Full Steam Ahead
The American States of Pennsylvania, New Jersey, and Delaware move forward with a hefty plan to attract investments and intensify transportation logistics in the region
By, Valeria Bursztein*
Global Magazine
Furthering the economic development of Pennsylvania, New Jersey, and Delaware is one of the directives that regulate Select Greater Philadelphia's activities in an area that consists of 11 counties, and embraces the fifth largest population in the United States.
In this, a post-crisis environment, local markets are beginning to show signs of recovery. That is why SGP believes the time has come to attract investments and diversify its industrial ventures. The region's economy has lately undergone important transitions. In the 1950's, a significant share of its labor force worked for manufacturing companies. Years later, the United States witnessed a reallocation of the industrial base to the south, and to Mexico and other countries.
In time, the region restructured itself with emphasis on value-added services, influenced by the expansion of industries specialized in research, such as pharmaceuticals, which now has a strong presence in the region, the largest in the United States.
The area is within a 600-mile radius of large consumer centers. The many intermodal transportation options make easy access one of the region's most obvious advantages. The Delaware River, which runs through the region, offers 50 pier terminals dedicated to different types of cargo, with emphasis on refrigerated cargo. In addition to its extensive roadway network — about 90 roadway transportation companies service the region — the area also features three rail companies (CSX, Norfolk Southern, and Canadian Pacific). In terms of air transportation, the region has 86 domestic and 38 international airports.
Logistics also gained in importance, evidenced by the 180,000 jobs directly related to that sector. The number of warehousing and distribution centers totals 250 in Philadelphia alone. Last year, it was directly or indirectly responsible for US$13.69 billion in revenue.
Because of the economic recovery and the increase in transportation demand, the region's ports have been enlisted to accommodate larger capacity vessels, which revealed some limitations. With a start date yet to be determined, there are plans to dredge close to 70 miles of the Delaware River in order to increase its depth from 40 to 45 feet. The US$300 million project should be completed in less than five years, generating more than 4.95 million ft2 of dredged material. Disposal of this material is one of the issues that has stifled the process. "We are losing business, especially with South America, because of the insufficient depth of the channel. We are competing directly with New York/New Jersey and Baltimore," regrets the Port of Philadelphia's Marketing and Development Director, Sean E. Mahoney.
Philadelphia
To validate the attention that the State of Pennsylvania is attracting, the Brazilian Foreign Relations Ministry has announced the creation of an Honorary Consulate in Philadelphia, with the intent of strengthening relations between that country and Pennsylvania, the State with the sixth largest GDP in the United States.
Since 1998, the State of Pennsylvania has stationed a trade representative in São Paulo to represent 120 American companies interested in doing business with Brazil. The State already exports transportation equipment to Brazil and, recently, there's been significant activity increases in the metallurgical products and metal refuse areas. The inverse is also true, with Pennsylvania receiving Brazilian ethanol, fresh fruits, footwear, coffee, refined oil, steel, iron, and automotive parts. The trade between Brazil and this American State increased by 107% between 2007 and 2008, only just missing the mark of US$1 billion.
The Port of Philadelphia is one of the points of contact connecting the two markets. With its 3.6 linear miles of shore, the complex operates with a large diversity of cargo: bulk solids (31%), and liquids (16%) , and containers (53%). In 2008, it docked 605 ships and managed 5.3 million TEUs. In addition to steel, forest products, and cargo, perishables are of great importance to the complex, which offers 366,000 ft2 of refrigerated facilities, and 21.9 million ft3 of freezer space, used to store fruits and meats from Brazil, Costa Rica, Australia, Argentina, Honduras, Spain, Chile, and New Zealand, among others.
The Port's Marketing Executive, Dominic V. O'Brien, comments on one of the port complex's logistics advantages: though it is a river port, the time spent navigating in the channel to reach the piers never surpasses six hours — only two more than getting to New York, without taking into account the bottleneck effect experienced by that neighbor port. And, he continues, "If the vessel comes from the Panama Canal, there is practically no difference." The Port Authority is trying to establish direct service to the Far East, which would mean an increase in container volume of about 300,000 containers per year.
