Cropping up: Port of Charleston cultivates niche in agricultural commodities
The shiny new BMWs awaiting shipment overseas from the Port of Charleston are a well-known South Carolina export, but the port’s growth strategy also means shipping more things like ground-up chicken feathers.
Where the crops go
Top export destinations for U.S. farm commodities in 2010:
Soybeans: China, 24.3 million metric tons.
Corn: Japan, 15.5 million metric tons.
Wheat: Nigeria, 3.4 million metric tons.
Poultry meat: Mexico, 595,000 metric tons.
Source: U.S. Census Bureau
With one eye on the increasing Asian trade that will flow to East Coast ports through an expanded Panama Canal, the State Ports Authority has been courting Midwestern agriculture-related companies.
“A lot of them are anticipating that the cost of getting goods to Asia from the East Coast will be less (than from the West Coast),” said Paul McClintock, senior vice president and chief commercial officer for the SPA in Charleston.
The West Coast is closer to Asia, but transportation costs — rail, truck and ship — determine which coast is more cost effective for outbound cargo. The East Coast also competes with Gulf Coast ports, where agricultural commodities flow to port in Louisiana on river barges.
“The Atlantic coast is a much smaller component, but it is growing,” said Mike Steenhoek, executive director of the Iowa-based Soy Transportation Coalition. “We do view the East Coast as a real growth opportunity.”
Our man in Chicago
To help capture more agriculture exports from the Midwest, the SPA recently hired a Chicago-based vice president for global account sales, Bob Reinecke, who was previously director of Midwest sales for Hanjin Shipping.
Meanwhile, the Port of Charleston has been setting up transloading operations, where bulk farm commodities are transferred to shipping containers, typically from rail hopper cars that can carry enough grain to fill four 40-foot containers each.
There are now four transloading operations at the Port of Charleston, and that’s happened over just the past year.
Farm products such as soybeans, corn and grain are typically shipped in bulk, filling up the holds of ships. Containerizing the products makes them a new export category for ports such as Charleston, which has no bulk ship-loading facility.
Putting something like soybeans in containers also raises the value of the product by improving quality assurance and supply-chain management, and better serving the needs of end users, Steenhoek said.
“Many customers would rather have two or three containers delivered to them each week than one large shipment a month,” he said. “Looking over the long horizon, we do see an increase in containerized shipping of soybeans.”
Also, chicken feathers.
On a recent morning at the Veterans Terminal in North Charleston, workers were filling 40-foot shipping containers with feather meal, a product used in animal feed and fertilizer that’s made from poultry feathers.
It’s not a high-value product, but just about any product that can fill a container is a desirable one for shippers. Container ships routinely carry a number of empty containers as part of their cargo, and it benefits the shipper and the port if more of those containers are full.
For agricultural exporters, the equation depends on the availability of empty containers, and that depends on imports and the location of distribution centers.
When the U.S. imports more than it exports in containers, the resulting empty containers become available for things such as soybeans and feather meal.
“One thing we are very interested in seeing is, with the Panama Canal changing, will more containers be deposited in places like Charleston and Savannah,” Steenhoek said. “Will there be more empty containers for the back-haul movement?
“We will always be the back-haul movement, because there’s so much revenue generated on the front-haul, when the container is full of iPhones, or Nike sneakers, or whatever,” Steenhoek said.
McClintock of the SPA said a container on an inbound ship “might weigh half as much and be worth 10 times as much” as a container on an outbound ship, due to the nature of the contents.
Charleston’s deep harbor, which can handle ships drafting 48 feet when the tide is up, is an asset in attracting heavy exports.
Ships are able to take on additional weight in Charleston, compared to ports with less-deep shipping channels such as the Port of Savannah.
Charleston and Savannah are both pursuing channel-deepening projects to accommodate ever-larger container ships.
“We see increased opportunities,” Steenhoek said. “I took my entire board to Savannah last year, and I was in Charleston in April.
“Obviously, having the infrastructure to accommodate it is important,” he said. “That comes back to having a deep enough channel, having these transloading facilities, and communicating that potential to grain-handlers and even farmers.”
In the game
The first transloading operation at the Port of Charleston was created last year, at Wando Welch Terminal. It’s a soybean-loading operation that McClintock said is associated with the Scoular Co., a privately held national agricultural marketing company with an office in Charleston.
“South Carolina was not exporting any soybeans before that,” said McClintock. “This put us in the game.”
The SPA is so new to the soybean business that when Steenhoek visited Charleston in April for an industry event, he did not meet with port officials, although his organization represents the United Soybean Board, the American Soybean Association, 11 state soybean boards and their collective transportation interests.
McClintock said the SPA, on the other hand, has been sending people to the Midwest, and finds new opportunities for the port on each trip.
McClintock said South Carolina was late to the game on grain exports, largely due to truck weight limits that were more restrictive in South Carolina than in neighboring states. The limits were increased three years ago, clearing the way for heavier loads.
Agricultural commodities mostly move by rail, but it takes trucks to get them from the train yard to the dock. There is no rail service, for example, at Wando Welch Terminal.
“The truck weight was the key to opening agricultural exports,” McClintock said.
A shipping container of frozen chickens, for example, is very heavy, he said.
“We are getting the deals now,” said McClintock. “We just have to keep selling and be in front of these customers.”
Reach David Slade at 937-5552 or Twitter @DSladeNews.