Pacific Cruise Ship Terminals LLC, a Wilmington company that operated the World Cruise Center at the Port of Los Angeles for about a decade, has lost its contract and wants to know why.
The port decided last year to switch to Jersey City, N.J., stevedoring firm Ports America Inc. instead of Pacific, which has operated the cruise terminal since 2003 as part of the cruise division of Nautilus International Holding Corp. Under the contract, which ended Sept. 30, the port paid Pacific nearly $10,000 for each vessel that called at the cruise center.
Pacific operated cruise ship terminals and provided stevedoring for the cruise industry by helping to board and process passengers. It also handled baggage and managed technical support for cruise ships while they were docked. Ports America is now servicing the cruise center under an interim contract, pending approval by the Los Angeles Harbor Commission.
Now Pacific is trying to find out why it lost its renewal bid so it can file a formal protest. The company has demanded public records related to the port’s evaluation process. The port said it’s too early to make the disclosures.
“Ports America was selected through a competitive bid process and is presently in negotiations with the Port of Los Angeles for their operating agreement,” said Phillip Sanfield, a spokesman for the port. He added that the port is in compliance with state public records law.
Representatives and executives from Pacific declined multiple requests for interviews. Pacific’s parent company, which has been headquartered near the port in Wilmington since 1923, said it’s the largest cruise terminal operator on the West Coast with services at cruise hubs including Long Beach, San Diego and San Francisco.
Ports America will operate the World Cruise Center’s facilities at berths 91 through 93, which include two terminal buildings and four passenger processing areas. The center handles cruise lines from companies such as Princess Cruise Lines Ltd. and Carnival Corp.
Pacific sued the port last month in Los Angeles Superior Court for all documents related to the decision to give the contract to Ports America.
Pacific has had some trouble at the port. A port audit of the company in 2011 said the operator went about $1.3 million over budget from 2003 through 2010.
The audit found, according to port documents, that spending “sometimes exceeded the budgeted amounts.” It also found “evidence of weak internal controls and accounting” by Pacific.
The port ended up paying about $796,000 to resolve the dispute over expenses and compensation.
The port would not say why it decided to switch operators because the contract is not finalized.
Low tide
Ports America is entering the L.A. market at a difficult time for the city’s cruise industry.
Disney Cruise Line moved its ship the Wonder from the Port of Los Angeles to Miami in December, making it the third major cruise ship to leave Los Angeles in two years, as the Business Journal reported late last year.
The Mariner, which was the West Coast’s largest cruise ship, moved to Galveston, Texas, in 2011 and Norwegian Cruise Line’s Norwegian Star moved to Tampa, Fla., in 2011.
Cruise traffic accounted for about 2 percent of the port’s $410 million in operating revenue in the last fiscal year. The L.A. port had 100 cruise ships call last year, down by more than half from 2008.
The cruise industry has been hit hard by the recession. The L.A. market has suffered even more because the violence in Mexico stemming from that country’s drug war has deterred customers, according to Teijo Niemela, editor and publisher at Cruise Business Review, a trade publication headquartered in Lambertville, N.J.
“Cruise passengers are afraid to go there,” he said.
He added that he expects the cruise business to pick up in the coming couple of years as the economy improves. Norwegian Star will move back to Los Angeles in the fall of this year.
“Cruise lines have really cut back from that market,” he said. “I expect there will be a little recovery in Los Angeles.”
