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April 2014
Port of Charleston: Key for Charlotte’s Global Competitiveness
By John Paul Galles

     There’s no doubt about it. South Carolina wants the Port of Charleston to be the preeminent port on the East Coast and the state is investing some $2 billion to make sure that happens, according to Jack Ellenberg, senior vice president for economic development and projects for the S.C Ports Authority.

     In a recent speech to the Charlotte Rotary Club, Ellenberg outlined significant efforts underway in the Palmetto State to distance Charleston from its competition on the eastern seaboard. According to Ellenberg, the ports are the Palmetto state’s most important strategic asset: “It’s all about growth. The key driver for the ports today is the tremendous growth in the size of container vessels and the growth of the ship sharing alliances.”

     “Consolidation is driving the urgency for bigger ships that can operate at lower costs. It’s all about economies of scale. There is potential for huge cost savings,” Ellenberg noted.

     Current container ships carry 4,800 TEUs (twenty-foot equivalent, meaning about half of a 40-foot trailer). That’s about 2,400 containers at a cost of about $1,250 each. Larger 8,000 TEU ships carry 4,000 containers for 40 percent less, and even larger 14,000 TEU ships now being built that can carry 7,000 containers for 60 percent less.

     How big is a 14,000 TEU ship? It’s 1,165 feet long, longer than three football fields. It’s 165 feet wide at the beam. And, according to the folks at Adidas which has its only U.S. distribution center in South Carolina, a vessel that big can hold 70 million pairs of running shoes!

     The biggest challenge posed by these behemoths is that they draw 48 feet so harbor channels must be at least 50 feet deep to accommodate them. Charleston has only a few challengers on the east coast with the ability to meet that mark.

     The New York/New Jersey port will have a 50-foot channel by 2016 if the construction to raise the Bayonne Bridge stays on schedule. Even then, Ellenberg noted, most of the goods shipped to that port are inbound. Shippers do not like to carry empty containers when they leave. Baltimore also has the requisite channel depth but it’s a long way from the ocean, a real drawback.

     Norfolk is a military port, Ellenberg continued, and it will get what it needs from the federal government, but military comes first. Miami and Jacksonville also have the potential to have 50-foot channels but Miami is too far from U.S. and North American markets and Jacksonville’s port is small and downtown.

     Charleston, on the other hand, is already a top 10 U.S. container port and among the top 100 globally. It has been the fastest growing port in the country since 2009. Business is up 22 percent from FY2010 to FY2013. In the Southeast which also includes Savannah, Jacksonville and Wilmington, Charleston “earned an amazing 70 percent of the growth that occurred in our port region,” according to Ellenberg.

     The Port of Charleston is within 500 miles of 94 million people in the Southeast, the fastest growing region in the country (46 percent between 2000 and 2030). There is strong manufacturing and exporting in the region so ships can unload and load—no empty containers leaving port. And the port, Ellenberg emphasized, is important to North Carolina, noting that 25 percent of Charleston’s usage comes from North Carolina destinations for imports or exports.

     South Carolina is making a $2 billion bet on its ports, most especially Charleston, so that by 2018 it will be capable of handling the 14,000 TEUs 24/7 365 days a year. The S.C. Ports Authority owns and operates the ports, but does not receive state funds for operations, so the enterprise needs to be self-sustaining. The state is, however, making investments in infrastructure “to ensure the viability of its biggest economic asset,” he said.

     The ports authority is making a $700 million investment in a new container terminal at the old Navy yard. It is also investing $600 million in other infrastructure and IT projects along with a $50 million investment in the state’s inland port in Greer, halfway between Charlotte and Atlanta. The legislature has already put $300 million in the bank to deepen the harbor, even though the federal government is supposed to cover 40 percent of the cost.

     “We’re not sure the feds will have the money when we need it,” Ellenberg cautioned. “That’s how serious the state’s bet is. The state will also spend another $225 million on improvements to interstate access roads and $130 million in a new dual access intermodal railhead where containers are off loaded or on loaded to rail cars.”

     It would seem that while South Carolina’s goals are ambitious, they are well on their way to being attainable.

     As Ellenberg noted, the nation’s success in global trading depends on an ability to move goods rapidly around the world, and South Carolina ports will be a pivotal player for the U.S. moving forward. Similarly, the Port of Charleston will be key for Charlotte’s global competitiveness. These port developments should encourage economic development efforts for the Charlotte region as well.

     Many thanks to fellow Rotarian Henry Bostic from Premier, Inc. who authored the summary of Ellenberg’s remarks. I thought it valuable information to share with our readers.

 

John Paul Galles is the publisher of Greater Charlotte Biz.
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