Empty-box decline impacts port

The OOCL Tianjin, which carries about 8,000 containers, is an example of the larger cargo ships paying regular visits to the Port of Charleston. The port has experienced a 9.2 percent increase in containerized cargo this year. File/Leroy Burnell/Staff

Shipping lines are doing a better job of efficiently managing the containers they use to send goods out of Southeastern ports, and that’s leading to lower-than-expected cargo numbers for the Charleston waterfront.

“Where our shortfall in volume has been this year is in empty import containers — empties brought off ships,” said Jim Newsome, president and CEO of the State Ports Authority. “It shows me that the lines are making better use of their land-side imbalance to fund their empty needs.”

Historically, ships would bring empty containers — called empty imports — to Charleston and other seaports so the boxes could be filled with goods and sent back overseas. However, slower export demand and slim profit margins have shippers looking for ways to cut costs, including how they find the empties they need.

Instead of bringing empties to the U.S., more shippers are waiting for the full boxes that are already here to be unpacked and then sending those boxes to distribution centers to be filled again.

The Port of Charleston experienced a 48.4 percent decline in the number of empty imports it received in fiscal 2016, which ended June 30, compared to the previous year.

There are indications the trend is continuing. The Ocean Shipping Container Availability Report published each week by the U.S. Department of Agriculture estimates the number of empty containers available for exports at 18 cargo transfer stations nationwide, including the Port of Charleston. The most recent report shows available empties have declined at ports from New York to Savannah compared to last year.

“It’s not just us,” Newsome said. “You’ll see empty volumes are down pretty much throughout the South Atlantic region.”

Other cargo categories at the Port of Charleston were flat or showed small increases during fiscal 2016. The number of loaded export containers dropped slightly by 0.3 percent while loaded imports increased by 5 percent. The number of empty cargo boxes sent overseas was up 4.3 percent.

All told, the Port of Charleston finished the year with 1.097 million cargo boxes moving across its terminals — roughly flat with last year’s totals and about 37,000 containers short of the record set in 2005.

Cargo volumes started the fiscal year strong, with 9 percent growth in the first quarter, but declined sharply as world economic troubles set in.

“World trade took a pause,” Newsome said. “It was a challenging environment. The China market was slow, the European market was slow. But most of the deviation in our case was due to empty containers.”

The SPA’s container volumes in June were muted in part because of planned, maintenance-related shutdowns at South Carolina’s two major vehicle manufactures — BMW in Greer and Mercedes-Benz Vans in North Charleston.

“They were not bringing cargo in to meet their manufacturing needs, because that’s a just-in-time industry,” Newsome said, adding that the shutdowns occur every year at different times. “This year was a bit earlier.”

The 88,773 cargo containers that moved through the Port of Charleston last month was 8.4 percent lower than the totals a year ago.

Newsome said the SPA is expecting a longer shutdown next year because BMW will be making a new vehicle “and that takes them longer to retool their robots” on the manufacturing line.

Of the 26 container ship services that call on the Port of Charleston, 16 are now using vessels that wouldn’t have fit through the Panama Canal before last month’s expansion was completed.

That means ships that used to bring 4,500 cargo boxes to Charleston are now carrying 8,500 containers. The SPA expects to welcome its first ship that can transport 14,000 cargo boxes later this year.

The movement to bigger vessels is a key reason the SPA is projecting a 6 percent increase in cargo volumes over the next year.

The tonnage of breakbulk cargo that moved through the Port of Georgetown last year was 54.6 percent less than in 2015, and Newsome said the SPA will have to make a decision soon on whether to keep operating the facility.

“It’s obvious that it has a very limited market opportunity, and it’s more limited every day as the water depth is less and the ships are getting bigger,” Newsome said, adding that the SPA has stopped making investments at the port.

Georgetown’s cargo tonnage was at 249,149 in fiscal 2016 compared with 548,933 tons the prior year.

A couple of factors have led to the port’s decline. The ArcelorMittal steel mill, once one of the port’s biggest customers, shut down permanently in August 2015. And Georgetown Harbor is filling in with silt, making it difficult for commercial vessels to navigate. There is not enough money to dredge the waterway, and city officials are looking at long-term plans to redevelop the steel mill site.

“We’re sort of in a holding pattern and we need to work with the town, the constituents in the town and the economic development group to see what they want to do,” Newsome said. “A lot of it is contingent on the final disposition of the steel mill. I would say sooner rather than later we need to decide what is the future (of Georgetown’s port). Within the course of this year we should have a clear direction.”

Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_