CSX is one of the three rail operators that transport cargo within the port. The manager of the rail terminal, Dennis P. Sweeney, reveals that, in a day of intense activity, approximately 300 trucks are registered at the site, which offers 2,000 reefer container plugs. On average, three regular assemblies of 120 containers are transported daily to the south, north, and west of the United States.
CSX's yard, with a total capacity for 250,000 units, transported 160,000 containers in 2008; this year the expectation is for 85,000 more. The company plans to acquire automatic cranes, which will be installed at their new site.
In order to increase the container assemblies' transport volume, the State of Pennsylvania is considering lowering the tracks, so as to allow for double-stacking of containers. This is an intricate project that may end up costing US$32 million.
Southport
With the Port of Philadelphia expansion in mind, an ambitious project takes shape: the construction of Southport, a new container terminal. "Most ports in the Northeast of the United States have exhausted their spatial growth possibilities. That is not the case with Southport, which may escalate its plans from the original 200 to 300 acres. The Port Authority believes that the project will be operating in less than ten years," says O'Brien.
According to him, the government of Pennsylvania will invest in the preparation of the necessary infrastructure and the Port Authority is looking forward to private initiative proposals. "Before the crisis, the area was being coveted by three groups, which included Holt Logistics, Hamburg Süd, and Goldman Sachs. However, when the crisis came along, the process was put on hold."
Southport is an important venture for Holt Logistics. In business since 1926, Holt is one of the most long-standing port operation and logistics companies in the region, acting in the development and operation of port terminals, and responsible for the largest perishables facility (frozen and refrigerated) in the United States. The president of the company, Leo A. Holt, says, "We are very much invested in the Southport project, but we do have other interests, such as the Packer Avenue Marine Terminal, which could be expanded to attract more business."
With a capacity for 600,000 units, the Packer Avenue Marine Terminal is Philadelphia's most important when it comes to container handling. Its productivity is impressive: each hour, 120 to 125 pallets, and 40 containers are processed (versus 27 in the Port of New York). For bulk cargo, the average comes to 300 tons per hour. "That means vessels stay less time in Philadelphia, minimizing the customers' cost," affirms Holt.
An enthusiast of the region, Holt is confident that demand will grow faster than expected. "When it comes to the future of ports, we will continue to be extremely aggressive, because we believe in the trade market's recovery. Millions of dollars were invested in New York/New Jersey, where there are fundamental structural issues, such as the limitation imposed to larger vessels by the Bayonne Bridge (linking New York and New Jersey); something that can benefit us. We should also bear in mind that we have space to expand and a more resourceful transportation and intermodality offer."
In 2030, the Port of Philadelphia will have the capacity to process up to 2.5 million TEUs, due to investments that are being made in infrastructure. "Our bulk operations are traditionally very important, but we need containers. These can come from sharing volumes with New York/New Jersey, which will probably happen with the expansion of the Panama Canal and the economic recovery," says Holt, an advocate for a deeper interaction between cities in the region, based on the obvious complementarity. And he concludes, "We believe the solution to the bottleneck and many other issues must be regional."
New Jersey
Developed within a shipyard built in the 1940's, South Jersey Port handles cement, silica, fertilizer, forest products, cellulose, and cocoa, among other cargo, as well as fruits, such as banana and pineapple. In recent years, the port expanded its activities to include the handling of scrap iron, which reached a volume of 1 million tons per year. "One of our goals is to attract entire industrial transformation operations — from recycling all the way to the manufacturing of other products," reports South Jersey Port's Director of Operations, Kevin Castagnola.
The region also plans the development of Paulsboro Port, with a 40-foot draft and 190 acres of space to handle general bulk cargo and perishables. The project requires a bridge to absorb the region's truck traffic. Construction of the access has been approved and should be finished by 2012. The schedule provides for the construction of two berths by 2012, with a cost of US$150 million, and a third one by 2015, for another US$100 million.
