Breakbulk Breakthrough

Breakbulk Breakthrough

Copyright 2004, Traffic World, Inc.

Plans to add breakbulk capacity and relieve congestion at the Port of Charleston should move more quickly now that a battle for control of a new terminal has been resolved.

A dispute between the South Carolina State Ports Authority and its former partner, Charleston International Ports, delayed development of a breakbulk terminal at the old Charleston Navy base. The SPA already has spent more than $450,000 to dredge around the terminal''s piers and it''s anxious to get the Navy base terminal up to speed.

Union Pier, the agency''s main breakbulk terminal, is crammed, thanks partly to BMW, which has a plant in South Carolina. Further, the port authority recently removed several breakbulk warehouses from its Columbus Street Terminal to make room for more containers.

The former Charleston Naval Base is critical to the port''s plans for growth. Charleston handled 613,000 tons of breakbulk cargo in fiscal 2003, up 15 percent from the previous year, and 1.68 million containers, up 11 percent from fiscal 2002. The Port of Charleston is the fourth largest U.S. container port, and Charleston is the sixth largest customs district in dollar value of international shipments.

"We really need the Navy base," said Bernard S. Groseclose, Jr., the port authority''s president and CEO.

The SPA and Charleston International Ports, a terminal operator backed by Warren Lasch, a trucking entrepreneur from Michigan, joined forces to rebuild the port''s breakbulk business in 1999. Together they set up shop on 100 acres that the authority had acquired at the former Navy base, on a bend along the Cooper River. Lasch''s company would run the terminal; the authority would help market it; profits would be split 50-50. It seemed like a good match at the time.

As will happen, there was a falling out. The terminal failed to turn a profit. Communications broke down and in early 2003 the authority evicted its partner. Charleston International Ports sued, alleging that its eviction was illegal. The company demanded as much as $40 million to buy out its 30-year deal with the ports authority.

A judge initially sided with Charleston International Ports on the eviction issue but the SPA port authority won on appeal. "For a while, we didn''t know who to send our rent checks to," said Perry Collins, president of Winyah Stevedoring, which uses the terminal to handle aluminum, lumber and other commodities.

"It was going back and forth like a ping-pong ball."

The dispute was headed to the South Carolina Supreme Court this month when both sides reached a deal: The SPA would get custody of the operation but at a cost - a $1.5 million payment to Lasch''s company and a promise to assume about $3.4 million of the company''s debt.

Collins said he''s relieved to see the bickering end. "I think the main thing is that we''ve got a stable landlord. We''re better off now with the ports authority."

Executives with the ports authority and Charleston International Ports now are trying to put a good face on the conflict, mainly by not talking about it much. Their remarks have been limited to a joint statement that said they had "resolved their disputes and differences amicably" and that there is "mutual respect and goodwill between the parties."

Officials at Charleston International Ports said they are reviewing the company''s future.

Meanwhile, the SPA is eager to proceed with plans to develop the Navy base terminal. "We''ve got a real opportunity to build our breakbulk business, which was our original intent," said Groseclose. "There''s been a lot of deferred maintenance and spending out there."

Resolution of the conflict also gives the authority more flexibility as it prepares to build a new 250-acre container terminal in another section of the former base.

Though the breakbulk and container terminal sites aren''t contiguous, the authority still could use some of the acreage at the breakbulk terminal to store containers or other cargo.

In the past, the authority has said it wanted to work with private terminal operators to help finance and run the new Navy base container terminal. The recent breakup with Charleston International Ports has soured its attitude toward such partnerships for breakbulk cargo, Groseclose said.

"We''re not going to enter into any agreement with a private (breakbulk) operator." But for the new container terminal, he said, "We''ll be looking for new private-sector partners soon."