Port of Charleston sets record pace

Charleston’s port, just two months into its new fiscal year, is already setting a record pace for itself, pushing more cargo through its terminals than ever before. However, experts caution the port is soon going to be pushing maximum density, reaching its maximum throughput for the amount of land available.

The port already has seen 13% growth over the amount of cargo moved during the same period in 2003 and has forecast an overall 6% growth for the fiscal year.

The port is moving more container cargo though its facilities, due in large part to increased trade with China and India, along with the port’s investment in new equipment that allows for higher stacking of cargo containers and a more efficient yard management system that relies heavily on radio frequency identification in the sorting and tracking of containers. Outbound cargo also has been flowing more steadily to the lagging markets in Latin America, Europe and Asia.

“We raised the ability of stacking containers from four high to stacking them five high and we added other new equipment that allowed for a much denser operation,” says Byron Miller, spokesman for the South Carolina State Ports Authority.

Growth began nearly 10 years ago and since then has seen an annual compound growth rate of about 8%, according to Miller.

“We were very strong after 1995, because that’s when we completed the last phase of the Wando terminal,” Miller says. “Leading up to that, we had a lot of pent-up demand, and as a result, grew for several years right up to 2000.”

The port saw its first down year in 2001, due in large part to a sluggish economy. But in 2002, 2003 and 2004, the port bounced firmly back.

“There’s no doubt that the growth at the port has been driven by increased international trade with the U.S. economy,” says Al Parish, director of the Center for Economic Forecasting at Charleston Southern University. “About 10 percent of Charleston’s business is done with China, making it second only to Germany, and I don’t think you could have said that 10 years ago.”

The port also has begun to implement a yard management system that allows for much more accurate tracking of containers. Largely through the use of that system, the North Charleston terminal has seen a 20% increase in volume—with fewer people working fewer hours.

By late November, the port hopes to have the same yard management system in place at the Wando terminal.

The next step

The port will soon face another spatial dilemma, most agree.

“We have to deal with the finite capacity of a port—you can only do so much with an acre of property,” Miller says. “So we need a new way of doing business and perhaps longer business hours that allows you to increase capacity without any new space.”

But that, cedes Miller, is a finite solution. Eventually, the ports will reach their maximum density and cargo containers won’t be able to stack any higher.

New space is out there. The port owns about 50 acres of unused land at the Wando terminal and has ambitious plans for the former naval base.

“We have land that we own but haven’t yet developed,” Miller says. “We haven’t needed it so far, but we’re almost there now. We have 50 acres, and we know we’re going to face opposition from our neighbors, but we have to figure out a way to use it.”

A 2002 South Carolina Legislative Audit Council report says the port should complete development at the Wando site to foster greater sustainability.

The report cites the port authority’s concern that it could lose a major containership contract, its need for new sources of revenue, its competition with the port of Savannah, and general shipping trends such as the increase in vessel size, which in turn places additional demands on ports to provide larger berths and more space for container storage.

The fact remains, though, that Charleston is constrained by the amount of land it has to work with. The port plans to expand to the former Charleston Naval Base, but the permit for that expansion isn’t expected until the end of next year, and then construction is expected to take another five or six years, according to Miller.

“It’s going to be a challenge,” he says.

Sibling rivalry

Charleston’s isn’t the only Lowcountry port that has seen explosive growth over the past several years. Savannah has seen growth similar to Charleston, making competition between the ports, which are less than 100 miles apart, that much more fierce. Both ports had all-time record months in August for the amount of cargo moved through them.

Savannah has grown by leaps and bounds since 1999, with over 60% more cargo passing through its gates.

Where Charleston’s port had an off year in 2001, Savannah’s continued to grow through the same period. According to Robert Morris, director of external affairs at the Georgia Ports Authority, Savannah’s port grew by 30% alone in fiscal 2003 and another 6% last year.

“Our mantra is location, location, location,” Morris says. “We’re a stone’s throw away from 10 million square feet of warehousing space and our strategy is to stay ahead of the growth curve.”

Parish says the port of Savannah benefits from greater recognition from the Georgia legislature as to the port’s importance to the state’s economy.

“Savannah used to be much smaller. Faster growth can be attributed to two things,” Parish says. “First is the distribution channels that have sprung up in the Savannah area. The Interstate 16 and I-95 corridors have been a hotbed for distribution centers because Georgia is actively recruiting them through incentives.

“The second reason is that the port of Savannah has received far greater support from the community and legislature,” he continues. “The citizenry and state government of Georgia seem to understand the value of the port much better than ours do.”

Parish says the monetary value of cargo moved through both ports is roughly the same, about $23 billion annually. Georgia’s economy, however, is two and a half times the size of South Carolina’s, meaning the port of Charleston has a greater impact on the coffers.

Savannah’s growth has been much more rapid than Charleston’s. Morris dismisses the notion of a rivalry between the two ports, saying they collaborate more often than not and offer shipping lines an alternative to ports in areas such as New York/New Jersey and Los Angeles/Long Beach.

“Nobody speaks about competition between New York and New Jersey or between Los Angeles and Long Beach. They talk about those ports in the same breath,” Morris says. “They should be thinking about Charleston and Savannah in the same way. We’ve entered the big time and think that, together, we are a better solution than those other ports.”

Even with expansion, the future of Charleston’s port isn’t all smooth sailing, Parish alleges.

“Charleston has a challenge to overcome: the shipping lines remain unconvinced the port can expand to handle the estimated 25 percent increase in shipping it foresees over the next five years,” Parish says. “Until the port can convince the shipping lines that it can handle the business as efficiently as they are now, the shipping lines are at least going to hedge their bets (by splitting their business among several ports). It’s just prudent business.”

Parish adds that were Charleston to expand its facility at Wando and the abandoned Naval station and still maintain or even improve its level of efficiency, the port could once again distance itself from its neighbor to the south.