Ambitious plan to make Portsmouth council-owned cargo firm profitable ‘needs £15m’

Shipping containers at MMD in Portsmouth. Picture: Paul Gonella/StrongIsland
Shipping containers at MMD in Portsmouth. Picture: Paul Gonella/StrongIsland

AMBITIOUS plans to make a council-owned cargo handling firm turn a profit could take a £15m cash injection.

Future-proofing MMD Shipping Services will see new head offices, reconfiguration of port space and new kit.

Shipping agents have been touting for contracts in a bid to increase the use of the two quays after there was an industry belief Portsmouth was ‘closed for business’ as it had major fruit contracts.

MMD director Mike Sellers hopes to boost the business so it turns a profit, removing the need for more loans from its owner Portsmouth City Council.

'Our ambition is to turn it into a profitable business over the next three years, so we're almost starting from scratch,’ Mr Sellers said.

Since 2010/11 the authority has handed out seven million loans totalling £7.3m, with an outstanding balance of £5.9m.

But Mr Sellers said his plans would need £15m of investment to make them a reality and  shore up the operation for the future.

He hopes to diversify the type of business at MMD, while keeping fruit importation at its core.

Portsmouth imports around 50 per cent of the country’s bananas despite MMD having lost fruit importer Geest Line’s cargo handling contract to Dover with 60 jobs gone.

Mr Sellers said: ‘We’ve got 170 people working at MMD – they’re highly-skilled operatives.

‘We want to add other types of of port-related business to the activities at MMD so we're not overly reliant on fruit.’

Business enquiries coming into the port have ballooned from three to 100 in the time since Mr Sellers and his team, including a business development manager,  were put in place.

New contracts include a 10-year deal with MHI Vestas Offshore Wind handling wind turbine blades, and giving wharf space to survey vessels.

Gerald Vernon-Jackson, leader of the city council, drew a distinction between the support needed for MMD and the decision to axe fledgling utilities firm Victory Energy Supply Limited brought in under the previous Tory administration.

Councillor Vernon-Jackson said: ‘It’s absolutely right to give (MMD) a life line to make sure it can turn itself around but we're not running a business for the sake of running a business.

‘We’re running a business to make sure it’s possible to reduce cuts to other (council) services.’

No decision has been made by the Liberal Democrat-run council to give more cash for MMD’s business plan.

But he added: ‘There’s a long way to go to turn that business round. It’s one of the dangers that we have to think about councils owning and running businesses.’

The council has put a floating charge on the assets of MMD so if the firm goes insolvent it will be treated as priority for repayment over other creditors.

Cash loans went toward plant equipment and the demolition of warehouses to accommodate handling larger vessels and more containers.

The city council currently earns around £2m in rent and fees from MMD that it pays to Portsmouth International Port, which is also council-owned.