Friday, July 9, 2010 - By Mark Szakonyi

Jacksonville Business Journal

The middle ground: Nearby competition stymies growth

A sign at Cecil Commerce Center shows the city's branding of the city as "America's Logistics Center". Experts say the city should also work on carving out niches in the supply chain.

The Port of Jacksonville will grow through gaining access to the larger post-Panamax ships, but the rewards will be less than the Jacksonville Port Authority is heralding, said Yem Bolumole, associate professor of logistics at the University of North Florida.

The sheer size of the ports of Charleston, N.C., and Savannah, GA., and their entrenched trade lanes will make it hard to attract shipping customers away to Jacksonville. Yes, there will be an opportunity to gain cargo normally shipped to West Coast ports, but it's unclear how much cargo will be gained. Part of the uncertainty is because some logistics analysts say that most of the shipping customers who will shift their supply chains to East Coast ports have already done so. About 70 percent of U.S. imports come through West Coast ports; however, the share expected to move to the East Coast after the canal opens ranges from 5 percent to 25 percent, according to the Journal of Commerce.

It's also unknown how much the American consumer will import since the economic recovery will vary depending on regions within the country. All is not lost, however, Bolumole said.

"We have the opportunity to do some things very well," she said. "What can set us apart in the Southeast is our intermodal connections and ability to ship to parts of the country faster."

As the city markets itself as "America's Logistics Center," it should work on carving out niches in the supply chain. Building the area's refrigerated storage capacity is one way and increased logistics efficiency is another way Jacksonville can be the trusted route for shippers who can't risk not getting goods and materials to their destination on time.

A ramp-up in regional manufacturing exports would also make Jacksonville more attractive to shipping companies since they could count on more exports during port calls.

Jeb Atkinson, vice president of logistics practice for ProVenture, questions whether post-Panamax access will be the biggest factor pertaining to the port's growth over the next decade.

Atkinson said he doesn't expect many shipping companies to begin operating post-Panamax ships once the canal opens or for several years after. He added that the port's new service to booming Southeast Asia via the Suez Canal will likely be a larger driver of growth.

Another factor that could hinder East Coast ports' growth despite having post-Panamax access is the rise of transshipment ports in the Caribbean, wrote Robert West, a Halcrow Inc. principal specializing in trade and transportation, in the American Association of Port Authorities' Seaports Magazine.

He wrote that because it will be too expensive for post-Panamax ships to call on ports unless they have significant volumes to load and unload, ports in the Caribbean will serve as virtual crossdocks. Smaller ships from the transshipment ports would then call on East Coast ports that shipping companies don't find financially feasible for post-Panamax calls.

If this does take place, Jacksonville won't be affected if shipping customers bring through enough cargo on its docks.