Cold Cargo

Cold cargo: Frozen goods market a hot commodity at Port of Charleston

Jun 29 2014 10:10 am

 Wando Terminal in Mount Pleasant. The SPA is looking refrigerated cargo business to meet the growing demand.

Heating up

Cold storage marketshare among marine ports in the South Atlantic market:

2012                       2013

Port Everglades                                   29%                       30%

Savannah                                             27%                       28%

Norfolk, Va.                                         15%                       17%

Jacksonville                                        18%                       14%

Charleston                                             8%                         9%

Wilmington, N.C.                                 2%                         2%

PIERS Data

Cold cargo is heating up at the Port of Charleston.

An Atlanta-based company that recently decided to open a refrigerated warehouse near Jedburg is one of three rival firms looking to invest in the Charleston area.

A control panel used to regulate temperature in the refrigerated cargo container.

The State Ports Authority is helping to subsidize at least one operator, boosting the state maritime agency's effort to increase its market share in the highly competitive cold storage import and export business. The SPA said it's been focusing on handling more perishable goods such as poultry and beef for more than five years. The effort has included the addition of new shipping routes and investments totaling millions of dollars to upgrade the cargo infrastructure at local terminals.

Now, the goal is to add more chilled warehouse space near the port, said Jim Newsome, president and CEO of the SPA. "It's not a question of rates," Newsome said about the competition. "It's really a question about having the capacity and cold storage capabilities."

Scott J. Mason, a professor of supply chain optimization and logistics at Clemson University, agreed. "The success of a port is also predicated on the industry and the warehouses supporting the handling of goods," he said. "To grow the cold storage capabilities gives people who choose to call on Charleston instead of Savannah more options."

Playing catch-up

Newsome said he wants to increase the SPA's market share in the refrigerated cargo business into double digits. In 2013, the SPA handled 9 percent of the refrigerated cargo port business between Norfolk, Va., and Port Everglades, Fla., up from 8 percent the previous year, according to import and export data from PIERS, a freight industry database. But the dominant players are Savannah and Port Everglades, which together accounted for nearly 60 percent of that business last year, according to the PIERS report.

Refrigerated cargo containers sit at Wando Terminal in Mount Pleasant. The SPA is looking to expand its refrigerated cargo business to meet the growing demand. Michael Pronzato/ Staff

The Port of Savannah's success has been tied to investments of tens of millions of dollars to expand and improve its refrigerated cargo capacity, said Curtis Foltz, executive director of the Georgia Ports Authority. He said the Southeast is a major provider of protein to China and other parts of the world where the appetite is growing for poultry, beef and other refrigerated perishables. "It's a large market in the Southeast," Foltz said. "The world is looking for more and more protein, and that's improving quality of foods and standards of living for people around the world, and there's a huge demand for it."

That's encouraging news for its smaller rival up the coast in Charleston, which is trying to catch up. The SPA handled the equivalent of 40,031 20-foot-long refrigerated containers in 2013, about one-third of what went through Savannah, according to PIERS data.

The Georgia Ports Authority has several hundreds of thousands of square feet of cold storage space, dwarfing the SPA's roughly 50,000 square feet, port officials said. Newsome said the SPA could more than double its South Atlantic market share to as much as 20 percent in the coming years, saying "most anything that moves over Savannah can move over Charleston." "Our take is there is room for more refrigerated transloads in Charleston, and we need that to grow our port," Newsome said.

He told the SPA Board of Directors recently that is a possibility as Charleston is poised to increase its chilled space tenfold, to about 500,000 square feet.

Refrigerated cargo containers sit at Wando Terminal in Mount Pleasant. The SPA is looking to expand its refrigerated cargo business to meet the growing demand. photos by Michael Pronzato/ Staff

"Capacity is a big thing," he said. And the SPA's board is spending millions of dollars to add more of it. The panel recently ponied up $12 million for New Orleans Cold Storage's $14 million plan to more than double the company's roughly 50,000-square-foot operations on Remount Road. Company officials did not respond to requests for comment.

According to published reports, the expansion will increase the warehouse's "blast-freezing" capabilities and expand the import meat trade with Australia, New Zealand and South America.

Newsome defended the SPA's financial subsidy, saying they've had three decades of local business and the investment is in land that the authority owns. "We owned the land they're on, and it was the terms of the deal for them to expand," Newsome said. "It offers a better use to the land we own."

New Orleans Cold Storage will pay the SPA rent for the property used in the expansion, according to SPA spokeswoman Erin Dhand. "We're paying $12 million toward construction for this expansion, and they will pay a lease on the expanded facilities to SPA," she said. Other capacity expansions come with the recent announcement that Lineage Logistics plans to break ground in July on a 340,000-square-foot storage site in Palmetto Commerce Park between Ladson and Ashley Phosphate roads.

Company CEO Bill Hendricksen said the Charleston facility is an important piece of the company's East Coast operations. Also, Atlanta-based Agro Merchants said it's leasing an existing 121,000-square-foot space formerly used as a Piggly Wiggly warehouse off Interstate 26 near Jedburg. The facility is set to open in August and employ about 70 workers. The growing capacity adds to the SPA's other efforts to gain more refrigerated cargo. For example, the SPA has secured new shipping routes to key refrigerated cargo markets, such as Australia and New Zealand. Newsome said the SPA has also upgraded refrigerated cargo infrastructures at Charleston area terminals.

Deep advantages

Mason, the Clemson logistics professor, said the added capacity, coupled with the depth of Charleston Harbor, should make the area a stronger competitor for refrigerated cargo shipments. Charleston's 45-foot-deep shipping channel can receive big ships that draft 48 feet and carry the equivalent of more than 9,500 20-foot shipping containers, but only when the tide is high enough. That's deeper than the waterway that serves the Port of Savannah, which has 42 feet of depth. "Charleston has such an advantage with its deep waters, and (added capacity) will help it increase its attractiveness to the shipping companies," Mason said.

Industry officials say depth plays a competitive role because refrigerated containers and the cargo they hold are often heavier than traditional shipping containers. "This is a cargo that needs to load into deepwater ports such as Charleston," Newsome said. "That is constant to our theme we have a 5-foot draft advantage, and we can load a lot of cargo here in Charleston."