Charleston’s groundwork for more cargo
New programs, services, and infrastructure embody South Atlantic port’s growth strategy.
A new system for managing drayage moves to crosstown rail facilities has contributed to a 27 percent increase in intermodal volume at the Port of Charleston for the calendar year 2012 compared to 2011, Jim Newsome, president and chief executive officer of the South Carolina Ports Authority, said in a phone interview during which he provided an update on several initiatives.
The rate of growth for rail loads was more than four-times faster than overall growth in container volume for the port. Between January and the end of July, the Port of Charleston handled 925,075 TEUs, up 5.7 percent from the same period the prior year. In fiscal year 2013, ended June 30, container volumes increased 9 percent to 1.56 million TEUs, according to port authority data.
Data on the actual number of rail moves was not available.
Most intermodal cargo moving out of Charleston is trucked about 15 miles to facilities in North Charleston operated by CSX Transportation and Norfolk Southern, the two major eastern railroads.
In early 2012, the port authority launched a program to arrange truck shuttles to and from the rail ramps instead of having each individual vessel line contract with local motor carriers and book loads. The goal is to drive more rail usage by better matching outbound export loads arriving at the railhead for delivery to the port with trucks dropping off import loads from the port and minimize wasted trips.
“So rather than having two trucks passing in the night we can better coordinate what is moving where,” Newsome said.
Vessel operators pay a fee to place trucking orders with the port authority, which finds a match for their container and arranges dispatch. About 75 percent of the 19 international container lines serving the port now participate in the program, Newsome said.
The success of the rail drayage program is one of several positive developments for the port authority in recent months. Officials are focused on infrastructure investments and operational efficiencies that will entice discretionary cargo — cargo that doesn’t have to move through a particular port — and the ocean carriers that transport it.
In mid-October, the port authority anticipates starting operations at a new inland port in Greer. The $35 million, 40-acre intermodal terminal is designed to make it easier for upstate shippers, as well as those in western North Carolina, Tennessee and other states, to drop off and pick up international loads rather than trucking them all the way to the port. Empty containers can also be stored closer to the customer, which benefits the port by freeing up valuable waterfront space and saves shippers from paying for empty truck miles. The facility will be served by Norfolk Southern, which operates a route along the I-26 corridor between North Charleston and Greer.
SCPA hired CenterPoint Properties to develop the site. CenterPoint is the master planner behind the massive rail-served logistics park in Joliet, Ill.
The inland port is similar to one in Front Royal, Va., which enables shippers to save on trucking costs by swapping containers with freight rail that connects to the Port of Virginia, 200 miles to the east.
Having a facility that can ground load ocean boxes is “really significant” for the Port of Charleston, especially as chassis pools replace the traditional model of ocean carriers providing their own chassis for inland moves by truck, Newsome said. Today, the majority of chassis are owned by equipment leasing companies and placed in pools managed by third-party firms.
In a normal wheeled operation, containers stay on the chassis until they are delivered to the client or lifted off at an intermodal ramp. Chassis pools require fewer pieces of rolling stock because containers are stacked in yards until ready for transport rather than occupying a chassis the whole time. But instead of free chassis provided with all-inclusive ocean shipping service, chassis expenses are now being unbundled and frequently passed on to the beneficial cargo owner. Grounding containers saves the shipper from having to pay a $15 to $20 per diem chassis expense while the container sits. Truckers benefit from the new system because they can stay hooked up to one chassis without having to waste time exchanging chassis several times a day when picking up containers controlled by different vessel operators.
The Port of Charleston belongs to the South Atlantic Consolidated Chassis Pool managed by Consolidated Chassis Management.
The Greenville/Spartanburg metro area near Greer is one of the fastest growing areas in the Southeast.
Newsome said the anchor customer of the inland port will be BMW, which operates a large assembly plant in Spartanburg and exports automobiles through the port’s Columbus Terminal. BMW imports about 20,000 containers per year filled with parts for the plant and nearby suppliers.
Above normal rainfall combined with the clay soil slowed construction and pushed back the opening from Sept. 1, he said. In August, the port authority dismantled and relocated three rubber-tired gantry cranes from Charleston to the intermodal site, which will have 552 spaces for containers. The facility will have an initial annual capacity of 40,000 containers.
Newsome said a realistic five-year target is for the inland port to annually handle 100,000 lifts, with demand aided by a growing global economy and a tight driver supply exacerbated by new anti-fatigue regulations limiting the amount of time truck drivers can spend behind the wheel.
By the end of the year, SCPA will have substantially achieved its goal of replacing the 200 oldest truck tractors serving Charleston through a voluntary program begun two years ago that offers independent truckers $10,000 towards the purchase of a 2004 or newer model, Newsome said. The port is using $645,000 of its own money and federal and state environmental grants to subsidize the clean truck program.
The port has also retrofitted all its rubber-tire gantry cranes with Tier 3 diesel engines and all its cranes are now electric to further reduce port-related pollutants.
