Rayonier considers itself fortunate. The $1.6 billion exporter of performance fibers dodged two of the most recent risks to ocean shippers: a potential International Longshoremen’s Association strike and reduced Asian demand. After numerous contract extensions, a labor deal kept longshoremen working on the East and Gulf coasts, and the wide range of uses for Rayonier’s products helped keep its export business steady.
But Rayonier’s exporting ability, like that of many U.S. companies selling their wares overseas, still faces constraints from factors beyond its control, including limited truck productivity, shallow ports and improved but spotty liner scheduling reliability. Those challenges add costs to the roughly 40,000 20-foot-equivalent units of performance fibers the company exports annually through the ports of Charleston, Jacksonville and Savannah to some 80 overseas ports.
Despite the global slowdown in manufacturing, Rayonier — No. 27 on The Journal of Commerce’s ranking of Top 100 Exporters — said it hasn’t seen demand fall for its performance fibers used in cigarette filters, digital display screens, cosmetics, foods, paints and impact-resistant plastics. Performance fibers, most of which are exported, generated nearly $1.1 billion in 2012, about 70 percent of the real estate and timber company’s total revenue.
“A large part of the (exports) are going to the cigarette market, which is still a growing market in China,” said Terry Bunch, director of logistics and customer service at the Jacksonville, Fla.-based company.
From its mills in Jessup, Ga., and Fernandina Beach, Fla., Rayonier trucks containers filled with performance fibers to the three Southeast ports. Savannah handles about 80 percent of the volume, Jacksonville gets approximately 15 percent, and Charleston takes the rest.
Although the mills enjoy proximity to the container terminals, the company can’t load trucks as heavy as it could in other developed countries. That’s because size and weight limits for U.S. trucks are lower than overseas, reducing driver productivity and causing more congestion and producing more emissions, Bunch said. The current federal standard restricts trucks to a length of 53 feet and a weight of 80,000 pounds on the national highway system. Size and weight limits vary by state for transport off the federal highway network.
The trucking industry has been lobbying for years to raise size and weight limits, but recent concern over how new federal regulations could reduce truck capacity has given proponents extra fuel to their campaign. The highway safety lobby and railroad industry, however, wield sizable clout in Washington. Opponents, for example, successfully blocked language in the last surface transportation bill that would have allowed trucks to haul heavier loads on national highways.
Opponents of raising truck size and weight limits argue accidents will become more severe, and wear and tear on highways and roads will worsen. The trucking industry counters that an extra axle would negate extra asphalt wear, and safety wouldn’t be compromised, particularly because fewer trucks would be needed. The results of an ongoing study of truck size and weight limits, a bone thrown to the trucking industry in the transportation bill, could provide ammunition to either side.
Bunch also is concerned about how long it will take Charleston, Jacksonville and Savannah to get their harbors deepened so they can handle larger ships. Because export containers tend to weigh more than import containers, the need for additional vessel draft is a priority for shippers such as Rayonier.
Charleston says it will be able to deepen its draft from 45 feet to at least 50 feet by the end of 2018, while the Georgia Ports Authority aims to have its harbor deepened to 47 feet from 42 feet in the second half of 2016. Jacksonville plans to begin deepening its 40-foot channel by seven feet in 2016, with construction taking two to four years, depending on funding and the speed of the contractor. None of the ports will be immediately able to handle the fully loaded, larger ships that will begin to transit the expanded Panama Canal in mid-2015.
Finding export capacity on carriers generally isn’t a problem, because Rayonier works closely with carriers to communicate its space needs. But the lack of scheduling reliability adds unnecessary costs to the company’s supply chain. Bunch praised Maersk Line for aggressively taking on improving scheduling reliability and telling the industry how it’s stacking up to its goals.
Service “is not where it needs to be, but it has been improving,” he said. “You can definitely see the seasonality in performance. It really dips after (carriers) change their vessel strings after peak season.”