The Big Reach of America’s Small Ports

The Port Corpus Christi is dwarfed by nearby Port of Houston, only 200 miles away. But its officials see the Houston port’s huge size and congestion in its favor as Corpus Christi expands and seeks to attract exporters beyond its core of crude oil products. Other small ports are undergoing similar expansions, trying to increase their range of exports in the process.

“Everyone along the Gulf Coast is trying to take business away from Houston,” says Sandy Sanders, deputy port director for Business Development and Operations at the Port Corpus Christi.

Products from some maquiladoras—export assembly plants in Mexico—along the Texas border now go to the Houston port for export. Sanders sees no reason these goods can’t be exported from Corpus Christi once the port completes its expansion.

“With the deepening of our outer harbor and the opening of an additional 1,100 acres,” Sanders points out, “we’re going to be poised for a multi-purpose dock that will take containers and heavy equipment and be able to be a very thriving port.”

Looking ahead, he believes the wind energy sector, which has been importing products from Europe and China through the port, will turn to exporting some products as those manufacturers open more facilities in the U.S., especially around the port. With its experience in handling wind energy parts, including for nearby Harbor Wind Farm, currently planning an expansion, Port Corpus Christi is well versed in the needs of the industry.

“Corpus Christi was far and away the leading port in those wind components coming through,” Sanders says. “So we already have a relationship with those manufacturers and have stevedores seasoned at handling wind components. Also, a lot of our rail have cut their teeth in our port accommodating these wind components. So it stands to reason that our port will be used for the export of these components. This is an emerging market that we’re going to go after.”

As manufacturers spread out from major metropolitan areas to those less populated and congested, as Sanders has seen occurring near Corpus Christi, smaller ports will seek to offer these companies export opportunities. Many of these ports are already served by the interstate highway system and rail lines.

Quite a few of these ports, many of them non-container ports, are handling the exports of autos and other wheeled cargo that are loaded onto ships—referred to as roll-on/roll-off (RO/RO) vessels—designed to enable these products to be driven onto and off.

Delaware’s Port of Wilmington, which does handle containers, exports autos and earth-moving equipment made by GM and Caterpillar as well as some livestock, according to John Haroldson, the port’s international trade manager. The port, currently undergoing a deepening, has been a successful auto hub for more than three decades, with an auto terminal that now includes a dedicated auto and RO/RO berth. Adjacent to the port, AutoPort Inc., a comprehensive vehicle processing and modification company, customizes GM exports for such overseas customers as police and utility service truck fleets.

The Port of Baltimore, another to deepen its channel in addition to adding four super-sized cranes, has become a major port for auto exports by Chrysler, Ford, Subaru, Toyota and others because of its closeness to the auto industry’s manufacturing plants. But even such distant facilities as Subaru’s in Lafayette, Indiana, and Toyota’s in Georgetown, Kentucky, are now using the Port of Baltimore, which even has an auto trade development director.

However, Honda’s manufacturing facility in East Liberty, Ohio, northwest of Columbus and directly west of Baltimore, uses neither the Port of Baltimore nor the far larger ports to the south, such as South Carolina’s Port of Charleston or Georgia’s Port Savanna. Honda instead ships from JAXPORT. Located farther south in Jacksonville, Florida, it is smaller but shares the Port of Baltimore’s focus on serving the auto export business as it continues to grow. As Roy Schleicher, executive vice president at JAXPORT notes, the port has become number one in the U.S. for vehicle exports and the nation’s second-busiest vehicle handling port.

The Port of Hueneme, 60 miles north of Los Angeles, has also gotten into the auto export business. Pete Wallace, director of operations, says it’s a great way to fill vessels that discharge imports and would otherwise leave empty on return trips to China and South Korea. The port now ships Honda, Toyota, Nissan, Chrysler and GM vehicles “mainly to Korea and China,” he says, noting that such exports have been steadily increasing.

