The State Ports Authority's plan to broaden its business horizons picked up a big head of steam last week, fueled by a mad scramble real estate deal and some old-fashioned relationship-building.
The maritime agency pulled off a major logistics coup on Monday with retail kingpin Walmart announcing it will build a nearly 3 million-square-foot import distribution site along U.S. Interstate 26.
The mammoth project on 250 acres will require a $220 million investment, create 1,000 full-time jobs and increase by 5 percent the number of cargo containers that cross the local waterfront.
"This is one of the biggest developments in the history of the port," SPA chief executive officer Jim Newsome said Wednesday.
The shopping empire that the late Sam Walton created will be the debut anchor at the Ridgeville Commerce Park, a 941-acre tract the SPA bought two years ago. The Dorchester County cargo-sorting hub is scheduled to open in April 2022 to serve 850 stores across the Southeast, Walmart supply chain executive Greg Smith said last week.
Once fueled by the state's manufacturing base, the Port of Charleston had been eyeing the stretch of I-26 northwest of Summerville as a distribution corridor for retailers since at least 2010, when it chipped in $15 million to help lure tire importer TBC to a site on the other side of the highway.
"Unfortunately, at that time we were not in position as a port to really get big time into the retail business," Newsome said.
He said the tide began to turn after the SPA opened its "inland ports" in the Upstate and Pee Dee. The first far-flung cargo hub in Greer helped lure a Dollar Tree distribution center to Cowpens. One of the Dillon site's biggest customers is Harbor Freight Tools.
A key takeaway from the two out-of-town expansions was the importance of owning and controlling ship-to-shore, shovel-ready sites where big-name retail chains can unpack their containerized imports and, with laser focus, load the goods onto delivery trucks. It's a strategy the Port of Savannah has leaned on for decades, to enormous success.
"I think they did a good job and had port-dependent land available for such projects," Newsome said of Charleston's maritime rival to the south. "And it's something we learned early in my time at the port. You have to do more than have a deep harbor to attract business."
Will it fit?
Newsome, who occasionally called on Walmart in his prior life as a shipping line executive, said talks about a South Carolina import center turned serious in May 2017, shortly after the company announced a slightly smaller distribution site for Alabama's Gulf Coast.
Others were on the drawing board.
"They had big plans to grow, and that growth would center on a major container port," Newsome said.
The stakes for the Palmetto State escalated the following March, when the ports authority learned that paper and packaging giant WestRock was seeking offers on a former timber tract along I-26 near S.C. Highway 27. Time was the enemy, Newsome said.
"We had 16 days to make a bid ... if we were to get it," he recalled.
Working with its board, the SPA drew up a business case to acquire the site.
"We felt that would be key to land a big retail distribution operation like this one," Newsome said.
The SPA prevailed with its $16.2 million offer. Newsome gave a tip of the hat to WestRock officials, who likely didn't forget the port's help in recruiting the TBC tire warehouse eight years earlier to a nearby business park that a predecessor of the company was developing.
"They had multiple bids, I think it's safe to say, and they could have sold it to someone else, but I think they thought we'd be good stewards of the property," he said.
The purchase was a game changer, based on Walmart's response.
"They had a team of people all along. It was very involved, ... They worked collaboratively with our team, and they did a lot of due diligence on the property. ... One of the big questions and issues was: Can you accommodate a building this size on this property?" Newsome said.
As it turned out, it was possible with some permitting modifications.
"I think they saw the location as very positive," the SPA chief said.
With the land in hand, it was time for the ports authority to approach Dorchester County officials. The early conversations were awkward because the SPA had signed a strict confidentiality agreement with Walmart.
"It was very hard for us along the way to explain what we were doing ... I think at one point, they thought it was going to be an inland port," Newsome said. "And that didn't excite them very much, fair to say, because it wasn't what they had in mind."
Walmart wasn't a lock at that point in the negotiations.
"They were looking at more than one place," said Newsome, who declined to elaborate but stressed that the "the existing relationship here" between the state's port system and the company was likely a competitive advantage.
Supply Chain Dive, citing data from S&P Global Market Intelligence, reported last week that Walmart brought 3.7 percent of its overseas-made goods through Charleston over the past year, through June 30.
Locally, the retail giant operates a 550,000-square-foot distribution site for its Sam’s Club membership chain off Clements Ferry Road in Berkeley County. It also imports merchandise through a warehouse run by a private company on the SPA’s Wando Welch Terminal in Mount Pleasant.
"So they knew us," Newsome said. "They knew the performance of the port in that sense"
He added that the SPA's track record of working closely with other big, no-nonsense shippers, such as automakers BMW and Mercedes-Benz, put it "in a good position to serve a demanding retailer like Walmart."
"First of all, they needed to be convinced we had the capacity to handle this business, that we understand their culture and that we understand their requirements," he said. "In business you don’t do everything based on a written agreement. At the end of the day, business partners deliver on what they say."
The hope is that Walmart will deliver for the port and the state, by serving as a calling card for the other major retail chains the SPA plans to pursue.
"This is, for us, a really big deal," Newsome said.