North Carolina Ready to Duke It Out

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Peter T. Leach, Senior Editor of The Journal of Commerce Magazine, wrote the article entitled "North Carolina Ready to Duke It Out" concerning North Carolina's plan to win back cargo from Charleston and Virginia ports.  Here is the article in its entirety: 

North Carolina Ready to Duke It Out

Peter T. Leach, Senior Editor | Feb 6, 2012 5:00AM GMT
The Journal of Commerce Magazine - News Story
The Tar Heel state looks to marshal forces to win back cargo from Charleston and Virginia ports

About 90 miles west of the North Carolina coast rests the sprawling airport of Kinston, which boasts the longest jet runway between Washington, D.C., and Atlanta. It’s one of several inland air and rail cargo hubs that will play a bigger role in the future of the state’s two ports as part of an effort to improve logistics and increase maritime traffic.

The move to tie the Tar Heel state’s various inland terminals more closely together with its two ports is part of a reorganization plan led by the North Carolina Department of Transportation. It’s a work in progress designed to channel more of the state’s container trade through the Port of Wilmington rather than through Charleston to the south or the Virginia ports to the north, all of which are better prepared to handle the larger container ships that will start calling at East Coast ports when the Panama Canal expansion is complete in two years. The reorganization also seeks to boost bulk and breakbulk traffic at the Port of Morehead City.

From a strictly volume standpoint, North Carolina has a long way to go to compete with its larger brethren to the north and south. Wilmington in fiscal 2011, which ended last July 31, handled just more than 290,000 20-foot equivalent container units, up 16 percent year-over-year. Charleston handled 1.38 million TEUs in calendar year 2011, up 1.3 percent, and Virginia moved 1.10 million TEUs, an increase of 8.9 percent.

The North Carolina DOT took its first step down the integration path last year when it brought under its aegis the North Carolina Global Transpark air cargo hub at Kinston, where a five-mile rail link is being built to connect the industrial and logistics park with Norfolk Southern’s rail line to Morehead City.

Similarly, the DOT is integrating into the state’s logistics network the air cargo operations at Charlotte Douglas Airport, where NS is building an intermodal yard that will serve its Crescent Corridor. The DOT also is coordinating with CSX on its rail terminal in Greensboro and NS on its Charlotte terminal to better coordinate capital investment and operating efficiencies on rail services to the ports.

We believe that by leveraging all of these assets together under the DOT umbrella, we can move forward with a coordinated strategy on logistics,” said Eugene Conti Jr., secretary of the North Carolina DOT. “We have inland terminals that we need to bring more actively into the DOT orbit. Having everything in the same organization will make that work better and more seamless.”

The integration of transportation modes is the first step in the reorganization, which Conti said was the reason for last month’s dismissal of Tom Eagar as CEO of the North Carolina State Ports Authority. Jeff Strader, the port authority’s chief financial officer, is managing day-to-day operations as the DOT embarks on a national search for a statewide logistics director.

“We are going to take our time during the restructuring of the ports and the Global Transpark, where we need to fulfill critical positions and streamline and combine them,” Conti said.

As part of the new logistics strategy, the DOT is developing a maritime strategy that will emerge from a study it has commissioned from two U.S.-based global engineering firms, URS and AECOM. “Part of the study is defining a role for both ports and deciding if we want to go ahead with the North Carolina International Terminal that’s been discussed,” Conti said.

The NCIT is a proposed deep-water terminal that was blocked by environmental and political opposition in 2010. “In the next few months, we’ll have the data we need to make some informed decisions about the direction we need to go,” Conti said.

The state still owns the 600 acres near the mouth of the Cape Fear River on which it had planned to build a new container port with annual capacity of 1.5 million TEUs. “Whatever recommendations come out of the maritime strategy, we’ll decide what options make the most sense in the near and long term,” Conti said. “The deep-water port may be part of the overall strategy, but not the main priority.”

Even before he finalizes the new maritime strategy, Conti is targeting two of the state’s most vibrant economic sectors for increased use of its ports: agriculture and the military. North Carolina has a strong forest products sector with exports Conti hopes to channel through Morehead City. The state also is a big producer of pork and chicken that could be exported in refrigerated containers through Wilmington.

On the military side, “There are five major bases in the eastern part of the state that have major logistics needs we can serve,” Conti said. “Military shipments are mostly diverted to Charleston because of poor landside connections or lack of service, so one of our major thrusts is to do better with the military logistics business.”

The port authority, meanwhile, is working on the three elements of the Wilmington Harbor Improvement Project that will improve the ship channel in the Cape Fear River and the port’s harbor. It sent a letter of intent about the project to the U.S. Army Corps of Engineers, which determined that it is “of federal interest” and is drafting a Project Management Plan, the first step to initiating a $5 million to $7 million feasibility study.

The project involves three elements: widening access to the entrance to the ship channel near Bald Head Island, eliminating the sharp turn at Battery Island, and widening the turning basin in the port. The corps is looking at how it would fit the feasibility study into its budget, Conti said. “If Congress does not direct that spending,” he said, “we could decide to undertake it on our own and then seek federal repayment for half the study cost.”