Deeper Port, Bigger Profit
Those of us living inland from the coast may fail to realize the impact the Port of Charleston has on our lives. When we don’t see the ships coming in and going out from the harbor, it’s easy to take the work they do for granted. But we are all affected by the port every day, whether buying a product at the store, clocking into our manufacturing job, or enjoying the quality of life in our communities. The momentum of international trade through the port is steadily rising each year, and the increased demand has made it necessary for Charleston to upgrade the port’s capabilities in order to sustain current business as well as gain a competitive edge in drawing new investment into our state.
The South Carolina State Ports Authority (SCSPA) reports that port operations deliver nearly $45 billion of economic impact to S.C. each year as well as being linked to more than 260,000 jobs and $11.8 billion in annual wages statewide. The Department of Commerce’s International Trade Administration reports that export-supported jobs linked to manufacturing account for nearly 7.6% of S.C.’s total private-sector employment, while 28.5% of all manufacturing workers in the state depend on exports for their jobs. A total of 3,644 companies exported from state locations in 2009, of which 84% were classified as small to medium-sized enterprises. According to the SCSPA, the Upstate region realizes $21.4 billion in annual port-related economic impact, accounting for 112,700 jobs and $5.3 billion in wages. Likewise, the Midlands region sees $9 billion in annual port-related impact, with support for 51,800 jobs and $2.4 billion in wages.
But the economic benefits of the Port of Charleston extend even further to the national level. Charleston is the eighth-largest U.S. seaport in cargo value with more than 20,000 companies in 24 states relying on the port to gain entrance to overseas markets. The SCSPA reports that importers through Charleston pay $600 million in duties every year into the General Treasury. The numbers make it clear it is an absolute necessity for S.C. to advance our port’s capabilities in order to stay ahead of the curve of industry demand to strategically position ourselves to efficiently access global markets, recruit new investments and continue to drive prosperity throughout the state.
Container volume increased by 17% at the port in 2010, and the Southeast region is expected to also experience significant growth in manufacturing and population. “Manufacturing companies and consumers alike want their materials and goods faster and cheaper than ever before. Much underlying costs in producing a finished product lie within costs associated with transportation and logistics, and, in response, shipping vessels are getting larger to handle demand more efficiently. Meeting the requirements of the shipping companies will help industries develop a more predictable supply chain to significantly decrease cost and time associated in the manufacturing pipeline,” says Byron Miller of the SCSPA. “In order to serve national manufacturing, distribution, agricultural and export growth, the U.S. needs a South Atlantic port able to efficiently handle ships drawing up to 48 feet or more. Studies demonstrate Charleston is most capable of delivering this requirement with $106 million in net benefits annually.”
Shipping vessels are indeed getting bigger – much bigger. Miller says that the first container ship to call on Charleston in 1966 held 600 TEUs (or twenty-foot equivalent unit – a term used referring to a unit of cargo capacity based on a 20 foot long container) while current vessels can hold up to 9,000. Charleston made news in the summer of 2011 when the MSC Bruxelles, the first 9,000+ TEU ship ever to call on the U.S. East Coast, came into port. Maersk has recently ordered the Triple-E, which carries 18,000 TEUs. The SCSPA’s orderbook capacity breakdown by TEU size range shows that 78% of ship capacity on order is too big for the existing Panama Canal. This trend doesn’t show signs of slowing. In 2011, Charleston received 175 ships exceeding 965 feet in length into port, a marked increase from the 30 ships of that same size who called in 2009. More than 208 of these vessels are anticipated in 2012.
The port currently has a mean low water depth of 47 feet in the entrance channel and 45 feet inside the harbor and though this is deepest in the region, large 1,100 foot long ships are tidally constrained, forced to wait until high tide to move into the harbor and then with only a couple feet underneath to spare. “Delays will become more severe as ships get larger and as traffic increases at the port,” says Miller. “Time spent at the port waiting on the tides equals money lost and that will translate into more expensive raw materials and goods coming in and out which will in turn decrease our competitive edge.”
Charleston’s Post-45’ Harbor Deepening Project will also allow the state to capitalize on new opportunities afforded by the 2014 expansion of the Panama Canal, which will allow even bigger ships to access the Eastern coast with more frequency. This is a prime opportunity for S.C. to expand the port’s capabilities in servicing the world’s leading ocean carriers while giving manufacturers across the region a viable alternative to West Coast ports. “Currently we are seeing around five ships per week that are too big for the Panama Canal, but once the Panama Canal expansion is completed, as well as the deepening of our port, the opportunities ahead are limitless. We will be able to handle larger vessels on any tide, capture some Asia-to- North America traffic previously moving via West Coast ports, and serve one of the largest exporting regions in the country. The deepening will establish Charleston as a true next generation sea port in the Southeast corridor.”
Over 40% of Michelin North America’s shipping comes through the port. “Since the deepening will allow more vessel options into the port and thereby improve overall shipping efficiencies and logistics in and out of the U.S., Michelin will benefit from the prospect of this project,” says Tony Fouladpour, press spokesman. “The Port of Charleston was one of the principal reasons Michelin came to S.C. Forty years later, the Port of Charleston remains the economic engine of the state. It is imperative for the port to be dredged, not just to accommodate the goods and products that Michelin currently moves through the port, but to anticipate future economic activity by all users.”
Otis Rawl, president and CEO of the S.C. Chamber of Commerce says the port deepening will provide tremendous incentive for industries looking to locate in S.C. “Companies looking to move their operations to the state will have to take into consideration how easily and effectively they can move raw materials and finished goods to and from the port. The advanced capabilities of a deeper harbor where multiple ships can pass each other and come in on any tide will enable S.C. to be a gateway to the Southeast for economic development,” says Rawl. “We now become competitive for distribution facilities and manufacturers looking to bring their specialized operations back onshore.”
Jerry Howard, CEO of Greenville Area Development Corporation (GADC), says the Upstate reliance on foreign markets make the port deepening an absolute necessity. “Statistically speaking, more than 60% of Upstate companies export their finished products,” says Howard. “The deepening will allow our local companies to sustain their current business while planning ahead to future demand from the global economy."
However, Rawl does warn that the state must act now to ensure that a sound infrastructure is in place to accommodate the increased port activity. “If we are to be a hub of economic development, it is vitally important that our highways and other infrastructure are improved and capable of handling the increased congestion and interstate capacity stemming from more traffic at the port.”
The Charleston Post-45’ Project is expected to generate many economic development opportunities for the entire state and Southeast region. According to the SCSPA, “each additional foot of channel depth allows post-Panamax ships to carry 100 more containers. Five feet represent a $30 million revenue opportunity for each weekly service. A 50 foot project means $106 million in net benefits per year on average.”
The deepening project’s reconnaissance report was approved in July of 2010 and a feasibility study is currently underway. The project’s expected completion is in 2020-2021.