Posted September 10, 2019
Closer-to-market approach and robust business help propel uptick.
Containerized cargo, infrastructure upgrades and a cold treatment pilot program now in its sixth year have helped Southeast U.S. ports share in the riches of growing fruit imports.
These developments have promoted a closer-to-market approach in the trade, cutting out unnecessary back-and-forth transport for fresh produce. However, imports still remain robust for Northeast ports on the Delaware River.
According to PhilaPort (The Port of Philadelphia), the ports under its purview — including Wilmington, DE, the Packer Avenue Marine Terminal, Gloucester (NJ) and others — imported $3.6 billion worth of fruit in 2018. This represents almost a third of the total import value if predominantly overland-focused Mexico is excluded.
How is this possible when Southeast ports have gained so many advantages in recent years? Quite simply, the pie has gotten bigger.
There are many idiosyncrasies within the sector, most notably the crucial role of these Northern ports for the United States’ largest sea-freight fruit supplier, Chile, because of its strengths in fumigation capabilities and proximity to population-dense markets.
But the issue goes deeper than that, both literally and figuratively. The Panama Canal expansion has prompted more imports from the West Coast of South America, and ports have adapted to accommodate larger post-Panamax liners.
“It’s had a big impact,” says Francis Werner, director for U.S. operations at Capespan North America, Camden, NJ. “[Because of] the dredging of the rivers and just the overall depth of the ports themselves, they’re able to handle the much larger vessels now.
“Philadelphia is still handling a large volume of the imports. Savannah, GA, has certainly started to make its niche, as well, and I don’t think it’s been to the detriment of Philadelphia,” he says. “It’s opened up avenues for distribution of customers in the Southeastern region of the country for quicker delivery.”
He notes this opportunity for the Port of Savannah and other hubs — also including Houston in the Gulf — has been partly the result of the shift to containerized cargo, which has increased dramatically.
“Bulk ships from the past have become more and more obsolete, so you’re seeing a greater volume of imported fruit coming via container as opposed to break bulk ship,” notes Werner. “That’s from everywhere, from New Zealand, from South Africa and from South America; containerized cargo is a predominant amount of the overall import volume.”
He says containerization also means the fruit arrives in better condition as it’s generally been climate-controlled for the entire voyage, and in contrast, break-bulk shipping is more difficult on the produce itself.
Manuel Alcaino of Decofrut, a Chile-based company with U.S. offices specializing in quality control, holds a similar view.
“The big change undoubtedly is the change from reefer ships to containers — this is a big change, but it’s not news. It’s been like that for several years,” he says. “This has opened up lots of options, and the options have started to materialize in the past two or three years.”
GEORGIA ON EVERYBODY’S MIND
The Savannah Harbor Expansion Project (SHEP) due for completion in 2022 will deepen the channel from 42 to 47 feet at low tide. Much of the fruit imported there goes straight to Americold-owned PortFresh Logistics, which has 100,000 square feet of cold storage space.
“It’s a refrigerated facility that’s inland, so you have to take a truck,” says Alcaino. “It offers a variety of services — Walmart is there with a very interesting project — as well as other importers that attend to retailers in the South, such as Publix and others.”
Pat Compres, chief executive of Advance Customs Brokers & Consulting LLC in Miami, says Customs and Border Protection (CBP) inspections can be performed at these cold-storage facilities in Savannah, as well as the completion of retreatment for cold treatment of the fresh produce.
“Ease of entry into the port and highway infrastructure provides a desirable alternative for truckers,” she says. “Collaboration and sensitivity of CBP and USDA at this port have positive ramifications for the importer.”
Chris Logan, Georgia Ports’ senior director of trade development for beneficial cargo owner sales, says a massive rail expansion project is underway that will lift the Port of Savannah’s rail lift capacity to one million containers per year.
Logan says the project, which will result in the Mason Mega Rail terminal, will cut transit times by 24 hours to inland markets such as St. Louis, Chicago, Cincinnati and Memphis, TN.
“Over the past five years, the Georgia Ports Authority has added nearly 600 refrigerated container slots, 16 new truck lanes and thousands of new chassis to stay ahead of increasing demand,” says Logan. “The Port of Savannah’s Garden City Terminal features the nation’s most extensive on-terminal infrastructure for refrigerated cargo, with 119 electric-powered refrigerated container racks.”
He adds the port has seen an increase in fruit imports from South America since the Panama Canal was widened, with six out of nine Panama services making Savannah their first port of call in the United States.
“Savannah serves a strong and growing portfolio, including imported blueberries, mangos, citrus, grapes, avocados, bananas, apples, pears, pineapples, plantains and plums,” says Logan. “As the most westerly of U.S. East Coast container terminals, the Port of Savannah is 100 miles closer to major inland markets such as Atlanta than any other port.”
AN INFLUX IN FLORIDA
PortMiami has benefited from its dredging and infrastructure works. Eric Olafson, director of global trade and business development, says deepening the port to 50-52 feet has facilitated the entry of bigger ships, bringing significant savings related to economies of scale.
