U.S. Seaport Update: Location Matters
While container throughput is a valid benchmark for “mega” ports, competing gateways do just fine by playing all the angles. Here’s how some of the nation’s alternative gateways are poised to take advantage of the next surge.
By Patrick Burnson, Executive Editor -- Logistics Management, 9/1/2008
Shippers may have fewer carriers to choose from when searching for attractive bookings, but at the same time, more ocean gateways are being targeted for scheduled calls. This paradox represents a challenge for seaports and the marketing buzz each one is trying to generate.
“There are a number of imperatives for ports to grow in a reasonable and sustainable way,” says Aaron Ellis, communications director for the American Association of Port Authorities (AAPA). “First, we are seeing a steady decline in the trade imbalance, which is shaping the ways ports reconfigure their supply chains. Then there’s the new emphasis being placed on being “green” and sustainable. And finally, there’s the 800-pound gorilla—energy. Consider all those aspects together and you get a whole new set of strategies for regional water gateways.”
And let’s not forget about the job-generating potential for seaports moving full speed ahead, adds Ellis. He notes that while mainstream news headlines tell readers about “downsizing” of port staff, these stories rarely speak of the tens of thousands of jobs created by shipping in the larger community.
“The indirect impact of seaport operations is huge,” Ellis says. “With the U.S. economy showing signs of recovery in the coming year, we feel that port growth is an absolute must.”
Analysts at the transportation and logistics consulting firm Tioga Group agree, observing in a recent study that South Atlantic gateways are poised to take advantage of several developing trends in the near future. “Our interviews with major shippers, carriers, third parties, ports, and others, suggests that all-water carrier deployments are going to have a profound impact on how these ports will be designed and operated,” says Dan Smith, a principal with Tioga. “We have already seen a significant shift in cargo coming from Asia via the Suez, and with the expansion of the Panama Canal, this trend can only get stronger.”
Charleston Says It’s Ready
Indeed, in anticipation of such a surge, the South Carolina State Ports Authority (SCSPA), which owns and operates the Port of Charleston, recently renewed a Memorandum of Understanding for a three-year term with the Panama Canal Authority.
“When you combine Panama’s tremendous role in global trade with Charleston’s productivity, expansion opportunities, navigational advantages and distribution center developments, the importance of this partnership becomes clear,” says SCSPA president and CEO Bernard S. Groseclose Jr.
Panama’s current construction of a new set of locks will double capacity and allow more traffic and longer, wider ships. At the same time, Charleston is laying the groundwork to prepare for the bigger vessels that will transit the expanded Canal. The port has a 45-foot water draft at low water and already handles vessels with drafts of 42 feet and greater. Post-Panamax ships make routine first-in and last-out calls in Charleston.
In a recent interview with LM, Groseclose noted that his port has made efforts to offer Fortune 500 companies other reasons to favor Charleston. “We have a lot of project cargo moving out of here, too,” he says. “With General Electric being a major shipper, it’s not just about containers. They are moving huge pieces of industrial equipment worldwide, and our port can manage the process.”
The area within 60 miles of the Port of Charleston is set to gain more than 20 million square feet of industrial distribution and manufacturing capacity, plus a 1,300-acre logistics center in Orangeburg County. According to port spokesmen, other multinational corporations are investing millions of dollars in the state to take advantage of strategic access to its facilities, major transportation corridors, and access to 60 million consumers within a 500 mile radius.
Savannah Primed
Building for the future is high on the agenda for neighboring Savannah, as well, say industrial real estate pros. According to Anthony Chiarello, senior vice president, customer development for AMB Property Corporation, time is of the essence if the region is going to take advantage of the surge.
“With major global players like Wal-Mart, Ikea, and Home Depot using Savannah as their gateway, the port has to constantly reinvest in its infrastructure,” he says. “Customers with these huge volume demands can’t afford to wait for blueprints of new developments to just be considered without a plan for implementation.”
Chiarello is strengthening AMB’s relationship with existing customers, including Savannah, to increase business with major retailers, third party logistic providers, and other users of big-box industrial warehouse space. He says the challenge is made easier by the port’s mandate for growth.
