Ports authority faces opportunities, challenges in years to come

By Matt Tomsic
mtomsic@scbiznews.com
Published Oct. 25, 2012

The S.C. State Ports Authority faces challenges in harbor deepening and recapturing cargo lost since 2009, said ports CEO Jim Newsome, but the port has seen increased cargo growth and positive developments in its harbor deepening project.

Newsome spoke to a record crowd at the Charleston Convention Center for the 2012 State of the Port, addressing the port’s progress during 2012 and its challenges beyond this year.

“A state with a great port will prosper disproportionately and become a visible player in the global marketplace,” Newsome said. “It is up to those of us in this room to develop and maximize that opportunity. Cooperation is key, and we have no time to waste.”

Ports CEO Jim Newsome
Ports CEO Jim Newsome
Newsome said the port’s first priority is to get back the business it lost because of the economic downturn and its declining port brand. The port is growing cargo, he said, and it logged the highest quarterly container volume for the past four years during the first quarter of fiscal year 2013. The port forecasts handling nearly 900,000 containers during FY13, a milestone on its path to 1 million containers, a volume that hasn’t been seen since fiscal year 2007, when the port handled 1.08 million pier containers.

Newsome also highlighted the inland port in Greer, where the ports authority and Norfolk Southern will operate a rail yard, connecting the Lowcountry to the Upstate and to a major rail investment in Charlotte, N.C.

The port has also hired new personnel to continue growing its cargo and services.

Newsome said John Wheeler joined the ports authority to lead its carrier sales, and Wheeler previously worked at the Georgia Ports Authority. At the October ports authority board meeting, the port promoted Jack Ellenberg to senior vice president for economic development and projects. Ellenberg previously worked at the S.C. Department of Commerce and was involved in the Boeing project.

“The port business is a long-cycle business,” Newsome said. “Things happen over the course of years, not months. Progress is slow as port choice is more strategic in nature, but we are laying a strong foundation and seeing significant progress.”

Bigger ships, deeper harbors
Ocean carriers are building larger ships, which offers fuel savings for them but stresses harbors that don’t have the depth to accommodate them.

Newsome said an 8,000 20-foot-equivalent-unit, or TEU, ship has 48 feet of draft when fully loaded and requires a harbor depth of 50 feet. The Port of Charleston can handle those ships now on high tides, but the harbor needs to be deepened, Newsome said.

The Army Corps of Engineers is studying the impact of the harbor deepening now and has said the harbor could be deepened by 2020 if it gets funding and approvals from Congress. Newsome said today the harbor needs to be deepened by 2018, and the port is confident it can be done thanks to the progress made during the past two years.

President Barack Obama selected the harbor deepening as one of five priority projects, Newsome said, and the state Legislature set aside $300 million to cover the project’s entire cost, which is normally split between federal and state governments. Newsome said the state would be reimbursed for the federal government’s share if that money is spent.

Challenges
Despite the progress, the port still faces challenges, Newsome said, including uncertain growth of world economies and trade, strong competition between ports in the Southeast and large investments that are required of port projects.

The Southeast has four ports within 400 nautical miles of each other, and those ports all serve the same region of the U.S.

“Clearly, not all four ports will be able to thrive and prosper,” Newsome said. “In our view, the starting point to be a future player in the mainstream container segment is to be a top-10 U.S. container port. The ability to grow will be governed by the achievement of untidally restricted deepwater harbors and supporting inland infrastructure to reach markets efficiently.”

The Georgia Ports Authority is also deepening its harbor and is nearing construction. Newsome said that Savannah's, Wilmington's or Jacksonville's harbors will not be deepened before 2017, though, because of each project's status and potential legal challenges.

“Lines cannot wait for this and will have to gravitate to a port like Charleston, which offers a significant draft advantage today and relatively unrestricted passage,” Newsome said.

Newsome said there are reasons to be optimistic, including projections that global container handling will grow at 6% each year and port throughput will reach 1 billion TEUs by 2020, an increase from the throughput of 600 million TEUs today.

“Our port is the major economic development engine for our state,” Newsome said. “And economic development is about jobs. I am constantly reminded that we do what we do ultimately to create good jobs and economic prosperity for our state.”

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