Portsmouth council set to approve £15m for loss-making shipping firm MMD

THE liquidation of loss-making MMD should be ruled out, a report has said – and it is likely that Portsmouth City Council will spend £15m to protect its future.
MMDMMD
MMD

It was forecast that by April this year the Portsmouth City Council-owned shipping company, based at the international port, will have lost £3m for the 2018/19 financial year.

This comes after one MMD’s largest customers, fruit importer Geest Line, moved to Dover last year, which resulted in 60 job losses.

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But ahead of cabinet approval on the council’s budget plans a financial report has concluded that investing £15m over a 10 year period in the firm would see a better return than ceasing its operation.

Councillor Ben Dowling, the city council’s head of economic development, explained how MMD could become profitable. ‘While MMD has been loss-making in recent years it has continued to make profit for the council’s revenue budget for the money it takes in rent and port dues,’ he said.

‘That said we want to get it to a stage where it is a profit making business because the council is a shareholder.

‘A new senior management team was put in place to diversify what MMD does. Traditionally it was a fresh fruit importer only. Now it is a multi-service shipping company.

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‘For example, MMD now has a shipping contract with MHI Vestas, which manufacture wind turbines. Now if there’s a storm in the Caribbean it doesn’t affect its financial stability.

‘Through that and this investment it means MMD will get to a profit making place in the future.’

He added: ‘Previous financial losses were partly because of Geest, which was a blow to the company. But the future is bright.’

Another new contract for MMD was recently secured with international company Seatrade to transport tropical fruits and vegetables from South America and the Caribbean into the UK.

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The service will see at least 2,000 pallets arrive every week holding refrigerated bananas, melons, pineapples and vegetables.

For Mike Sellers, managing director of MMD Shipping Services, new contracts were vital for its future. He said: ‘Following developments on site we have secured major contracts, firstly global offshore wind company MHI Vestas, Ferry Speed’s Channel Island service, and more recently with international fruit importer Seatrade.

‘These long-term contracts illustrate how we’re both diversifying our business, by handling the world’s largest wind turbines, and also sustaining our core business of fresh produce imports.

‘Our commercial team has been handling a record number of enquiries so it’s essential we’re able to manage an increase in business, which means further investment is vital.

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‘All combined we’re confident that MMD’s impact as a successful, serious competitor, will continue to grow and have a positive effect on the city.’

Plans to invest in MMD will need to be approved by the cabinet next week before going to full council for decision on February 12.