“We also do some exporting of high and heavy cargo—things like tractors and excavators—to China and Korea,” Wallace says. “We’re also shipping Kenworth trucks down to Ecuador. Most of the larger ports identify themselves with containerized cargo rather than automobiles.”

Other exports, he adds, include locally grown citrus fruits and avocados.

Van Grundmann, chief commercial officer for Mississippi’s Port of Gulfport, which is currently undergoing expansion and improvements, sees potential for future exports—especially to Central and South America—in autos from a Toyota plant in Blue Springs and a Nissan plant in Canton. General Electric’s plant in Batesville adds to the state’s export potential, as does a Howard Industries Inc. plant in Laurel that manufactures transformers and other electrical transmission and distribution equipment.

Those transformers soon could be shipped for installation in the Central American hydroelectric power plants to which Port of Gulfport has been shipping “all kinds of concrete and building supplies,” Grundmann points out.

“In general,” he says, “we’ve got a great little niche port with a lot of business running in and out of here every week that a lot of other ports in the Gulf would love to have. We’re a very economical port to ship out of. That’s why we’re attractive to small regional carriers.”

At least 45 truck lines service the port on a daily basis, Grundmann says, and rail service is provided by two rail lines that, through a joint marketing agreement, provide access to two additional rail lines.

There are at least 73 active ports along America’s coasts and its Great Lakes, according to the corporate membership roster of the American Association of Port Authorities (AAPA). The type of goods departing from many of these ports—seafood, agricultural, forest and wood, oil- and gas-related products—reflects their locations

Agricultural products ranging from grains to cotton to various food items, including frozen poultry, are among the most common exports from ports in Mobile, Alabama; Gulfport, Mississippi; Galveston and Victoria, Texas; Iberia, Louisiana; Brunswick, Georgia; Richmond, Virginia and Stockton and West Sacramento, California.

Forest and wood products are handled by such Atlantic coast ports as Richmond and North Carolina’s Morehead City. On the Gulf Coast these goods are shipped through ports at Mobile and Gulfport, and in Northern California it’s Humboldt Bay.

Oil- and gas-related products are the major exports from such Gulf Coast ports as Corpus Christi, Iberia and Fourchon, which is also in Louisiana. “These are what we call niche ports or smaller ports,” says Aaron Ellis of AAPA. “They may consider themselves mid-size ports and a lot of them consider themselves large in the area they focus on.”

Also belying their smaller sizes, most of these ports are undergoing or planning the expansion of their territories to attract more export and import business. Many are deepening their waters to accommodate the larger “post-Panamax” vessels once the widening and deepening of the Panama Canal locks are completed, now expected sometime during the first half of 2015. Those large ships, often referred to as gigantic, could drive today’s large vessels away from major ports to their smaller competitors.

The few ports that don’t already have an established Foreign Trade Zone, where customs duties and some taxes can be avoided by companies trading internationally, are creating at least one. Some ports with FTZs are adding to them and others already have several. These zones, supervised by U.S. Customs, consist of areas in or near U.S. ports of entry where domestic and foreign products and components receive the same customs treatment they would had they been outside the commerce of the U.S.

“Along the Southeast and Gulf coasts,” according to a U.S. Army Corps of Engineers report, “there may be opportunities for economically justified port expansion projects to accommodate post-Panamax vessels.”

All this suggests that much of the future growth in exporting may lay with the smaller, secondary ports.

What Gulfport’s Grundmann says about his port’s potential exporters can be applied to other small or secondary ports located near rail lines, interstate highways and manufacturers with export potential. Experience handling certain types of imports can be applied to the export of similar products in the same fashion put forth by Port Corpus Christi in parlaying its experience with importing wind components to handling the export of such products.

“The global economic malaise,” Grundmann points out, “has created an opportunity for us because large companies that wouldn’t have taken another thought at moving their [export] facilities are now saying, ‘Here’s where we can save half a million a year in pilot fees and a million more where we export out of.’”

Those savings from turning to smaller ports can really add up, he concludes.