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Port of Charleston sees growth in break bulk
By Dan McCue
Staff Writer
Despite a shortage of bulk ships and the escalating shipping rates that accompany such a shortage, the Port of Charleston sees real opportunities in the future of break bulk shipping on the city’s waterfront.
The reason? A weakened dollar as compared to other currencies has strengthened the export of goods ranging from machinery to forest products to chemicals.
In the first quarter of the SPA’s current fiscal year, a timeframe extending from July 1 to Sept. 30, 87,000 tons of break bulk exports moved across the dock here in Charleston, compared to 53,700 during the same time period last year, a more than 60% increase.
Imports of break bulk, a term applied to goods that are not shipped in containers, meanwhile, were also still strong during the first quarter of the fiscal year, coming in at 101,897 tons compared to 79,500 tons for the same period last year, an increase of 28%.
“The broader economic issue, the weakening dollar, is having a stagnating effect on imports, though they remain fairly strong, but it’s led to a significant increase in road and construction projects overseas, and a surge demand for the materials used in those projects,” said SPA spokesman Byron Miller.
“The other factor that’s led to the significant increase in the movement of these materials in our port, quite frankly, is the strength and reputation of our maritime community and our labor force. People know that break bulk, the stuff that’s too large, too heavy or too expensive to ship in a container is going to be handled carefully and efficiently,” he said.
In the world of global trade and international shipping, there are three modes of transportation for ocean going cargo, each chosen to fit the specific piece of cargo.
Consumer goods, by and large, travel by container. Break bulk refers to items that are more easily moved on palette, or that are outsized, like cars and trucks, luxury boats, wind mills, large machinery or turbines.
A final category, merely called bulk, consists of crude oil, petroleum, steel, aluminum, chemicals and the like.
Here in Charleston, break bulk is handled the Union Pier terminal and Veterans terminal operated by the S.C. State Ports Authority, while both break bulk and bulk are also delivered to a host of private terminals, ranging from Kinder Morgan to Nucor Steel,
Chevron and British Petroleum.
So brisk is this latter business that Maybank Shipping of Charleston operates a “midstream” service, wherein materials are taken off larger ships and put on smaller vessels to travel up the Cooper River, and trucking firms such as Superior Transportation, in North Charleston, have created a strong niche for themselves by making a practice of regularly hauling oddly shaped and extraordinarily heavy cargo.
“The story of contemporary shipping is really the story of a 40-year transition,” said Robert Goethe, whose 33-year maritime career included 15 years with the S.C. State Ports Authority and 18 years with the Georgia Ports Authority.
“Since the advent of containerization in the 1960s, boxes gradually have been taking over the market, but bulk and break bulk will never entirely be replaced by containers. They can’t be. Once you go over 40 feet long and 22 tons, containers are irrelevant.”
Because everything in international commerce flows based on the cost of handling the cargo, economies of scale dictate whether a private company will use a public facility, like the Port of Charleston, or establish a bulk or break bulk port of their own.
“The Port of Charleston has clients that ship chemicals in relatively small quantities, but there’s a reason for the proliferation of private facilities in proximity to Charleston Harbor—if you ship in large volumes, you need to own facilities to store your cargo in.”
What that means is that there are essentially two shipping markets in Charleston—the public market, represented here most vividly by the SPA’s Union Pier, Columbus Street and Wando Welch terminals, and the private market represented by the firms that ship in their own raw materials.
While the ports in the public market have been struggling with their need to grow to meet the demands of handling ever-increasing volumes of container traffic, the private market has seen pressure of an entirely different kind.
In recent months, the cost of shipping raw materials by sea has reached an all-time high because of the explosive growth of the economies in China, India and other developing nations.
As a result of its need for resources, and the need to travel farther to acquire them, manufacturing companies in China are requiring the services of more bulk and break bulk carrying ships and requiring those services for longer periods of time.
At the same time, ship manufacturers have been focusing on building ever-bigger container ships to carry the goods those Asian industries turn out.
The net result: A shortage of bulk ships.
“One way or another, there’s always a shortage of ships; that’s what happens as economies grow,” Goethe said. “Because of the economics of building theses hugely expensive vessels, shipbuilders need to be sure of the market.
“And because it takes two years, on average, to design and build a new ship, there’s always a lag between needing a ship and having one,” he said.
But Goethe readily admitted, that lag can have profound temporary effects on the economy.
On the one hand, a shortage of ships means that manufacturers might have to wait longer for their raw materials, and thus their capacity for turning out products is reduced.
If they strive to compete on the market for the ships that are available, these companies face stiff premiums, premiums that translate into higher prices for consumers.
“The good news is, like everything else in shipping, movement flows toward money,” he said. “A shortage of break bulk and bulk ships is a problem, but a short term one.”
And despite this year’s up tick in shipping prices, Goethe thinks the Port of Charleston’s faith in break bulk shipping is well placed.
“In this business, you don’t base things on the value of the dollar, which is cyclical. What you base things on are assumptions of opportunity, on your assumptions on future need,” he said.
“The economy of the United States remains the strongest economy in the world, so much so that years after the overseas car makers came over, we still see foreign manufacturers opening facilities here.
“What that means is that the future of break bulk and bulk shipping is very strong. In fact, if I was to make a prediction, I’d suggest that along with all the new container terminals being built, ports authorities and private companies very soon will have to start thinking seriously about the expansion of their break bulk facilities as well.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@setcommedia.com.
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