FULL STEAM AHEAD
The American States of Pennsylvania,New Jersey, and Delaware move forward with a hefty plan toattract investments and intensify transportation logistics in the region
VALERIA BURSZTEIN*
Furthering the economic developmentof Pennsylvania, NewJersey, and Delaware is one ofthe directives that regulate Select Greater Philadelphia's activities in anarea that consists of 11 counties, and embraces the fifth largest population inthe 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 toattract investments and diversify its industrial ventures. The region's economy has lately undergoneimportant transitions. In the 1950's, asignificant share of its labor force worked for manufacturing companies. Years later, the UnitedStates witnessed a reallocation of the industrial base tothe south, and to Mexicoand other countries.
In time, the region restructureditself with emphasis on value-added services, influenced by the expansion ofindustries specialized in research, such as pharmaceuticals, which now has astrong presence in the region, the largest in the United States.
The area is within a 600-mile radiusof large consumer centers. The many intermodaltransportation options make easy access one of the region's most obviousadvantages. The DelawareRiver, which runs through the region, offers 50 pier terminalsdedicated to different types of cargo, with emphasis on refrigeratedcargo. In addition to its extensiveroadway network — about 90 roadway transportation companies service the region— the area also features three railcompanies (CSX, NorfolkSouthern, and Canadian Pacific). Interms of air transportation, the region has 86 domestic and 38 internationalairports.
Logistics also gained in importance,evidenced by the 180,000 jobs directly related to that sector. The number of warehousing and distributioncenters totals 250 in Philadelphiaalone. Last year, it was directly orindirectly responsible for US$13.69 billion in revenue.
Because of the economic recovery andthe increase in transportation demand, the region's ports have been enlisted toaccommodate larger capacity vessels, which revealed some limitations. With a start date yet to be determined, thereare plans to dredge close to 70 miles of the DelawareRiver in order to increase its depth from 40 to 45 feet. The US$300million project should be completed in less than five years, generating morethan 4.95 million ft2 of dredged material. Disposal of this material is one of theissues that has stifled the process. "We are losing business, especially with SouthAmerica, because of the insufficient depth of the channel. We are competing directly with New York/NewJersey and Baltimore," regrets the Port of Philadelphia'sMarketing and Development Director, Sean E. Mahoney.
PHILADELPHIA
To validate the attention that theState of Pennsylvania is attracting, theBrazilian Foreign Relations Ministry has announced the creation of an HonoraryConsulate in Philadelphia, with the intent ofstrengthening 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 interestedin doing business with Brazil. The State already exports transportationequipment to Braziland, recently, there's been significant activity increases in the metallurgicalproducts and metal refuse areas. Theinverse is also true, with Pennsylvaniareceiving Brazilian ethanol, fresh fruits, footwear, coffee, refined oil,steel, iron, and automotive parts. The tradebetween Brazil and this American State increased by 107% between 2007 and2008, only just missing the mark of US$1 billion.
The Port of Philadelphiais one of the points of contact connecting the two markets. With its 3.6 linear miles of shore, thecomplex operates with a large diversity of cargo: bulk solids (31%), andliquids (16%) , and containers (53%). In2008, 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 ft2of 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 reachthe piers never surpasses six hours — only two more than getting to NewYork, without taking into account the bottleneckeffect experienced by that neighbor port. And, he continues, "If the vessel comes from the PanamaCanal, there is practically no difference." The Port Authority is trying to establishdirect service to the Far East, which wouldmean an increase in container volume of about 300,000 containers per year.
CSX is one of the three rail operatorsthat transport cargo within the port. The manager of the rail terminal, Dennis P. Sweeney, reveals that, in aday 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 transporteddaily to the south, north, and west of the United States.
CSX's yard, with a total capacity for250,000 units, transported 160,000 containers in 2008; this year the expectationis for 85,000 more. The company plans toacquire automatic cranes, which will be installed at their new site.
In order to increase the containerassemblies' transport volume, the State of Pennsylvania is considering lowering thetracks, so as to allow for double-stacking of containers. This is an intricate project that may end upcosting US$32 million.
SOUTHPORT
With the Port of Philadelphia expansion in mind, an ambitious projecttakes shape: the construction of Southport, anew container terminal. "Most portsin the Northeast of the UnitedStates have exhausted their spatial growthpossibilities. That is not the case withSouthport, which may escalate its plans fromthe original 200 to 300 acres. The PortAuthority believes that the project will be operating in less than tenyears," says O'Brien.
According to him, the government of Pennsylvania will investin the preparation of the necessary infrastructure and the Port Authority islooking forward to private initiative proposals. "Before the crisis, the area was being covetedby three groups, which included Holt Logistics, Hamburg Süd, and GoldmanSachs. However, when the crisis camealong, the process was put on hold."
Southport is an important venture for HoltLogistics. In business since 1926, Holtis one of the most long-standing port operation and logistics companies in theregion, acting in the development and operation of port terminals, andresponsible for the largest perishables facility (frozen and refrigerated) inthe United States. The president of thecompany, Leo A. Holt, says, "We are very much invested in the Southport project, but we do have other interests, suchas the Packer Avenue Marine Terminal, which could be expanded to attract morebusiness."
With a capacity for 600,000 units,the Packer Avenue Marine Terminal is Philadelphia'smost 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 tonsper hour. "That means vessels stayless time in Philadelphia,minimizing the customers' cost," affirms Holt.
