From Site Selection magazine, September 2002
INFRASTRUCTURE
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From Site Selection magazine, September 2002
INFRASTRUCTURE
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2002 Global Infrastructure Report, page 3
Up-and-Comers Ports on the rise include Durban, South Africa, with more than 880,000 TEUs; Tianjin, in northern China; and Charleston, South Carolina and Savannah, Ga., which may operate as rivals but function much like Los Angeles and Long Beach in terms of clustered port activity.The Charleston Regional Development Alliance indicates that one-third of the companies they have worked with over the past five years in business expansions and new locations have come because of the port, the fourth-largest container ship port in the U.S. And, similar to the Savannah bridge project of a decade ago, Charleston's port expansion work includes a new - higher - bridge, assuring that the tallest laden container vessels can find a berth. "It's my observation that Charleston has done extraordinarily well post-Naval presence at the base," says Russell Lamb. "While there was much consternation during the process, the end result has been a very positive economic impact to the city, making it potentially stronger by having less reliance on a single employer."
The Port of New Orleans combines the best of river and ocean terminals and is the only U.S. port served by six Class 1 railroads. The Port of New Orleans has invested nearly $500 million over the last 10 years in new facilities, the latest being the Napoleon Avenue container facility currently under construction. The 57-acre (23-hectare) terminal, with a projected annual capacity is 366,000 TEUs, is scheduled to open in November 2002. One port that is stealing attention as well as development is Tanjung Pelepas, Malaysia, where sweetheart deals have lured such major players as Maersk Sealand and Evergreen Marine away from longtime leader Singapore, which is now pursuing a similar strategy of equity stakes by container companies in terminal facilities. Gaining ground in the U.S. is the port of Norfolk, where the level of facility development inspired Target Corp. to locate a huge distribution facility, expected to be up and running by spring 2003. "This facility varies from other warehouses that we build because it will function primarily as an import warehouse," says Target Corporation's Jim Theusch, who has helped the company locate other regional distribution centers this year in Midlothian, Tex., and Topeka, Kan. "We were looking for a major port facility on the East Coast, with adequate transportation systems that would service the port and allow us to service our eastern retail operations. It also had to afford our management group a quality of life that would allow us to put executives into this area, and it had to have a labor supply that would accommodate our operation requirements." Looking at labor market stress, other corporate activity and the available labor pool, Target officials saw an opportunity in Norfolk, enhanced by accommodating relations with the state, the port authority and the local redevelopment authority. The port is undergoing a 300-acre expansion that will double container cargo capacity to almost 50,000 TEUs, enabling the port to maximize its high-cube intermodal capabilities. "We handle more intermodal containers than our two closest competitors, New York and Baltimore, by rail," says Port Promotions Director Linda Ford. Should a statewide voter referendum pass later this year, the planned port improvements in and around Hampton Roads will be further supported by major highway improvements over the next 20 years, costing an additional $10 million annually. Further ports or port clusters on the rise include Seattle-Tacoma and Portland in the U.S. Pacific Northwest, and Panama, which offers a whole lot more than a throughway. The Manzanillo International Terminal began operations last year on the Atlantic side, where Taiwanese firm Evergreen, has negotiated the construction of a second container port. The ports, combined with the trans-isthmian railroad, are projected to move two million cargo containers by 2002. Hartz Mountain Industries began the construction of a 400,000-sq.-ft. (37,100-sq.m.) industrial distribution facility in Secaucus, New Jersey in large part because of port growth. "The improvements being made to Ports Elizabeth and Newark have added momentum to the northern New Jersey industrial market despite slower economic times," said Hartz Emanuel Stern, referring to the Ports' dredging to 50-foot depths to enable them to accommodate larger container ships. In May 2002, the Alabama State Port Authority Board approved funding for contracts in preparation for the $240-million Choctaw Point Container/Intermodal Distribution Terminal, due to be operational by 2005. In Puerto Rico, the development of a transshipment hub at Port of the Americas (in Ponce and Guayanilla) is just underway, with the selection of a port development firm expected by the end of 2003, and a hoped-for completion date of 2007. Planning for ships that could carry as many as 12,000 TEUs, the Commonwealth aims to back its port with a new cargo airport at Aguadilla and a 1,000-acre (405-hectare) free trade zone devoted to light manufacturing and assembly plants (packaging, labeling), and logistics and distribution firms. The new facility should have a capacity approaching 3 million TEUS, to pair with the 2.3 million currently moved annually by the Port of San Juan. Fast, Efficient and Secure Whether facilities are being refurbished or tacked onto, activity is bustling on every waterfront. Just ask the people who design the software to handle the tile-game complexity of container management, as they just opened an office in Hong Kong and signed a contract with an unnamed Chinese port."To make it effective, a lot of players, like Dubai Ports Authority and others, are making free trade zones, so it attracts all the major players who are major product purveyors," observes Jim Schreitmueller, vice president of sales and marketing for Navis, an Oakland, Calif.