The global trade in cars, trucks, auto parts and tractors continues to grow.
(Article originally published in May/June 2019 edition.)
In 2018 the United States was the largest importer of cars in the world with a dollar value of $178.5 billion and the third largest exporter of cars with a dollar value of $51.4 billion. It’s a huge business that many seaports depend on and strive to attract. In the shipping world, automobiles moving on ships is called roll-on/roll-off cargo (ro-ro), and for the port of Baltimore the ability to attract this type of cargo has made it the top ro-ro port in the country.
In the real estate world there is simple formula for success: “Location, Location, Location.”
The “L” word has been a major factor in Baltimore’s ability to maintain its number one ranking. In 2018, the port handled a record 850,147 cars and light trucks, the most in the U.S. for the ninth straight year. The port also handled 820,445 tons of farm and construction machinery, an increase of 13 percent over 2017. “So far in 2019,” says Richard Scher, Director of Communications, Maryland Port Administration (MPA), “cars and light trucks are up 12 percent and machinery 17 percent.”
The port’s location is ideal for exports from the industrial heartland of the Midwest. For imports, it’s ideal for the huge Middle Atlantic marketplace. “So location has a lot to do with it,” says Rick Powers, Director of Sales & Marketing for the MPA.
The ro-ro trade has also spawned increased development at the port.
“We’re always working on new infrastructure and development,” adds Powers. “Since we are dredge-heavy here, we have dredged material to develop more land, and one of our other big advantages is we a have a number of auto processors so all of the car companies that come here have many options. Some ports have only one processor.”
After years of focusing hard on the ro-ro business, the port has developed a critical mass of services including the multiple processors, all the major car-carrying shipping lines and several trucking firms. In addition, there has been a major focus on quality.
A port initiative put together a quality cargo-handling action team (QCHAT) that meets monthly. QCHAT is composed of all the people involved in the business – labor, processors, truckers, administration. Powers credits the group with numerous quality and service improvements for customers.
While Baltimore holds down the top spot, Georgia is working hard to maintain the number two ranking in ro/ro.
“In fiscal 2018, the port of Brunswick handled nearly 600,000 cars, trucks and tractors including the 30,000 moved via Ocean Terminal in Savannah,” notes Pat Richardson, Manager of Commercial Communications at the Georgia Ports Authority (GPA). “Georgia is the second busiest hub for the import-export of vehicles and ro-ro machinery and other types of ro-ro cargo in the U.S.”
A series of infrastructure projects will increase capacity and provide new opportunities.
“This year, the Georgia Ports Authority will add 60 dockside acres to the ro-ro operation at Colonel’s Island Terminal at the port of Brunswick,” Richardson says. “The development will increase the car storage area by approximately 7,000 spaces, providing a staging area for vehicles being loaded or unloaded from vessels. The benefit will be speedier vessel processing, especially for those customers whose auto-processing lots are on the south end of Colonel’s Island Terminal.”
The authority is also adding a new cross-terminal road linking the three vessel berths. A new access road between the docks and the island’s south side was recently completed, providing a more direct route to existing auto-processing lots and new development on the south end of the terminal.
The new dockside expansion will double GPA’s rail capacity for autos at Brunswick, adding 14,100 feet of track. This, in turn, will allow Brunswick to expand service in markets west of the Mississippi River and in the Midwest. Vehicles crossing Brunswick’s docks are already moving west in significant numbers with 16,000 units sent to California and more than 4,500 to Texas during fiscal 2018.
Upon completion, the GPA will have added 250 acres in recent years for a total of 639 acres of leasable space with an additional 140 acres that were sold for auto processing at Colonel’s Island Terminal.
Brunswick’s current annual capacity is more than 800,000 units. “GPA’s plan is to utilize approximately another 400 acres to bring annual throughput capacity to 1.5 million vehicles in coming years,” Richardson notes.
A long-time customer of the port of Savannah, Kia Motors Manufacturing Georgia (KMMG), began producing cars in West Point, Georgia in 2009. KMMG moves parts and components in via Savannah to support assembly at the West Point plant.
In addition to importing vehicles through Brunswick, Kia is now exporting finished vehicles via Colonel’s Island and plans to export 3,000 Telluride SUVs a year through Brunswick. Through vertical integration – parts in via Savannah, autos out via Brunswick – Kia is taking advantage of Georgia’s extensive road and rail infrastructure as well as its broad network of shipping line services.
Expansion at the port of Virginia is opening new ro-ro opportunities, says Joe Harris, Senior Director of Media Relations for the Virginia Port Authority (VPA): “We are well past the half-way point of our combined $700 million capacity expansion at Virginia International Gateway (VIG) and Norfolk International Terminals, and that is opening up new possibilities for ro-ro, breakbulk and project cargo.”
Harris adds that “At the height of construction we were using the 287-acre Portsmouth Marine Terminal (PMT) as an outlet for container cargo, but we are now shifting more and more of that container volume out of PMT and back to VIG. That migration of cargo opens up PMT as a multi-use (ro-ro, breakbulk and project cargo) facility. As a result, our sales team is actively marketing the terminal’s ro-ro capabilities.”
PMT currently has regular calls by Atlantic Container Line’s (ACL) vessels. It also has on-dock rail service via Norfolk Southern, Portsmouth Belt Line and CSX Transportation.
The Newport News Marine Terminal (NNMT) is another multi-use facility with many possibilities. It occupies 165 acres, has direct, on-dock rail service via CSX with the ability to transfer to Norfolk Southern in Richmond, and features a permanent roll-on/roll-off ramp for loading and unloading rail cars with construction and agricultural equipment. In 2018, NNMT handled nearly 25,000 imported vehicles.
“Our goal is to diversify our cargo mix by leveraging the possibilities these multi-use terminals present, and ro-ro cargo is an area where we have many possibilities,” Harris explains. “In our effort to diversify our cargo mix, we are reacquainting ourselves with the process of moving SDDC cargo (the military’s Surface Deployment and Distribution Command), much of which can be ro-ro. Virginia is one of 17 strategic ports, and as a result we have handled SDDC moves in the past. But now with PMT and NNMT we are better-equipped to handle this business and can be more aggressive in courting it.”
The threat of tariffs on imported cars is a concern, he says: “We are closely monitoring the current trade environment and the effects that additional tariffs may have on our business. In order to ensure that we have a clear understanding of the impacts of new tariffs on our volumes, our business analysis team is conducting sensitivity forecasting to help gauge the impact.”
Partnering for Profit
On the West Coast, the big story at the port of San Francisco is the Pier 80 facility where there has been solid ro-ro growth during its first three years of operation, says Brendan O’Meara, the port’s Maritime Marketing Manager.
The port partnered with Pasha Automotive Services at Pier 80, and auto volumes have doubled each year and are expected to reach 75,000 units at fiscal year-end. “By partnering with Pasha we have successfully turned an underutilized maritime asset into a highly active ro-ro facility,” O’Meara says. The port’s ro-ro business consists entirely of autos with 70 percent exports and 30 percent imports.
From a carrier’s perspective, there is a strengthening trend in inbound cargo as the U.S. economy continues to be very strong, notes Atlantic Container Line (ACL) spokesperson Renee Sisk. “We are also seeing an increase in the used ro-ro cargo sector for construction and agricultural equipment to and from Europe,” she adds.
In the past three years ACL introduced five new con-ro vessels (container and ro-ro) into its fleet. To improve efficiencies and service to customers, the carrier is now developing electronic data interchange capabilities for all ro-ro freight, which is expected to be available next year.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.