Maersk Line announced yesterday that they continue operations in Charleston, South Carolina through 2014. This is a reversal of a previous decision by the line to leave the east coast port. This is obviously great news for Charleston and demonstrates their commitment to serving their shipping line clients in the best possible manner.
The Port of Charleston announced a new breakbulk/container service that will provide connectivity to several ports in the Middle East and India. The “North America” service of the National Shipping Company of Saudi Arabia (NSCSA) will have a rotation that includes the ports of Jeddah, Jubail and Dammam in Saudi Arabia; Jebel Ali, United Arab Emirates; Mumbai, India; Port Qasim, Pakistan and Livorno, Italy.
No indication was given as to the anticipated volume of the new service. However, any win in this economy is a great win. Keep up the good work Charleston!
The engineering firm of Moffat & Nichol said it could be 15 years before it made sense to construct the new port in Jasper County, SC. In their recent report, the company cited slowing demand and increasing capacities at existing facilities as reasons for the delays. In addition, M&N estimated that the permitting phase could take in excess of 12 years.
The Jasper Port, which would be operated by a joint Georgia and South Carolina port authority is in a unique position. Lawmakers want the port up and operational as soon as possible. They believe that it will be a huge economic driver for the region. With the slowing in consumer spending and the resultant reduction in TEU volume, the individual states are concerned about cannibalizing business from Charleston and Savannah ports (both of which are increasing capacities). Although, with a 12 year permitting process, demand will have certainly picked up by 2020.
In the latest twist to a storyline that would keep General Hospital fans on the edge of their seat, the State Port Authority (SC), the International Longshoreman’s Association and APM Terminals may have found an acceptable solution to keep Maersk at the port. While the specific details have not been released, the basic terms of the proposal was agreed upon last week by all three parties. At a macro level, the proposal calls for Maersk to use less space and equipment at their current Wando Welch Terminal location. This should represent enough of a cost savings to keep Maersk’s Charleston operations profitable. The implication is also that Maersk would use less labor in their paired down operations, but that has been conspicuously absent from any reports.
The final proposal will be formally presented this week in Charlotte and we should have further details then. Stay tuned…
Yesterday I talked about a story about Maersk continuing to move services away from Charleston and redistribute them elsewhere. Today, I wanted to briefly touch on the Port of Wilmington. As I mentioned yesterday, Maersk will be moving some of its services to the North Carolina port. What is interesting is that Maersk is not the only shipper to see the value in this location. Earlier in the week I mentioned that International Container Lines would be leaving the Port of Richmond. And where are they going? Yep, to the Port of Wilmington.
With the addition of both of these shipping lines to the Wilmington roster, the port is set to enjoy year over year growth of over 100%. Savannah will no longer be the “fastest growing port on the East Coast”. It is important to keep in mind the base that Wilmington is working from. Over the past 12 months, the port has handled approximately 200,000 TEUs. So, where Savannah would hardly notice a 100,000 TEU increase, it’s a major news story for Wilmington. However, the small river port does have some very good things going for it.
First, it is located along the Cape Fear River basin with a 42ft channel. Second, it is geographically very far east. It’s not quite as far east as Hampton Roads or NY/NJ, but it is farther than Charleston, Savannah or the Florida ports. For the US-Europe trade lanes, this can mean less steaming time and a cost savings. However, the slow river journey can mitigate those gains (see below). Third, the port offers convenient access to the State’s textile and apparel manufacturers. Fourth, the port has a multi-year expansion plan in place and is executing it. They also have new dock equipment that is in place and ready to be utilized. Finally, and this is often overlooked, the port is open on weekends. As part of the agreement with Maersk, the port agreed to maintain Saturday hours. Ships are expensive assets and they need to keep moving. They don’t have the luxury of taking the weekend off. If you, as a port operator, can offer weekend service you are providing a very valuable commodity to shippers.
There are two downsides that I see to the Port of Wilmington. The first is its connection with the hinterlands. While it appears very well located on a map, with 70% of the US population within a one day drive, getting to major interstate arteries is a challenge. Via I-40, it is just about 100 miles to I-95. If you head due west on Hwy 76, it is 80 miles to I-95. That will make it difficult for them to attract major distribution centers that help to bring more business. The second downside that I see is its position as a river port. It is a 26 mile steam from the ocean buoy to the terminal. That is time that is spent at significantly less than full speed and under the control of a harbor/river pilot ($$). As always, time is money and time spent poking up a river is time you could be spending being unloaded, steaming to the next port, etc.
Overall, this is great news for Wilmington. In this economy, any win is a HUGE win. It will be interesting to see if more shippers begin looking at the Port of Wilmington as a viable alternative. I’ll have to keep an eye on them.
Maersk has continued moving forward on pulling its services from the Port of Charleston. On Sunday the company announced that its South Atlantic Express service would not call on Charleston after March 3rd. Instead, the carrier would re-route the service to Savannah, GA and Wilmington, NC. SPA interim Chief Executive John Hassell remains hopeful that they can salvage the Maersk relationship and said that a new proposal could be in front of the shipping giant by the end of the week.
Even with negotiations still underway to retain Maersk as a customer at the Port of Charleston, the shipping line announced that it will reroute some of its cargo away from Charleston. Under a vessel-sharing agreement with CMA-CGM, Maersk will eliminate one weekly service call from Charleston and add that cargo to rival ports of Savannah and Virginia. The loss is another major blow to Charleston in what is becoming a painful saga. This latest move is a clear indication that Maersk is serious about leaving the Port of Charleston when its contract expires in 2010.
While the loss of Maersk will be difficult for the Port of Charleston to handle, I am afraid that it may be just the beginning. When the largest shipping line in the world publicly announces that it can’t operate in your port because it is too expense relative to the competition, few other shipping lines will be beating down your door to sign up. Where the big boys go, so goes the little guy.