

If Packer Avenue terminal cannot handle new incoming container business, the lease says the
port must be given an opportunity to provide suitable space elsewhere, such as Tioga Marine
Terminal or Pier 82 in Philadelphia. "Under the lease," Iannarelli said, "we have to be afforded
an opportunity to participate in the discussion, and we were not."

Holt's original Packer Avenue lease was for 10 years. It was later amended for two additional 10-
year periods, or 30 years, with the possibility of an additional 20-year extension, if Astro has
"substantially completed" a "major development" on parcels north of the terminal.

But, the PRPA says, the lease will end in 2023 unless the terminal operator submits a master
plan, signed by an architect and approved by the port authority, to design and develop a marine
terminal on Piers 96, 98, and 100. Astro also must spend $18 million to develop the parcels.

"They are not obligated under the lease to spend any money on the additional parcels, but if they
don't, their lease is up in 2023," Iannarelli said. "It will be a 30-year lease, instead of a 50-year
lease. That's what the lease says."

Contact staff writer Linda Loyd
at 215-854-2831 or lloyd@phillynews.com.
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