A Kentucky company that transports plastic pellets from Gulf Coast refineries to the East Coast for export to foreign markets will build a $60 million warehouse at the former Carolina Nurseries site near Moncks Corner.
A&R Logistics announced plans Tuesday for a 615,000-square-foot distribution center at the site off U.S. Highway 52. The facility, which will be served by an existing CSX Corp. rail line, is expected to open in late 2020. A groundbreaking event is scheduled for Oct. 21.
Louisville, Ky.-based A&R plans to transport the pea-sized pellets — also known as nurdles — from the Gulf Coast by rail and then package them at the Berkeley County site for export. Trucks would then haul cargo containers full of the plastics to the Port of Charleston.
"We believe combining the Port of Charleston's efficient operations with A&R's deep experience in packaging and premier customer service will offer unparalleled service to the chemical and plastics industry," A&R chief executive Mark Holden said in a written statement.
The State Ports Authority, which operates the Port of Charleston, is providing $750,000 for public infrastructure at the A&R site, including roads and utilities.
A&R also had sought property tax breaks but Berkeley County Council denied the request because of traffic concerns. The facility, previously disclosed under the code name "Project Monk," is eventually expected to generate 20,000 truckloads of plastic pellets annually.
"Proximity to the Port of Charleston gives A&R Logistics access to global markets for exports, as well as the ability to handle growing import volumes bound for Southeast consumers," said Jim Newsome, the SPA's president and CEO. He added the port's efficiency and equipment "will play a major role in A&R's East Coast strategy."
Chicago-based private equity firm Wind Point Partners acquired A&R in May with the aim of expanding the company's operations, which consist of about 50 sites and a fleet of more than 800 trucks. In addition to the South Carolina project, A&R is planning a large plastic pellet distribution center near the Port of Savannah.
Production of plastic pellets continues to accelerate in North America, according to a report by Petrochemical Update, which says more than 4.5 million tons of capacity has been added by polyethylene manufacturers since 2017. Polyethylene is packaged in pellet form and converted into plastic goods like drink bottles, food containers and children’s toys.
North American polyethylene capacity is expected to increase from 23.15 million tons a year in 2018 to 33.82 million tons annually in 2023, according to GlobalData analysts.
Growth in production has spurred worries about pollution. Environmental groups estimate spills at manufacturing and transport sites cause more than 250,000 tons of the pellets to enter the ocean each year. For example, Frontier Logistics was cited in July for violating the state’s Pollution Control Act after a spill at its Charleston-based operation led to thousands of tiny pellets washing up on the beach at Sullivan’s Island.
Most of the pellets are shipped from ports in Texas and Louisiana, but some manufacturers are sending their products to the East Coast because of transportation bottlenecks at Gulf Coast facilities and as a hedge against bad weather in that part of the country.
Plastic pellets are seen as a growth commodity for the Port of Charleston, which is trying to diversify its cargo base beyond manufacturing. The Charleston area has already attracted several shipping firms, including Frontier Logistics, Mid-States Packaging and A&R Bulk-Pak, which is not affiliated with A&R Logistics.