“The Panama Canal expansion project has actually added another lane for ocean carriers to use when sending products from the West Coast of South America,” says Olafson. “In fact, in 2018 we saw a 300% increase in container cargo coming from Peru and an 88% increase coming from Ecuador — two key growing markets in the perishable trade.”
The port has spent more than $1 billion in on-dock rail and a highway tunnel that provides access to the U.S. interstate system, he says.
“We plan to continue investing in infrastructure at PortMiami, including $11 million in state-of-the-art new gate technology, more than $40 million for four new post-Panamax cranes, $4 million in reefer racks and $36 million in E-RTG cranes,” he says.
Olafson also references Miami’s geographic advantage as the closest to fruit-growing regions in Latin America and the Caribbean, bringing about extended shelf life for perishables. To boot, the port’s extended USDA hours of operations allow for same-day deliveries to 14 million people in South and Central Florida.
“We can also provide next-day service to perishables markets in Atlanta, Charlotte, NC and Nashville, TN and the entire Southeastern U.S. in one to two days using our fast access highway tunnel and our on-dock rail,” he says.
He adds PortMiami is the only U.S. port designated as a CBP center of excellence and expertise for agriculture and agricultural prepared products.
“One of our biggest shippers of perishables, Seaboard Marine, which has a terminal at PortMiami, worked with the appropriate federal agencies and PortMiami to begin inspections in the winter at 5 a.m. using special lights, which allows perishable cargo to finish inspection and move off port by 7 a.m.,” he says. “This is a turnaround time that is unheard of.”
An investment has also been made in a new lab to host a USDA identifier onsite so if an insect is found in a shipment it can be immediately identified “without costly delays that occur at ports without similar investments.”
“We conduct our inspections on-dock, which helps preserve the shelf life by not creating major delays related to off-port inspections,” explains Olafson.
Andres Ocampo, director of operations at HLB Specialties in Fort Lauderdale, FL, says PortMiami and Port Everglades are quick in working with the government to facilitate inspections and expedite releases of imports.
But changes are afoot in Florida as a wide-range of ports competes for market share.
“In Florida, there have been initiatives to bring more produce to Northern ports, away from the traditional hubs of Port of Miami and Port Everglades,” says Ocampo. “Some shipping lines are now using Port Canaveral and Port of Tampa for reefers incoming from Central America.
“Ports offer more options in terms of refrigerated facilities, complementary to the standard docking services that other ports not servicing produce offer,” he says.
More than a shift, Ocampo says the changes are a response to more demand.
“These new options are absorbing some of that new demand,” he says.
Tampa Bay is not only near the heart of Florida’s agricultural industry, but it is increasingly becoming a key point of entry for imports of agricultural products.
Wade Elliott, vice president of marketing and business development at Port Tampa Bay, says his area has become a logistics hub with the highest concentration of distribution centers in the state.
“The Tampa Bay/Orlando I-4 Corridor region is the fastest growing region in Florida and is now home to almost half of the state’s population,” says Elliott. “Fresh pineapples, mangos, avocados, limes and juice are examples of fruit import commodities handled regularly at Port Tampa Bay.
“Consumer demands for same-day service, tighter delivery windows and shorter lead times are driving a shift in supply chain strategies,” he says. “Port Tampa Bay is ideally positioned to capitalize on these trends.”
One game-changer for the port was the opening of Port Logistics Refrigerated Services’ (PLRS) new refrigerated warehouse in 2017.
“With onsite dedicated fumigation services, this 135,000-square-foot facility has 6,348 racked pallet positions, 148 reefer plugs, onsite USDA and CBP inspection areas, as well as a CBP AG Specialists lab,” he says. “With an adjacent berth capable of working two vessels simultaneously and two dedicated mobile harbor cranes, the facility is also right next door to the port’s container terminal with post-Panamax gantry cranes.”
Elliott says the new 17,000 linear feet of on-dock rail and a dedicated truck ramp linking the port to the interstate were also major infrastructure expansion projects to improve truck and rail connectivity. And at the facility itself, there is still plenty of room to grow.
“There are more than 75 acres adjacent to the PLRS facility and the container terminal in an area we refer to as the Food Campus where we are planning to develop additional warehouse, trans-loading and distribution capacity to serve the food and beverage, as well as the retail sector,” he says.
THE MAINSTAY PORTS
At the Port of Wilmington, Casey says the Panama Canal expansion has had virtually no impact on fruit imports from this region, which for Wilmington is primarily Chilean winter fruit. However, Casey notes the importance of the port’s ability to handle Moroccan citrus, Argentine apples and pears and Peruvian grapes. “This product arrives in Wilmington via the specialized reefer mode.
“Having said that, we handled a trial service last Chilean season with a feeder container ship that transshipped fruit over the Bahamas,” he clarifies. “Large container ships that did benefit from the Canal expansion partially contributed to that successful service, which will be expanded next year.”
Thomas Holt III of Holt Logistics in Gloucester City, NJ, describes the impact of the Panama Canal expansion as negligible.