An enthusiast of the region, Holt isconfident 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 trademarket's recovery. Millions of dollarswere invested in New York/New Jersey, where there are fundamental structuralissues, such as the limitation imposed to larger vessels by the Bayonne Bridge(linking New York and New Jersey); something that can benefitus. We should also bear in mind that wehave space to expand and a more resourceful transportation and intermodalityoffer."
In 2030, the Port of Philadelphiawill have the capacity to process up to 2.5 million TEUs, due to investments thatare being made in infrastructure. "Ourbulk operations are traditionally very important, but we need containers. These can come from sharing volumes with NewYork/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 theobvious complementarity. And heconcludes, "We believe the solution to the bottleneck and many otherissues must be regional."
NEW JERSEY
Developed within a shipyard built inthe 1940's, SouthJersey Porthandles 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 itsactivities to include the handling of scrap iron, which reached a volume of 1million tons per year. "One of ourgoals is to attract entire industrial transformation operations — from recycling all the way to themanufacturing of other products," reports South JerseyPort's Director ofOperations, Kevin Castagnola.
The region also plans the developmentof Paulsboro Port, with a 40-foot draft and 190 acresof space to handle general bulk cargo and perishables. The project requires a bridge to absorb theregion's truck traffic. Construction ofthe access has been approved and should be finished by 2012. The schedule provides for the construction oftwo berths by 2012, with a cost of US$150 million, and a third one by 2015, foranother US$100 million.
Cold chain logistics plays animportant role in the region. A majorplayer in that market is Mullica Hill, the leading meat, fruits and seafoodimport operator in the UnitedStates. Handling 40,000 to 50,000 TEUs annually, between import and exportactivities, the structure offers 30,000 pallet positions within its 253,000 ft2as well as close to 7 million ft3, dedicated to storage, in additionto freezing/thawing and packaging/labeling service offerings. "The idea is to adapt the product to ourclient'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 operationsand, in two years, should reach 80 to 90% of all handled cargo. Mullica Hill has also invested indistribution and, today, makes use of its own 52-truck fleet, as well asoutsourced, in order to deliver throughout the United States. "The more attention we give to domesticdistribution and products, the more opportunities we'll have. For example, part of the livestock industryin the United States isproducing meat with the same standards used in Australia," evaluatesMitchell.
DELAWARE
The government of one of the smallestStates in the US, Delaware, announced thatFrisco Automotive will invest in the development of an export driven productionplant. The site selection decision wasbased on WilmingtonPort's efficiency, theactual location, and the presence of a qualified labor force. This is great news, especially after theclosing of two automotive plants in the State — GM and Chrysler.
As Director of the Wilmington port complex, Gene Bailey sees thenews as confirmation of the excellence provided by their wide range of serviceofferings: "In terms of cargohandling, we are an extremely diversified port. Besides fruits, we also export vehicles, and handle steel, cellulose,and general cargo."
Last year, the port managed 65million crates of bananas, 16 million crates of grapes, 14,664 cattle units,130,819 vehicles, and 190,600 TEUs. Despiteits expertise with fruits, the port administration intends to implement newoperations to compensate that niche's seasonality and the loss of GM'soperations, which migrated to Jacksonville,Texas. The strategy already proved to be positive in2009, as evidenced by the port's scrap iron export success and an increase of9% in liquid bulk volumes.
The terminal's 308 acres is locatedat the confluence of the Christina and Delawarerivers, less than four hours of navigation from the AtlanticOcean. The port docks 400vessels per year, and handles 4 million tons, generating gross revenues of US$31.5million (2008). "Last year, evenwith 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 topetroleum operations, and still another for ro/ro carg an operation that handles around20,000 cars per month, provided in three regular weekly services. That berth also handles other cargo, such assteel and design. When it comes tostorage, it has at its disposal six warehouses (800 ft2) forrefrigerated cargo, as well as 237,000 ft2 of dry warehouses forsteel, 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 theregion’s philosophy and port development is its main focus. New Jersey'ssenator, Stephen M. Sweeney, asserts categorically that the three States — Pennsylvania,New Jersey and Delaware— are working together, and declaresthat New Jerseyis very clear on the fact that development is intimately linked to theexpansion of their ports' capacity. "We have the largest distribution network in the country's EastCoast, a privileged location. What weneed is to develop our ports. Here, in New Jersey, we will develop three new ports: Paulsboro, Greenwich, and DuPont'ssite, which will be used to store chemicals. The project calls for 18 docking berths in the next 20 years. NewJersey can contribute half of these berths,"says Sweeney.
The demand to justify all of thisinvestment should come from the country's economic recovery, as well as the New York port'sinability to expand its operational capacity. "We are changing into a high value-added industrial region withstate of the art technology applications. And what's more, we are in the center of the country's industrialproduction flow," stresses the senator.
In order for the ports’ expansion totake place, it is essential to be defter with licensing approval and regulationprocesses. Sweeney authored a bill featuringthat dynamic, the Fast Track Administration, which was approved and limitedlicense wait-periods to 90 days (specially environmental ones), but later wassuspended by other government administrations. "We are hopeful that future state administrations will extricatethe applicability of the law, making it easier to implement projects to developthe region," concludes Sweeney.
* The journalist traveled to Philadelphia at theinvitation of Select Greater Philadelphia.
www.selectgreaterphiladelphia.com
