The Port of Jacksonville is still determined to get deeper water needed to handle heavily loaded, larger container ships that will be able to transit the expanded Panama Canal. But the Jacksonville Port Authority, now guided by a former Horizon Lines executive, is tweaking its strategy to better focus on what it can do in the short term so it’s better prepared to capitalize on a deeper draft that’s still years away.
Signs that Jacksonville would have to alter its game plan to become a larger Southeast container port player roughly coincided with the opening of the port’s $230 million TraPac terminal in early 2009. The global economy was in free-fall, reducing import demand and keeping major shippers from adding expansive distribution centers. The economic downturn eventually forced Hanjin Shipping last March to scrap plans for a $300 million terminal adjacent to TraPac.
The recession didn’t do Jacksonville any favors in getting congressional authorization for its Mile Point project, which would fix navigational problems that prevent fully loaded container ships from calling at the port nearly two-thirds of the day, hampering business at TraPac, a subsidiary of Japanese ocean carrier MOL.
A congressional ban on earmarks imposed in 2010 makes it nearly impossible for Florida legislators to get federal authorization until Congress passes a Water Resources Development Act. The historically biennial bill was last passed in 2007.
“You go into your game with your best game plan, but all of a sudden the defense does something you’re not expecting and you get back at halftime, and you say, ‘Wait a minute. We have to figure out what we are going to do to counter this thing they are doing.’ You call an audible into your game plan,” said Brian Taylor, Jaxport’s new CEO.
If the Mile Point project doesn’t get federal authorization soon, the port is prepared to take on the $38 million fix itself, using state money and getting reimbursement from the U.S. when WRDA passes. The Senate already has passed a WRDA bill, putting the onus on the House to approve its version soon after the bill is introduced this month.
Jacksonville also is working to see if the White House’s Office of Management and Budget would allow the Maritime Administration to work directly with the U.S. Army Corps of Engineers to authorize the project without congressional approval.
Deepening the harbor to 47 feet is even further off. The corps expects to complete its deepening study next April and estimates construction will take five to six years. When the project, projected to cost $633 million, starts depends on whether authorization can be included in the WRDA bill being considered or in the next version.
Jaxport is optimistic the deepening project can be sped up, and President Obama, who visited the port in June, is prioritizing similar projects on the East and Gulf coasts ahead of the opening of the expanded Panama Canal in mid-2015.
Despite the delays around the Mile Point project and the long road ahead for deepening, the port has enjoyed some successes. Container traffic has grown consistently the last several years to a record 923,660 20-foot-equivalent units in fiscal 2012, which ends Sept. 30. The port’s diverse cargo mix — including breakbulk, liquid bulk, heavy roll-on, roll-off and motor vehicles — has kept the Northeast Florida gateway in good financial standing.
Even Hanjin’s decision to scrap plans for its highly automated terminal has a silver lining: The South Korean company added a weekly service involving nine vessels with slots available to its CKYH Alliance partners. An intermodal container transfer facility, providing near-dock rail access to the TraPac terminal, is expected to further ratchet up traffic growth. The $30 million ICTF is scheduled to open in late 2014, giving shippers cheaper access via a CSX Transportation line to Southeast and Midwest markets, Taylor said.
“There are economic opportunities here for us to provide a transportation product that customers will gravitate to because it is cost-effective for them and allows their product to arrive and leave in the time frame they are looking for, and that is what we are going to be focused on,” said Taylor, formerly executive vice president and chief operating officer at Horizon.
Jaxport is meeting with shippers and container lines to find a way to better position refrigerated and dry containers used in its Puerto Rican trade with services connecting to Latin America, Europe and Asia, said Roy Schleicher, executive vice president. There is an opportunity to “marry up” equipment moves in Jacksonville, considering many imports to Northeast Florida are still trucked down from Savannah, he said.
Caribbean volume made up about 60 percent of Jaxport’s laden container traffic in fiscal 2012, while Asian trade contributed about 19 percent, according to port statistics.
The port also is working to maximize its Latin America service, buoyed by Hamburg Sud. Exports to South America have been one of the strongest areas of Jaxport’s growth, said John Martin, principal port consultant at Martin Associates. South American trade accounted for nearly 16 percent of Jaxport’s laden traffic in fiscal 2012.
“We are turning up the heat” to attract distribution centers, Schleicher said. "Now we have 16 Asian services and call tell shippers, ‘You don’t need to go to Savannah or Charleston.’ ”
Northeast Florida is prime for distribution center development for several reasons, he said. First, Florida is on its way to becoming the third most populous state, and the Southeast overall is booming. Second, rail shippers can reach the Chicago market from Jacksonville in 45 hours, giving them an incentive to funnel discretionary cargo through the region. A 55 million-person market is within an eight-hour drive from the port, which has helped the port attract such shippers as Michaels, Samsonite, Coach and Bridgestone Firestone to the area.
Although shippers are reluctant to build 1 million-square-foot DCs, they’re looking to build small facilities to keep inventory low and trucking costs down, Schleicher said. That Asian container traffic hasn’t taken off as expected means there is plenty of terminal capacity and affordable industrial space, added Martin, who has been advising the port since 1993. More than 10 million square feet of warehousing and distribution space has been added to the region in recent years.
Charles Clowdis, an IHS Global Insight trade and transportation analyst, is less optimistic about Jacksonville’s opportunities for growth. He’s skeptical about Jacksonville’s ability to offer a better value to shippers than Charleston and Savannah, both of which have intermodal rail connections and more container services. Besides, Savannah, only two hours north of Jacksonville, has invested in its reefer capacity and has enjoyed increased volume as result, he said.
Martin said Jaxport’s opportunities would become clearer when his firm unveils its strategic plan for the port, though he concedes Jacksonville “will be left in the dust” if it doesn’t get a 47-foot draft.
“But if they do, they can definitely step up and play with Charleston and others,” he said. “Don’t count (Jacksonville) out.”