The executive’s well-known family company manages the Delaware River ports of Gloucester, Packer Avenue and Paulsboro Marine Terminals, all under the purview of The Port of Philadelphia. Holt is optimistic about the region’s benefits for servicing fruit markets.
“The Port of Philadelphia is uniquely suited to serve all fruit importers from the Southern Hemisphere as well as Europe, Africa and the Mediterranean,” says Holt. “Philadelphia offers unparalleled access to 40% of the U.S. population within a day’s drive of the Port.
“Our goal is to make the Port of Philadelphia a true “one-stop shop” for any producer or exporter that wants to reach the U.S. market. We offer unparalleled access, fast turnaround times and significant room to grow our capacity over the next decade,” he says.
Holt says Gloucester just upgraded its solar capacity up to 10.1MW, and a new repack facility was also built at the site, which has 25 million-cubic feet of cold storage, 650 reefer plugs and 1.1 million square feet of dry storage.
He says the Packer Avenue Marine Terminal has four million cubic feet of refrigerated cargo space and 2,200 reefer plugs, and in August the site was expected to see the addition of a post-Panamax crane to build on “a host of other terminal-wide improvements.”
Casey of the Port of Wilmington says work already has begun on the initial set of improvements at the port, including: pier restructuring and pile replacement; warehouse upgrades such as new racking systems for palletized cargo and roof improvements to improve safety and security; and a dock and crane rail extension.
The port’s storage yard also is being restructured to increase the cargo throughput capability from 350,000 20-foot equivalent units (TEUs) to 600,000 TEUs, as well as added capacity for roll-on, roll-off cargo. “With investment in new refrigerated and especially with the opening of a reefer centric, modern container terminal, the expectation is there will be a market share shift from the other mid-Atlantic terminals – in the midterm,” he says.
“However, GT USA Wilmington’s focus is not on current share, but finding partnerships to bring new share into the region — increasing the pie rather than taking a larger slice of existing pie, so to speak.”
Apart from her praise of infrastructure improvements in Georgia, Advance Customs Brokers & Consulting’s Compres is also particularly upbeat about several upgrades in the Delaware River region.
“Packer [Avenue] has invested significantly in cranes and is making a sizeable investment in infrastructure at the terminal, including a newly constructed inspection site, which will enable more inspections and improved release time,” she says. “Seaboard Marine’s service into Penn Terminals last year offers importers an excellent option for exports of perishables from Peru.”
Overall, she thinks Philadelphia has perhaps the best availability for refrigerated cargo because of its numerous cold storage options.
“However, for the same reason, we have had to secure our own cold storage to eliminate the substantial congestion in getting cargo into and out of the warehouse,” she says. “Seaboard’s service into Philadelphia has had a positive impact on the Northeast market, allowing options for alternate days of arrival and faster turnaround of cargo through CBP.
“Commodities include bananas, blueberries, avocados, pineapples, melons and citrus from South America.”
COLD TREATMENT PROGRAM —VITAL TO SOUTHEAST OPERATIONS
One of the biggest game-changers for fruit imports into the Southeast has been the cold treatment pilot program for certain commodities, which started at PortMiami and Port Everglades in 2013 and has since spread further.
In 2014, the Port of Savannah was brought into the initiative, followed by Jacksonville, FL, Tampa Bay, FL, and Manatee, FL, in 2015, Charleston, SC, in 2016 and then New Orleans, Canaveral, FL, and Virginia in 2017.
“It has allowed us to open markets for new products such as grapes, blueberries and citrus from Peru, apples and pears from Argentina and blueberries from Uruguay and Chile,” says Eric Olafson, director of global trade and business development at PortMiami.
“At the Port of Savannah, the USDA In-transit Cold Treatment Program means cargo owners have a new, more efficient route to serve the U.S. Southeast,” notes Chris Logan, Georgia Ports’ senior director of trade development for beneficial cargo owner sales. “This has led to increased interest from cargo owners in Savannah as a new port of entry, with a subsequent broadening of the types and volume of produce handled at Garden City Terminal.”
Pat Compres, chief executive of Advance Customs Brokers & Consulting LLC, Miami, says the program has been vital for continued growth in the market.
“We are advocates for expansion of the program including allowing completion of cold treatment and retreatment in South Florida and the entry of other origins and commodities into Savannah, Los Angeles and Houston,” she says.
Although port operators in Florida, Georgia and other Southeast states are bullish on the program, import stalwarts in the North seem undeterred. GT USA Port of Wilmington chief executive, Eric Casey, says the program’s impact on Delaware River ports has been minimal.
“That’s because the volume still gravitates to our region, which has the decades of experience and supportive infrastructure and transportation network to best support the most population dense region in North America,” says Casey. “This gravitation can take a longer, more expensive route via truck from the Southeast, or can sail up to Wilmington, which is ready to receive with a very experienced staff.
“We also have the option to restart a failed CT [cold treatment] rather than be required to re-export,” he says.