Cold chain logistics plays an important role in the region. A major player in that market is Mullica Hill, the leading meat, fruits and seafood import operator in the United States. Handling 40,000 to 50,000 TEUs annually, between import and export activities, the structure offers 30,000 pallet positions within its 253,000 ft2 as well as close to 7 million ft3, dedicated to storage, in addition to freezing/thawing and packaging/labeling service offerings. "The idea is to adapt the product to our client's requirements," says Mullica Hill's Vice-President, Arthur D. Mitchell.
The posted revenue of US$24 million, in 2008, is expected to be repeated this year. One of its strategies is to diversify the types of cargo. In line with that approach, the "non-meats," as they're called, already represent 60% of operations and, in two years, should reach 80 to 90% of all handled cargo. Mullica Hill has also invested in distribution and, today, makes use of its own 52-truck fleet, as well as outsourced, in order to deliver throughout the United States. "The more attention we give to domestic distribution and products, the more opportunities we'll have. For example, part of the livestock industry in the United States is producing meat with the same standards used in Australia," evaluates Mitchell.
Delaware
The government of one of the smallest States in the US, Delaware, announced that Frisco Automotive will invest in the development of an export driven production plant. The site selection decision was based on Wilmington Port's efficiency, the actual location, and the presence of a qualified labor force. This is great news, especially after the closing of two automotive plants in the State — GM and Chrysler.
As Director of the Wilmington port complex, Gene Bailey sees the news as confirmation of the excellence provided by their wide range of service offerings: "In terms of cargo handling, we are an extremely diversified port. Besides fruits, we also export vehicles, and handle steel, cellulose, and general cargo."
Last year, the port managed 65 million crates of bananas, 16 million crates of grapes, 14,664 cattle units, 130,819 vehicles, and 190,600 TEUs. Despite its expertise with fruits, the port administration intends to implement new operations to compensate that niche's seasonality and the loss of GM's operations, which migrated to Jacksonville, Texas. The strategy already proved to be positive in 2009, as evidenced by the port's scrap iron export success and an increase of 9% in liquid bulk volumes.
The terminal's 308 acres is located at the confluence of the Christina and Delaware rivers, less than four hours of navigation from the Atlantic Ocean. The port docks 400 vessels per year, and handles 4 million tons, generating gross revenues of US$31.5 million (2008). "Last year, even with the crisis, we had 9% more vessels, due to car export activities to Africa's East Coast," says Bailey.
The port complex features seven mooring berths, and one dedicated to petroleum operations, and still another for ro/ro cargo — an operation that handles around 20,000 cars per month, provided in three regular weekly services. That berth also handles other cargo, such as steel and design. When it comes to storage, it has at its disposal six warehouses (800 ft2) for refrigerated cargo, as well as 237,000 ft2 of dry warehouses for steel, cellulose, and paper, among other items. As is the case with other ports in the region, Wilmington is also serviced by railroads.
18 Berths in 20 Years
"United we stand" is the region’s philosophy and port development is its main focus. New Jersey's senator, Stephen M. Sweeney, asserts categorically that the three States — Pennsylvania, New Jersey and Delaware — are working together, and declares that New Jersey is very clear on the fact that development is intimately linked to the expansion of their ports' capacity. "We have the largest distribution network in the country's East Coast, a privileged location. What we need is to develop our ports. Here, in New Jersey, we will develop three new ports: Paulsboro, Greenwich, and DuPont's site, which will be used to store chemicals. The project calls for 18 docking berths in the next 20 years. New Jersey can contribute half of these berths," says Sweeney.
The demand to justify all of this investment should come from the country's economic recovery, as well as the New York port's inability to expand its operational capacity. "We are changing into a high value-added industrial region with state of the art technology applications. And what's more, we are in the center of the country's industrial production flow," stresses the senator.
In order for the ports’ expansion to take place, it is essential to be defter with licensing approval and regulation processes. Sweeney authored a bill featuring that dynamic, the Fast Track Administration, which was approved and limited license wait-periods to 90 days (specially environmental ones), but later was suspended by other government administrations. "We are hopeful that future state administrations will extricate the applicability of the law, making it easier to implement projects to develop the region," concludes Sweeney.
* The journalist traveled to Philadelphia at the invitation of Select Greater Philadelphia.
www.selectgreaterphiladelphia.com |
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