The South Carolina Ports Authority (SCPA) was on track for a record fiscal year—until the coronavirus spread across the globe.
SCPA President and CEO Jim Newsome said during a livestreamed interview staged by SC Biz News on Thursday that the COVID-19 pandemic has dealt a blow to container volumes during the fiscal year, which runs from July 1 to June 30.
“If you look through February of our fiscal year, which was eight months, we were 25,000 containers ahead of our plan, a record pace,” Newsome said. “We were headed easily to $100 million cash flow. And then China really never came back from Chinese New Year for six weeks and then the Western world shut down due to the pandemic.
“We had 61 blanked sailings between the end of January and July, so about 10% of the number of sailings we would expect. Our volume in the last three months is down about 15%. From being 25,000 containers ahead of plan, we’ll probably end the fiscal year 50,000 containers behind plan,” he said.
Charleston import shipments were ahead of year-ago levels before the pandemic
Newsome believes the SCPA will begin to crawl back to precoronavirus levels in a “U-shaped recovery that gets us to a number next year that’s probably about 8% lower than this fiscal year.”
“Additionally, Europe has impacted us. We’ve always been a disproportionate Europe port and Europe has impacted us because the economy is really slow there,” Newsome said.
Imports from Europe have shown weakness of late
No ‘blood war’
Newsome rejected the notion that the Port of Savannah was the SCPA’s “mortal enemy.”
“They’re a great port and we’re a great port and we both coexist in the best market to be in the port industry,” he said. “I think Savannah and Charleston really lift the public operating port concept to a new level.”
Newsome pointed out that the SCPA and Georgia Ports Authority (GPA) are even working together on the Jasper Ocean Terminal. An agreement was signed in 2015 for the terminal, which will be jointly owned and operated by both port authorities. A first phase could open between 2035 and 2037.
“We think there’s enough business for both of us,” he said. “We’re not in this blood war against each other. We have a lot of respect for what they do and I think the same applies to Norfolk. There’s enough freight for all of us if we do our jobs well.”
He granted that the Port of Charleston’s biggest competitor is Savannah. Outbound intermodal container volume from Savannah in mid-June is about twice the volume from Charleston.
“They have really focused on retail distribution,” Newsome said. “They’ve also done a good job in rail. One of the key things we have to do at Southeast ports is to leverage short-haul rail. We cannot continue to rely on trucks to move every container everywhere.”
Within the SCPA, “we do about 25% of our volume by rail, which is exceptional. A lot of that has to do with our inland port network. We do about 350,000 containers by rail,” Newsome said. “We have to continue on that path … We’ve got to turn our attention to rail infrastructure and broadening our cargo base in retail distribution. [The GPA has] done a great job. It’s something they should be very proud of, but equally I think we’ve done a great job.”
On The Horizon
Newsome said an intermodal transfer station near the Leatherman terminal is in the works, but funding is needed.
“We need it soon. It’s time to realize that project. It’s a project that we’ve talked about here in South Carolina since before I came here [a decade ago]. That is too long to talk about a project, so we need to get that done. I think we’ve got a good plan to get it done. It’s going to take some funding.”
Newsome declared the trend for bigger and bigger container ships over.
“Most of the innovation in container shipping has been done in the sense that they’re not going to build bigger ships anymore, fortunately. They’ve reached the outsized limit of big ships,” he said.
Newsome does foresee more ships coming his way. “I think we see more and more cargo coming to the East Coast ports because 70% of the population is east of the Mississippi River and we do manufacturing and distribution here really well so we think we will grow above the market,” he said.
Ocean rates from China to the U.S. East Coast have risen sharply.
FreightWaves SONAR offers the most essential rail and intermodal data available, with daily updates on rail and intermodal pricing and volumes. Additionally, compare rail market trends against other modes of transportation to gain a comprehensive view of logistics markets. Users can react faster than ever to changing market conditions, giving them an advantage never before seen in freight. To learn more and schedule your personal free trial, click here.