-based leader in development of container handling software. He says port development basically follows two courses - trans-shipment hubs or distribution centers - with some performing both functions. Russell Lamb, now with Allegro Realty Partners in Cleveland, used to work for Charleston County, South Carolina, spearheading award-winning real estate management initiatives. And before that, his last assignment as a U.S. Navy officer involved the closure, disposition, and reuse of the 1,400-acre Charleston (SC) Naval Base. Asked what makes for an ideal port facility, he said the first fundamental is navigable water, and easy access to it from shipping lanes. "You want a short route and easy access, like getting off the Interstate," he says. "That's why places like Charleston and Savannah do well. It becomes a function of geography." At the same time, working against some of those same locations is a lack of broad intermodal distribution from that easy access point, with a multitude of highway and rail routes to choose from instead of just one option. "You are going to have natural geography, but also you have to have this node connected to the next node," says Lamb. "It's all about all the downtime. Everyone has the same objective. The ship's goal is to get loaded, time their journey at sea to pull right into the dock, get unloaded as fast as possible, and get back out to sea. That now falls onto the crane operators and to the ports themselves." "One of the elements to begin to identify a port that's successful is that it owns more and more of its lay-down area. Usually port authorities and investors look for adjacent and outlying areas for storage and distribution. But there is money lost every time goods sit. That's the whole idea driven by just-in-time. Someone is carrying that inventory. And you have cash tied up in it. The days of 'If we can just get more land and get these companies to lay down their goods while waiting' are rapidly dwindling. At a lot of really successful ports, they pop them off the ship and put them right on the truck, off to the next point on the supply chain." Intermodal: A Movement Trend That Is Here to Stay Symbolic of the interwoven, multinational nature of modern global transport was an event in June at the eighth-busiest port in the world, Hamburg. The Austrian firm of Plasser and Theurer in Vienna was loading onto a Chinese-Polish Joint-Stock Shipping Co. vessel an 85-ton track-laying machine, destined for the Chinese port of Xingang in China, where it will help in the eventual $42-billion build-out of that nation's already extensive railway network. Port officials were happy to report that the machine reached Hamburg by rolling on its own axles.Peter Gatti, vice president of international policy for the National Industrial Transportation League, used to work for the National Association of Port Authorities. "The logistics and supply chain can have a contributive aspect to decision-making," he says. "Carrier A serves Port B, that's where the determination is made of where cargo is going to go. It's not in the same sense as the colonial days, where you built in a specific spot - intermodalism has made that less important. In terms of access, the intermodal connectors - so that you have direct access to ports, interchanges that are in place, and sufficient clearances on railroads servicing ports so they can use double-stacked trains - things of that sort certainly have an impact." Just ask Chicago, where 50 percent of U.S. rail container freight passes through the 57 different railyards. And even though it's 800 miles to saltwater, more intermodal containers pass through the Windy City than anywhere else in the Western Hemisphere. Developers needed no greater reasons to embark on the massive 2,032-acre railyard and warehouse complex called CenterPoint Intermodal Center nearby, to be used by Burlington Northern Santa Fe Corp. in the same way it uses a similar facility in the Alliance Texas development outside Fort Worth, Tex.
As the purveyor of software trying to shuffle all components efficiently, Jim Schreitmuller of Navis, like corporate leaders themselves, sees the benefits of intermodal immediately. "It becomes economically more compelling, like bees to honey, as long as they have the infrastructure to service the customers," he says. "In L.A. for example, it goes right to the Alameda Corridor, in double-stacked trains going right inside the ports facility." As such, ports and companies are looking more closely at stowing a vessel with a train in mind on the other end, he says, so it can be expedited on discharge. "You pull off the top layer in a narrow time frame, those could all be discharged, and match the schedule of outbound trains to send them right to Chicago," he says. The $2.4-billion, 20-mile Alameda Corridor just began operation a few months ago, and has received rave reviews. "The universal thinking is to get the trucks off the road in the inner cities where the ports are, so you're not hammering the roadways with all this truck traffic and pollution," observes Schreitmuller. "So the general thinking is to use railhead as the conduit to move cargo from a marine facility inland. One thing we did half a dozen years ago was to introduce double stack train planning, so we treat it just like we do a ship: measure the vertical center of gravity, and do all the stowage for the train just like we do for the vessel. You see more and more cargo moving onto the train directly from a marine facility "It's been exceptional," says Hal Duensing, director of properties for the 3,800 acres comprising the Port of Long Beach, of the Alameda Corridor. "The number of trains has exceeded what we thought it would do. The railroads seem to be functioning very well, and living up to all our expectations." A Way In, A Way Out Some of the greatest cities in the world did not locate near protected harbors and waterways by accident. And there is more reason than rhyme to the attraction of industry to those same shorelines.So what are the development trends in and around these busily expanding ports? There seems to be nearly universal agreement that the time is now to get as close to them as you can. "My observation is that it is picking up quite a bit," says Omer Kadaster. "The ships are getting bigger. The ports are expanding such that they like to combine all the piers into less docking areas, but with more storage facilities." "In general, if you look at how ports sell themselves, they sell themselves on efficiency and location," says Schreitmuller. "That's what they're selling to the line operators. They will invest, they will dredge, they will buy new cranes. Here in Oakland is a classic example: the port is spending a lot of money retrofitting the entire port to support rail. They have claim to one of the largest container cranes in the world, and they have purchased seven in the past six months." While noting that industrial space is "very very scarce" within the urbanized L.A.-Long Beach marketplace, Duensing says that corporations are merely looking further east, toward the Inland Empire. "The expansion of trade through the ports has increased the demand for warehouse and distribution facilities," he says, in comments that could apply to any number of expanding port areas worldwide. "They're looking for large tracts of land and large boxes for regional and national types of facilities. An example is Hasbro Toys - they had a distribution facility in Seattle, which they closed, and they're going to run everything out of this area now, because the shipping and distribution facilities here are much better to reach the national market." "That's something that is becoming of great interest to a lot of port operators around the world — to capture a market and build a business," says Schreitmuller. "They're interested in building commerce that's non-oil-related, and leveraging their geographic location."
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