Outside Looking in: Port of CHS as an Economic Engine

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1 Outside Looking in: Port of CHS as an Economic Engine Samuel A. Woodward President & CEO, Horizon Lines

2 Executive Summary I. Overview II. Winners & Losers in the Post Panamax Era III. IV. Port of CHS as an Economic Engine Takeaways SC Supply Chain Summit 2

3 Overview SC Supply Chain Summit 3

4 Relative to its size, the port plays a large role in SC s economy SC NY/NJ Gross State Product: $170B Per Capita Income: $32,000 (47 th ) Gross State Product: $1.6T Per Capital Income: $52,000 (7 th ) Total Port Impact: $45B Port Impact/GSP: 30% Direct Jobs: 24,000* TEUs: 1.5mm *Wilbur, Smith Associates 2008 Total Port Impact: $49B Port Impact/GSP: 3% Direct Jobs: 170,000** TEUs: 5.5mm **Strauss- Wieder Associates 2010 South Carolina s economy is 10% the size of New York/New Jersey The port is 10x more important to South Carolina s economy SC Supply Chain Summit 4

5 Winners & Losers in the Post Panamax Era SC Supply Chain Summit 5

6 Panama Canal Expansion: A Game Changer Panama Canal expansion completed by Will allow larger ships to navigate channel Channel Depth: 42 Y. è 52 Y. Max Capacity: ~5,000T è ~13,000T Bigger Canal è Bigger Ships è Deeper Ports Economies of Scale Reduced transit ]mes Winners & Losers in Southeast Some ports will be ley behind SC Supply Chain Summit 6

7 Southeast ports jockey for position SC Supply Chain Summit 7

8 Status of Post Panamax Projects Miami already dredging Charleston has money and close to approval Study to determine harbor depth $300M needed: $300M funded by South Carolina and/or Fed Jacksonville has approval but no money (yet) Expects environmental approval in April $700M needed: $0 funded Savannah has some money but no approval (yet) S]ll conduc]ng environmental study $652M needed: $266M funded by Georgia All four ports sending posikve signals to market, but which ends up as Southeast Gateway? SC Supply Chain Summit 8

9 Pre & Post Panamax Harbor Depths *Channel Depths Charleston will be one of five Post Panamax ready ports on the East Coast Charleston will be 48, 50 or 52 SC Supply Chain Summit 9

10 Markets demand optimal solution on East Coast Super- regional gateway through Southeast Economic catchment area Best- in- class hub for road, rail and water transit US West Coast to/from East Coast Asia inbound To/from South America Balance consump]on markets with produc]on markets South Florida consump]on market South Carolina export market SC Supply Chain Summit 10

11 Economic Catchment Area Mid- Atlan]c manufacturing & export center Supply chains seek fastest, most cost- efficient solu]on Most cargo trucked: shiy to IMC? SC Supply Chain Summit 11

12 IMC Competitive Analysis IMC Costs Charleston Savannah Jacksonville Chicago $860 $815 $736 Columbus $700 $725 $901 Pittsburgh $700 $725 $1,044 Nashville $580 $600 $625 Charlotte $420 $400 $425 Avg $652 $653 $746 IMC Transit Times Charleston Savannah Jacksonville Chicago Columbus Pittsburgh Nashville Charlotte Avg CHS & Savannah compe]]vely priced Savannah has best transit ]mes CHS- CHI not compekkve, but Ohio Valley is SC Supply Chain Summit 12

13 Optimal solution for land, air & sea Post Panamax era will create bull- whip effect: dictates supply chain movement Markets orient around single, op]mal solu]on Port development and related supply chain infrastructure Who will organize to capture opportunity? SC Supply Chain Summit 13

14 Port of Miami wants to be that solution Public- Private Partnership to construct world- class mousetrap Combina]on of private and state funds Currently dredging to 52 Y. Cranes and berths to accommodate 13,000T ships Poten]al agreement with P- 3 Seaport to Airport Tunnel Florida East Coast (FEC) Railroad Full trains with imports, connect to JAX, SAV, CHS Off- set imports with Miami- des]ned cargo (consump]on market) and interna]onal carrier exports Intrinsically faster, cheaper Cut out ports of Jacksonville, Savannah & Charleston SC Supply Chain Summit 14

15 Deep water Miami + FEC Intermodal SC Supply Chain Summit 15

16 FEC connects to terminals, warehouses, distribution centers in JAX, SAV & CHS State government market s]mula]on SC Supply Chain Summit 16

17 Port of CHS has competitive advantages Op]mal supply chain loca]on, ideal port Efficient opera]on Great KPIs Few fog delays Environmental approval & money in hand for dredging Already a deep port (45 low ]de, 48 high ]de) Visionary capital investment New lo/lo terminal at former Naval Yard Inland Port Export economy Right to Work Low cost labor, land & energy SC Supply Chain Summit 17

18 But it also has disadvantages Most Southeast cargo moves by truck Poor highways and two- lane roads: trucking expensive and slow Charleston s view of not in my backyard : Cruise Ships SC Supply Chain Summit 18

19 Port of CHS as an Economic Engine SC Supply Chain Summit 19

20 Maritime commerce has an incredible impact on local economies Port of Charleston 24,000 direct jobs $12B in wages $45B in economic acovity SC Supply Chain Summit 20

21 Ports are a powerful economic engine Case Study: Horizon Lines 600 direct, high- paying, full- ]me jobs $46M in local economic ac]vity 8x jobs mul]ple SC Supply Chain Summit 21

22 Horizon Lines moves to Philly SC Supply Chain Summit 22

23 Takeaways SC Supply Chain Summit 23

24 SC must organize and support the port Case Study: Boeing 600 votes in Washington state $10B incremental impact SC Supply Chain Summit 24

25 Keys to Long Term Economic Success The port is one of cri]cal resources available to South Carolina Requires change in the poli]cal landscape Underpinning of manufacturing, distribu]on centers and related supply chain Organize similar to New York/New Jersey Port Authority SC Supply Chain Summit 25

26 QUESTIONS? SC Supply Chain Summit 26