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Jafza project would redefine ‘Port of Entry’
By Dan McCue
Staff Writer
During his only on-the-record interview about his company’s plans for South Carolina, Chuck Heath, managing director of Dubai-based Jafza International, offered few clues to what his company’s 1,300-acre facility will be like and how it will function.
“You have to understand how early in the process we are,” he said. “It would have been premature to plan anything until we secured the land in Orangeburg and began speaking with officials here and that’s where we find ourselves now.”
But as he warmed to talking about the sprawling $600 million complex of warehouses, distribution centers and light manufacturers Jafza plans to build near the intersection of Interstate 95 and S.C. Highway 301, he was emphatic on one point.
“We think Orangeburg has the potential to become a major logistical hub in the United States,” he said.
That reasoning is easy to understand, said Joe Gurskis, director of Intermodal Freight Planning for Wilbur Smith Associates of Columbia, one of the nation’s foremost infrastructure consultancies.
“I think we’re on the verge of tremendous growth of all types of ports and logistics facilities, and communities like Orangeburg and others like it in the Southeast are going to be the beneficiaries of that activity,” he said.
Fueling that explosion of logistic activity is the shipping industry’s increased activity through the Suez Canal, the soon to be commenced widening of the Panama Canal, and the emergence of the economies of India and countries on the African continent.
Land values on the rise
Jafza is a subsidiary of Dubai World, a holding company owned by the royal family of Dubai. Drawn to the Southeast by demographic trends, the company began scouting potential locations for a logistics complex in March, and moved quickly to secure the land in Orangeburg when it became clear that options held by CaroLinks, the Charleston-based logistics startup company, began to expire.
One reason to move quickly was the fact that thanks to a host of other commerce park developments in what Orangeburg County has deemed its global logistics triangle, land prices were already expected to rise considerably in the area, said Gregg Robinson, executive director of the Orangeburg Economic Development Commission.
“Land prices in Santee, adjacent to Lake Marion, have always been high, but that didn’t carry over to other nearby areas because we had a lot of land available that didn’t have water and sewer,” he said.
“Now that Jafza has made its investment and as we identify additional areas to bring in water and sewer, we’ll continue to see an escalation of the price of land in Orangeburg,” Robinson said.
Heath likened the Jafza project to that of a mall operator who invests in a site, begins establishing an infrastructure, and then brings in quality tenants who provide an array of employment opportunities throughout the surrounding region.
Jafza will reduce its risk exposure by building and leasing some of the facilities on the land, while other companies would buy portions of the site and build their own facilities within the confines of the industrial park.
The carrot for these companies is that Jafza will have designed its facility to provide the highest level of distribution efficiency for a broad base of commercial users, large and small.
Jafza is also banking on ongoing changes to shipping patterns that have already seen massive amounts of cargo diverted from ports on the West Coast to Charleston and other points in the Southeast.
Global Insights, an industry analyst, has projected cargo volume from Asia alone will grow by more than 320% over the next 15 years. The container cargo volume passing through the Port of Charleston is projected to increase by 257% during that same period.
“More than 70% of the U.S. population lives east of the Mississippi, with the population center shifting farther south,” said Heath, citing U.S. Census Bureau statistics. “As a result, bringing goods through ports and facilities in the Southeast, means you’re bringing them in closer to market.”
Duplicating successes
Heath began working for Dubai in 1981, when the oil-rich nation opened its first large port facility in an effort to transform itself to a corporate state. Together he and Sultan Ahmed bin Sulayem came up with the idea of augmenting the port with a massive logistics hub, the Jebel Ali Free Zone.
Opened in 1985, Jebel Ali now employs about 150,000 people within 35,000 acres. Heath said 6,500 international companies operate out of the zone, with about 140 of them being Fortune Global 500 companies.
The Jebel Ali is the model Jafza would like to replicate here, Heath said. What’s clear, based on the information on Jafza International’s Web site, is that if it’s successful in carrying out that objective, it will effectively redefine the concept of “port of entry” in the Southeast.
While Jafza International has yet to announce its blueprint for the more than 1,300 acres it now owns in Orangeburg, Heath’s description of Orangeburg as a logistics hub is telling.
First of all, it redefines the concept of port of entry because it suggests a pivot point serving not just the Port of Charleston, but port facilities up and down the southeastern seaboard.
With it also comes the implied acceptance that coastal ports in the United States are largely a confluence of the shipping and trucking industries, according to those who’ve met with the company’s representatives.
In fact, Robinson said a great deal of the planning that now needs to be done on the state and county level involved road improvements leading to and from I-95 interchanges 93, 97 and 98. These improvements will enhance trucks’ ability to enter and exit the Jafza property, while pushing truck traffic away from Lake Marion and off local roadways.
The issue then becomes how to move the cargo once it’s away from the coast, and that most likely will involve rail.
Robinson said the Jafza property already has one direct connection to a CSX Corp. railroad line and that another rail connection is nearby.
“The current track has the capacity to handle double-stacked rail cars, and the route out of Orangeburg is clear of obstacles such as low bridges and the like,” he said.
“That said, I think we’re going to have to work with CSX to improve the rail connections to the site, specifically by looking at the possibility of laying an additional line of track in the existing rail bed,” Robinson said.
CSX and Dubai are no strangers. In February 2005, Dubai Ports International, another company under the Dubai World umbrella, bought CSX’s international freight terminal business for $1.14 billion.
It was that deal that made Dubai Ports one of the six largest operators of terminals in the world and gave the company a presence in Asia for the first time.
Logistic center build-up
Joe Gurskis, director of Intermodal Freight Planning for Wilbur Smith Associates, said the emphasis on rail to move cargo and goods out of Jafza’s site and Orangeburg’s global logistics triangle as a whole would be a good one.
“That’s just one of several possible models, and of course, I’m speaking generically, but that is a model that works” Gurskis said. “Let’s face it the highest and best use of a coastal port facility is to process containers off ships.
“Now as cargo ships get bigger, you need more and more land because there are more containers to place on the ground. So what do you do?” he said. “Where capacity constraints are an issue—as they are in most coastal communities—the best thing to do is get those containers off the dock as soon as possible and that means an inland facility, and typically one that has expedited rail service that keeps the flow of cargo going off to the Midwest or to some other site in the Southeast.”
“Like I said, there are a lot of different models, but the primary idea is to keep the cargo flowing,” he said.
Gurskis said while he has no direct knowledge of Jafza’s intentions or plans, he thinks the railroad will be “extremely interested in investing in the kinds of infrastructure” it and other distribution centers in the area need.
“Railroads are out to make money and they will invest as required to make that money, whether that means improving capacity, making technological enhancements or extending track,” he said.
“Again it comes down to economies of scale. What we’ve found over the years is that you will get the best service where it makes sense for railroads to provide it,” Gurskis said. “A network of logistics parks in an area will provide an incentive for improvements by virtue of the density of potential traffic. After all, like any other part of the supply chain, the more you shove through their system, the more money they’ll make.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@setcommedia.com.
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