“The commencement of the Savannah harbor deepening project will help ensure our future success,” declares Steve Green, Georgia Ports Authority’s (GPA) chairman. According to Green, Savannah greatly contributed to GPA’s record-setting container throughput figures this fiscal year, adding that this one gateway alone had a 14.9-percent increase in 2008. It is also worth noting, however, that for the first time in GPA’s history Savannah’s total exports exceeded one million twenty-equivalent units (TEUs).
“In addition to exporting more cargo than ever before to the Far East and the Mediterranean we added significant new export market share to the India subcontinent,” says Doug Marchand, GPA’s executive director.
Total TEUs exported to China surpassed 175,000, a 23.6-percent increase compared with the previous year, Marchand adds. GPA exported more than 18,000 TEUs to the emerging market of India, two and a half times more than the previous fiscal year.
Houston Hussles
There’s no rest for weary at the booming Port of Houston Authority (PHA) as the Gulf’s largest gateway anticipates even more traffic once the Panama Canal is widened. Asia is the PHA’s fastest growing containerized market, a fact prompting Houston to extend its Memorandum of Understanding for three years with the Panama Canal Authority.
The port owns and operates the public facilities located on a 25-mile-long complex of diversified public and private facilities designed for handling general cargo, containers, grain, and other dry bulk materials. Each year, more than 7,700 vessels call at the port, which ranks first in the U.S. in foreign waterborne tonnage and second in overall total tonnage.
“Efforts were made many years ago to promote business between the Port of Houston and Panama,” says Adsinar Cajar Bocek, Consul General of Panama. “Together, we have acted as ambassadors to the trade community. The expansion of the Panama Canal will provide an entryway to the Gulf Coast from Asia and is a tool for the port and the region to grow.”
Tracking Tacoma
If shippers wish to track the progress being made at the Port of Tacoma lately, they had better use a stopwatch.
“Volumes of containerized cargo moving to the U.S. West Coast will remain strong regardless of the share being taken away by all-water,” says Dan Smith of Tioga. “LA/Long Beach is going to be a leader no matter what, but we are excited about the potential of Tacoma. It’s growing like crazy.”
Larry St. Clair, the Port of Tacoma’s director of intermodal marketing, says one big advantage now is that 100 percent of the port’s intermodal yards are on-dock. Furthermore, there are staging areas with tracks beyond the yards for shippers to store cargo until it can be loaded on to rail cars.
“We are also very fortunate here that the port is in an industrial area,” St. Clair says. “If you think about other West Coast ports, a lot of the conflicts arise because of things like having daycare centers, schools, and churches in the core cargo-handling area.” This zoning should help provide the Port of Tacoma, unlike others, capacity for future growth. “We will be working with our partners, the Burlington Northern Santa Fe and Union Pacific Railroads, to make sure we see our growth in terms of time and place and how we can invest together,” St. Clair says.
BNSF is evaluating a number of enhancement projects through its analysis of current capacity and future capacity requirements. One future project could be the expansion of the Stampede Pass tunnel to accommodate double-stack trains. That would give BNSF three double-stack routes out of the Puget Sound region, the others being Stevens Pass and the Columbia River Gorge. Additionally, BNSF is working with the port and its mutual customers to forecast future demand to best determine when local rail infrastructure projects will need to be constructed.
Oakland OK
And keep your eyes on Oakland, shipping and real estate analysts say. From both perspectives, the port will have a lot to offer shippers from a staging perspective and for throughput. First and foremost, though, is the ongoing dredging project which supports deep draft navigation improvements.
“With the already completed maritime infrastructure improvements combined with the Oakland Harbor Deepening Project and plans for new rail access at the port, we will be able to grow our cargo business,” explains maritime director James Kwon.
Project components have included the widening and deepening of the Harbor Entrance, Outer and Inner Harbor channels, and two turning basins to -50 feet Mean Lower Low Water (MLLW) as well as local business and utility relocations. Existing project depths are -46 feet MLLW (after dredging to interim depths). Related local service facilities, paid entirely by the port, include berth deepening and wharf strengthening.
“The balance of trade shift has made Oakland more attractive as an outbound load center, too,” says Smith. “It has always been known as a reliable gateway for agricultural exports, but we are seeing an even greater mix in commodities in the future.”
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