NEW YORK — North Carolina’s economic vitality might hinge on 600 acres along the Cape Fear River.
The North Carolina State Ports Authority announced plans on Jan. 3 to purchase the industrial-zoned property from pharmaceutical giant Pfizer Inc. in order to build a state-of-the-art facility capable of handling the world’s largest container ships and 2 million containers a year, which would make it one of the largest U.S. ports.
The state has been at a particular disadvantage when it comes to benefiting from the rising level of imports arriving at East Coast ports, said Tom Eagar, chief executive officer of the North Carolina State Ports Authority. “We’ve seen a lot of opportunities lost to the state due to our inability to provide facilities.”
The problem is principally one of location. Ships arriving at Wilmington, the state’s biggest port, must travel 26 miles up the Cape Fear River. The facility itself has only 100 acres, four cranes to load and unload containers and a comparatively shallow channel depth of 42 feet that limits the size of ships that can be berthed.
Even in the face of these limitations, the Port of Wilmington reported that the number of 20-foot-equivalent units, or TEU — the standard maritime industry measurement used to count cargo containers — it handled increased 8 percent in 2004 to 104,122. Wilmington ranked 34th among North American ports based on TEU in 2004, the latest year for which figures are available, according to the American Association of Port Authorities.
Eagar noted that the port is in the midst of a $130 million expansion that will boost the number of TEU it is able to handle to 560,000. Four new cranes are also scheduled to be delivered in January 2007. However, even with the expansion the port’s proximity to the city is another constraint.
“What has to be understood is that the current location of the Port of Wilmington is really encircled by the city,” said Eagar, noting that adding cranes or investing huge sums of money to deepen the channel presented further problems, like increasing truck traffic in the city. “Everything that we know told us that we needed to be looking for an alternative site. When this property became available we acted very quickly to…acquire it.”
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It was also apparent that North Carolina was missing significant growth opportunities compared with neighboring states. The ports of Charleston, S.C., Hampton Roads, Va., and Savannah, Ga., are reaping the benefits as shippers turn to East Coast ports in an effort to avoid congestion and the threat of labor disputes at West Coast ports. All three ports were among the top 10 North American ports in terms of TEU in 2004, each posting increases of more than 9 percent and handling in excess of 1.5 million TEU.
Wilmington has been left out of the all-important Asian trade, as well. According to a study from logistics consultancy Martin Associates released June 8, Charleston, Savannah and Virginia have captured an increasing share of the Asian trade since 2000. Savannah, in particular, has seen its share of Asian trade rise more than 80 percent to about 3.25 million tons in 2004 compared with an estimated 1.75 million tons in 2000. The Martin report also said that increasing business within the port translated into more business being generated outside the port.
The Port of New York and New Jersey, working with the New Jersey Economic Development Agency, has committed $1.8 million to identify 20 potential properties for development of distribution centers. The Virginia Port Authority saw Wal-Mart announce plans to expand its existing 1-million-square-foot distribution center to 3 million square feet. Target also planned to expand its 1.5 million-square-foot distribution center in the area.
None of this has gone unnoticed by Eagar or North Carolina. “We’ve seen distribution centers in Savannah, Charleston and Virginia,” he said. “We have been denied access to those markets because we have been denied a world class facility. That’s about to change.”
The proposed site for the new port has several advantages. The land is only 9.5 miles from the Atlantic Ocean and is already zoned as a heavy industrial area.
“It gives us easy access to the Atlantic and we have an area that is more or less underdeveloped,” Eagar said. “It has very good highway access and rail access.”
Another advantage is the depth of the channel. Eagar said, “We can dredge to 52 feet in order to accommodate the Suez vessels that are expected to come in the coming years. We’re going to see business coming through Panama as well as Suez.”
Eagar also anticipates more business from European and Latin American countries.
“We haven’t had the Latin America business here in the last five years,” he said. “We had lacked the water depth. The limiting factor for us has been location, capacity and ability to take on greater volumes.”
The State Ports Authority is completing the purchase of the land. Eagar anticipates getting state approval in February and has set a March 31 deadline to finish the process.
However, it will be several years before construction begins. Eagar said after the purchase is completed he must carry out an environmental impact study that could take two years. Then Army Corps of Engineers must do an economic analysis, which could take another year.
“It’s probably a 10-year project before you would see the facility operational,” he said.
Eagar believes there’s little chance that a new port in North Carolina will negatively impact neighboring ports.
“There are many studies out there that show international trade is projected to double by 2020,” said Eagar. “The North American container market is expected to double by 2015. We already see the impact of the growth.…We’re already starting to see issues at the major South-Atlantic ports. The reality is that the market will outgrow the supply side in terms of port facilities.”