Construction continues on the 286-acre, $800 million container terminal at the former Charleston Navy Base. The port authority has spent $150 million so far on engineering and building the terminal’s containment wall, and work is now underway to fill the structure with dredge material, Newsome said. At final build-out, it will be able to handle three 8,000- to 13,000-TEU vessels at once. It is the largest part of SCPA’s 10-year, $1.3 billion capital spending plan.
SCPA announced operating income of $12.7 million for the fiscal year, up $5.45 million from the prior year. The state agency said its operating revenue for the period grew 7 percent to $131 million, aided by the growth in container volume and a 14 percent increase in non-containerized cargo at Charleston and the Port of Georgetown.
Newsome said the port has about $42 million in operating cash flow, comprised of operating earnings and depreciation.
The Port of Charleston has begun to benefit from new service calls and shipping lines bringing in larger ships or more frequent services. Port officials say the increased activity will fully kick in during fiscal year 2014, which is expected to further increase cargo volumes.
“Between our anticipated growth in volume, anticipated improvement in margins and a very conservative balance sheet we have the capacity to build our capital budget and complete the Navy base by 2018,” Newsome said. The port authority will return to the bond market within the next couple of years to help finance the new terminal, but the agency currently only has one outstanding bond issue for $170 million, he added.
New steel business contributed to the growth in non-containerized cargo. During the fiscal year fourth quarter, breakbulk volume increased 85 percent from the first nine months of the year. The downtown Union Pier Terminal handled 50,079 tons of non-containerized freight, mostly imports of steel wire rod and coils used to make tires and steel billets, and exports of steel for construction.
South Carolina is home to several large tire manufacturing plants. Many of the tires exported through Charleston are for huge earth-moving equipment used in the mining industry that move in open-top containers to places such as Brazil and Australia, SCPA spokeswoman Allison Skipper said.
Earlier this year, Grieg Star Shipping began monthly service to Charleston.
In the near future, Union Pier will no longer be used for cargo. Within two to three years, SCPA plans to relocate its cruise terminal from the southern end of Union Pier to the northern end. Once the more modern cruise facility is open, more than 30 acres in the terminal’s southern end will be redeveloped for non-maritime uses, according to a joint proposal by the city and port authority. The cruise business represents a small, but important, portion of the port’s revenue and Newsome said letting go of the bottom half of Union Pier makes sense because it will be cut off from rail access when the new cruise facility is in place.
Charleston’s move to a single gate operation in January 2011 has also proved popular with shipping lines, which are seeking to participate in bigger, commonly operated terminals, Newsome said. By outsourcing gate operations to local stevedores the port has uniform processes and operations across all container terminals, including common (and longer) hours of operation, cargo cutoffs, and holidays, and can make better use of its capacity, Newsome said.
The port authority received good news in early September when the U.S. Department of Agriculture announced that China had lifted its ban on hardwood lumber from South Carolina and Virginia after safeguards were increased to control pests. Forest products, including wood chips and paper board, are traditionally the port’s top export category. Port officials expect new business in containerized lumber exports, but haven’t yet estimated the potential market, Skipper said.
Meanwhile, officials from the Army Corps of Engineers said Sept. 9 at the South Carolina International Trade Conference they expected to complete a preliminary study on deepening Charleston Harbor beyond 45 feet by next fall.
Newsome said “deepening our harbor is our most important strategic priority today,” because by the end of 2015, when the Panama Canal expansion is complete, 56 percent of the world’s containership capacity will be bigger than can go through the Panama Canal today.
He said the deepening should be completed by the end of the decade.
This year the port handled 300 post-Panamax ship calls and Newsome said once the canal opens, he expects the size of “work horse” ships calling the U.S. East Coast to be in the 8,000-10,000 TEU range.
A deep harbor is especially important for export commodities, which tend to be heavier and currently prevent vessels from loading to full capacity.
Charleston Harbor has an authorized depth of 45 feet, but larger ships call the port using high tide.
Lt. Col. John Litz, district engineer and commander for the Army Corps’ Charleston District, said the feasibility study is on schedule and within budget.
The Army Corps expects to complete the study by September 2015, when the chief engineer forwards a study to Congress asking for project authorization.
A draft port study and environmental impact study should be ready by next summer that will describe the depth and width of channels to which the harbor should be dredged and the size of the turning basins, project manager Brian Williams said.
The study will look at the possibility of deepening the channels to Charleston’s Wando and Navy Base terminals to 48, 50 or 52 feet and the channel from the Navy base to North Charleston to 47 or 48 feet.
It will also cover the project’s engineering requirements, safety, cost and its environmental impact, such as the extent of saltwater intrusion further up the Cooper River.
South Carolina’s legislature has authorized the entire estimated $300 million cost of the project, but Newsome reiterated at the conference that Charleston is the most deserving port of dredging dollars in terms of national economic benefit and that South Carolina should not have to pay the $120 million federal share of the project. (Chris Dupin contributed to this story.)
(The timeframe covering the port’s intermodal rail figures has been updated from the original version to reflect more accurate information provided to American Shipper.)