Jim Newsome, CEO of the South Carolina Ports Authority, laid out an ambitious plan to grow container operations at Port of Charleston over the next five years as the Army Corps of Engineers chief green-lit a plan to deepen channels to 52 feet.
Jim Newsome, the president and chief executive officer of the South Carolina Ports Authority (SCPA), laid out an ambitious goal for Charleston to become a top-five container port by the end of the decade during his State of the Port Address on Monday, saying the next five years will be the most decisive in the port’s history.
Charleston is currently the ninth largest container port in the country.
The port also announced on Monday it had received a “chief’s report” from Lt. General Thomas P. Bostick, chief of engineers for the U.S. Army Corps of Engineers, that finalizes a recommendation to deepen the major shipping channels in the Port of Charleston from 48 feet to 52 feet,the harbor’s entrance channel to 54 feet, and enlarging the turning basin to accommodate for post-panamax ships. The port said the deepening will allow the port to handle ships drawing 48 feet with no tidal restrictions.
After a review by the Office of Management and Budget, the deepening project will be presented to Congress to consider authorization and appropriation.
Last year, when the Army Corps released a Draft Integrated Feasibility Report and Environmental Impact Statement, it estimated the cost of the project to be $509 million, with $166 million funded by the federal government and $343 million funded by the SCPA.
The South Carolina legislature appropriated $300 million for the project in 2012, a move that Newsome said showed foresight and was critical in getting the feasibility study approved in just four years and at a cost $13 million, $7 million less than originally projected.
Newsome said the port already has 11 “big ship services” calling the port on a weekly basis and has to prepare for more large ships calling the port.
“That will be the future of our port,” he said, noting by 2017, 60 percent of global containership capacity is expected to be on ships with more than 7,500 TEU slots.
“We think 14,000 TEU ships will come to the East Coast very soon,” he added.
Erin Dhand, a spokesman for the port, said work on the deepening project could begin next year as soon as a design agreement between the Army Corps and SCPA is signed and even before congressional authorization since the state has already appropriated $300 million for the venture. (That money is in an account that is accruing interest and has grown to about $307 million, according to Newsome.)
Charleston had a “very good year” in its fiscal year which ended on June 31, 2015, said Newsome, handling 1.8 million TEU of containers, up 14.5 percent from 2014 and recording revenue of $196 million and $30 million in operating earnings.
Newsome said Charleston’s ranking as the ninth largest port in the country is “critical, because I think if you’re not a top 10 container port, you will not stay in the container game in the future.”
The port will now look to grow its container business at about double the average rate of the U.S. port industry, he said.
The way Newsome sees it, the U.S. Southeast is the best place for a port to be located today with its expanding population, manufacturing growth, foreign direct investment, and the fact that the region is also a strong generator of exports.
“Maybe that is taking a bit of a pause right now because of China, but certainly that will be the dominant trend over the next 10 or 15 years,” said Newsome.
About 80 percent of the SCPA’s business is from the container segment, with breakbulk cargo supplying about 16 percent of revenue and the cruise business about 4-5 percent.
Newsome said the port’s inland facility in Greer, S.C., which was built at a cost of $50 million and opened in November 2013, is “firing on all cylinders.” The inland port in Greer had 58,000 lifts in 2014 year and is on track for over 100,000 lifts this year.
Discount retailer Dollar Tree is building a retail distribution center near Greer and Newsome said his staff tells him an expansion of the inland port is likely in 2017.
“It’s our thesis that more such facilities are needed so we are really going to look with the railroads, the two Class 1 railroads in the East, to see if there are more places that we can intelligently locate a inland port,” Newsome added.
Newsome said manufacturing is critical to port growth because it produces both inbound and export cargo. According to Newsome, just five companies — BMW, Mercedes-Benz, Michelin, International Paper and Eastman Chemicals — are responsible for 10 percent of the port’s volumes.
Volvo Cars announced in May that it will build a $500 million assembly plant in Berkeley County that will produce 100,000 cars per year, a move that should boost volumes at the port.
Newsome said the port will also benefit from both the opening of the new locks in the Panama Canal, and from the raising of the Bayonne Bridge in New York Harbor, because without the ability to access the New York market, companies are unlikely to route bigger ships to the U.S. East Coast.
SCPA will need to spend about $1 billion by 2020 to reach its goals, according to Newsome. He said one of the strengths of the SCPA is that it
enjoys strong financial support from the state government, contrasting
it with Florida where he said many ports must compete for scarce
resources.
Major capital projects around the port include:
- The new Navy Base Terminal
- Strengthening the wharf at the Wando Welch Terminal, the port’s largest terminal.
- Adding new cranes that are taller and can reach across larger containerships.
- A new port access road to the Navy Base Terminal.
- A new intermodal rail terminal in North Charleston.
Newsome said the port needs to improve its return on capital, prioritize its capital spending and become as efficient as possible streamline the port’s organization.
He emphasized the need for the port to improve its intermodal infrastructure, noting that more cargo is moving to and from the port by rail (22 percent in fiscal year 2015 compared with 12 percent in FY 2010), and that truck productivity is key. He said truck turn times should be no longer than one hour, including queuing time outside the terminals.
Charleston has extended terminal hours, and although Newsome said he is “not a big fan” of appointment systems for truckers at container terminals, he added that pre-notification can help improve port productivity.
There are plans to start the permitting process later this year for a new 1,500-acre terminal on the Savannah River in Jasper County. That terminal, which will eventually cost $5 billion, is to be developed jointly by states of South Carolina and Georgia is not expected to open for 15 years.
“Believe it or not, while we may need it in 2030 we have to start working on it today,” said Newsome. The Jasper port will be needed “to keep the Southeast as a growing region. Without port capacity to move manufactured goods, in the global sourcing, global manufacturing world a region cannot be successful.”
