With a cargo value of more than $60 billion annually and links to more than 260,000 South Carolina jobs, the South Carolina Ports Authority has prompted both interest and debate statewide over its impacts on a wide variety of areas, from economic growth to state infrastructure.
Statewide and national attentions now turn to the port again, as a plan to deepen the channels from 45 feet to 52 feet nears a critical final approval stage in September that would allow dredging to begin. Deepening the port is needed to keep the ninth busiest container port competitive in an industry trending toward “supersized” vessels, according to state and federal officials. As debate over environmental impacts wane and the project pushes forward, leaders in the Midlands are joining stakeholders throughout the Palmetto State in touting the impact of the project both in well-known and less obvious ways.
“It is well-known that state government, the universities and Fort Jackson are vital components of economic prowess in the Midlands. Lesser known is the role that the Port of Charleston plays,” says Bill Stern, a Columbia businessman who chairs the state’s Ports Authority. “Exporting and importing at the Port of Charleston is tied to nearly 52,000 jobs, $2.4 billion in salaries and wages and $9 billion in economic impact throughout the Midlands. South Carolina’s ability to deepen the Charleston harbor to 52 feet will be felt in the Midlands and every other part of the state.”
In 2011, federal officials began a multi-year feasibility study to determine if deepening the Charleston Harbor would be both economically beneficial and environmentally acceptable to the nation. The report by the U.S. Army Corps of Engineers found key benefits of dredging to include added safety, accommodation of larger container ships and fewer delays for ships traveling through the port. The estimated cost of the deepening project is around $509 million, with the federal government and state contributing $166 million and $343 million respectively, according to the Army Corps study which determined the project to be “economically justified.” The report also determined that many of the vessels currently using the Charleston port were “tide-restricted.” Officials maintained that to stay competitive, South Carolina’s port must proceed with deepening the channels to 52 feet — a plan that would make the Charleston ports the deepest lanes on the East Coast.
“The growth of exporting and the formation of mega-alliances that will feature the deployment of large container ships on the East Coast mean that deepened harbors are critical for supporting commerce in the Southeast region,” South Carolina Ports Authority President and CEO Jim Newsome says. “The Southeast needs a port of 50 feet or deeper to support this growth, and Charleston is well-positioned, thanks to its post-45 foot deepening project.”
According to economists, South Carolina has many industries that will benefit directly from the deepening project. “South Carolina’s econocmic growth over the past five years has been largely driven by export-oriented manufacturing,” says Joseph Von Nessen, a research economist with the University of South Carolina’s Darla Moore School of Business. “Deepening the port will incentivize more firms to locate to South Carolina and provide additional resources for existing manufacturers that are facing higher levels of demand. Export activity has risen 120 percent in the last decade, which clearly documents this industry’s expanding statewide presence.”
The tire-making and automotive manufacturing industries make up a significant portion of the Midlands’ economy. More than 400 companies in South Carolina make automotive parts, an increase from just over 300 in 2008. “South Carolina is the number one producer of tires in the country, thanks to Midlands-area companies like Bridgestone, Continental and Michelin,” Joseph explains.
While the effects for automotive, manufacturing and aerospace sectors may be prominent and apparent, an “economic multiplier effect” may bring benefits for other small businesses.
“Any company that supplies an export-oriented manufacturer with goods or services has the potential to benefit from the deepening of the port,” Joseph adds. “For example, if the deepening of the port leads firms to export a higher total volume of cargo, this will also lead to an increase in demand for the ground transportation industry, which must ship this additional cargo from the firms to the port. These types of additional impacts are known as economic multiplier effects.”
At the State Department of Commerce, leaders have long viewed and utilized the port as a key recruitment tool that’s helped attract major business to the state.
“The deepening project is certainly a strong selling point for South Carolina. The fact that we have a deep water port gives us a competitive edge in bringing industry to the state, since business today is increasingly global with complex supply chains,” says Allison Skipper, agency spokeswoman.
Infrastructure has been a leading topic for the port-deepening project, with critics questioning the state’s ability to support increased traffic. “The state is making a concerted effort to likewise improve inland infrastructure to complement the work on the waterside,” Allison says. “One example is the Intermodal Container Transfer Facility on the former Charleston Navy Base that will be a dual-rail served facility, operated by Commerce’s railway division, Palmetto Railways. This is a significant investment on the land side for handling port-related cargo.”
End to a long road
More than 100 miles away, many inland companies in Columbia and beyond have closely watched each step of the port-deepening project — voicing their support and their company’s dependency on the port’s future.
Michelin North America is among a list of “Charleston Post-45 Deepening Project Supporters” that also includes the South Carolina Manufacturers Association, the Central SC Alliance and the Orangeburg County Development Commission among other businesses and groups. Leaders at Michelin say the company “fully supports” the port deepening plan.
“One of the reasons that Michelin first came to South Carolina almost 40 years ago was the proximity to the Port of Charleston,” says Stephanie Tarbet, spokeswoman for Michelin North America. “Today, Michelin is one of the largest users of the port for both imports and exports. Most of the raw materials we use to make our tires, including natural rubber, are imported through the Port of Charleston. In addition, we export 80 percent of the Earthmover tires we make to be used in mining applications around the world.”
Due to its proximity to many manufacturing and distribution sites throughout the Palmetto State, the port is a vital component to the business strategy of many corporations.
“Michelin has continued to invest and expand in South Carolina over the past four decades for many reasons, but access to the Port of Charleston is one of the main factors. The deepening of the port is important to attract larger vessels, which in turn allows us to maintain or reduce our transportation costs,” Stephanie says.
With the Charleston Post-45 Deepening Project now on the cusps of a new phase after years of debate and study, expectations and optimism remain high along the coast and in the Midlands. Dredging is expected to end in 2019, and already stakeholders are planning for a future of deeper waters and more accessibly to the global marketplace.
“We should all be celebrating a project that can justifiably be called the greatest game-changer for jobs and economic opportunity in generations. Competition is the name of the game,” says Bill. “With shipping, time is money. Shipping companies will use the port that maximizes efficiencies, minimizes costs and offers the opportunity to fully load their ships.” Erin Dhand, S.C. Ports Authority spokeswoman, adds, “Businesses in the Midlands, if they are using the port, are going to benefit from this just as much as the businesses in Charleston. The port is a major economic tool for our state, without question. So if you are a business that is looking to produce a product and sell it in the international marketplace, proximity to a port and proximity to a port with deep water is very important.”
‘Future of competitiveness’
By 2020, U.S. container trade is expected to be export dominant, and South Carolina and the South — with its strong manufacturing presence — is posed to be a key player in the changing landscape.
Following the opening of the Panama Canal expansion and raising of the Bayonne Bridge in New Jersey, post-Panamax vessels are expected to call the East Coast more frequently, requiring ports to invest in infrastructure and deepening projects to be competitive, officials with the South Carolina Port Authority say.
“The Port of Charleston’s ability to handle post-Panamax vessels 24 hours a day without tidal restriction is critical to the future competitiveness of our state port system,” says Jim Newsome. “Completion of our harbor deepening project to 52 feet ensures that the S.C. Ports Authority will continue to grow above the market average and remain a Top 10 port, facilitating trade and economic development for our entire state, region and nation.”