Port Canaveral Open for Business – with this comes hopes and doubts
When the container ship CMA CGM Jamaica docks Friday at Port Canaveral, it will be only a ceremonial call to help dedicate a new terminal, not the start of a regular service. But port CEO John Walsh sees it as a harbinger of bigger things.
Walsh said Port Canaveral’s container traffic, now virtually nonexistent, could soar to 3 million to 4 million 20-foot-equivalent units within 15 years.
That’s an ambitious goal, to put it mildly — Savannah, the busiest container port in the Southeast U.S., handled 3.3 million full and empty TEUs last year. Port Tampa Bay, on the other side of Florida’s Gulf coast, handled less than 50,000 TEUs in its most recent fiscal year.
And Port Canaveral plans to achieve its goals without poaching other Florida ports’ business. Walsh said. Instead, Canaveral expects to grab a share of the Florida cargo that now moves through other states’ ports, and to tap into regular market growth in the third most populous U.S. state.
“The Florida Ports Council did a study that showed only 50 percent of the cargo coming into the state moves through Florida ports, so that’s 2.5 million containers coming from other places,” Walsh said.
He said Port Everglades can compete for perishables imports that now primarily move through Delaware River ports and are trucked south to Florida. “If your drayage cost drops from $2,200 to truck it from the Port of Philadelphia to $200 to truck it from here, that’s pretty compelling, especially if you’re talking about 4,00 containers,” Walsh said.
Port Canaveral ambition to attract more discretionary cargo and freight destined for Florida parallels the state’s larger ambition. Florida’s share of overall U.S. containerized imports and exports has been flat at 7 percent for the last six years
Last year, Florida ports handled 10.2 percent of the U.S. export container traffic, down from 10.2 percent in 2009, according to data from PIERS, a sister product of JOC.com with IHS Maritime & Trade. Florida ports’ share of the import container market rose to 4.8 percent from 4.6 percent during that period.
Walsh said Port Canaveral offers multiple advantages — a three-mile channel to a uncongested location within a short truck drive of growing Florida markets; 46-foot channel depth that the port plans to deepen to 55 feet over several years; terminal management by global port operator Gulftainer; and a plan for “vertically integrated” logistics services including port, distribution center, trucking and intermodal services.
On the minus side: Port Canaveral is a late entrant to the high-stakes container port game; it’s challenging well-established competitors that won’t easily yield market share; the port’s location on the Florida peninsula may limit its inland intermodal reach; and it’s attempting an abrupt about-face in its business strategy.
Today Port Canaveral is best known for its thriving cruise business, second only to Miami in passenger volume, and has an eclectic collection of petroleum, dry bulk, breakbulk and other cargoes. Walsh sees containers as an untapped opportunity.
“When we started looking at the economics — what’s growing, what’s not growing — we knew we needed to be in containers,” he said.
Largely because of its cruise ship port just an hour from Disney World, Port Canaveral is solidly profitable, with annual free cash flow exceeding $30 million. Walsh said the plan is to leverage that bankroll to develop container traffic.
“Our business model is to be self-sufficient, with good partners and a good business model, and slow growth — 50,000 TEUs the first year, then 100,000, then 200,000, and then people will begin to take notice,” he said. “Nothing ever happens overnight. We’re working on one customer at a time, one solution at a time.”
The port’s new container terminal is starting small. United Arab Emirates-based Gulftainer initially is operating on 20 acres, using two refurbished second-hand cranes purchased from the Georgia Ports Authority. There are options to add 80 acres, and plans to eventually to develop a 500-acre terminal on leased Navy property.
Gulftainer has committed to match the port’s initial $100 million investment in container facilities. Walsh said that as volume develops, the plan is to maximize acreage utilization by developing an automated terminal similar to operations in major European ports.
Port Canaveral hopes to emulate Savannah’s development of near-port distribution centers that have been a cargo magnet for the Georgia port. Canaveral is developing several off-dock DCs as a real estate investment and potential cargo source. Walsh said the port may eventually provide its own trucking capacity.
The port is seeking to overcome local environmental opposition to a plannedc rail extension that would provide a better link with the Florida East Coast Railway.
Likely initial cargoes include feeder shipments to and from the Caribbean region. Walsh said Port Canaveral could grow into a major gateway port following dredging of its channel — a project the port plans to fund after obtaining U.S. Army Corps of Engineers permits.
Asaf Ashar, research professor emeritus and independent consultant at the National Ports & Waterways Initiative, said Port Canaveral may have difficulty attracting line-haul services by larger ships coming directly from Asia and Europe.
Short-sea and feeder services appear to be the port’s most logical cargoes, especially if carriers cultivate regional hub-spoke networks following next year’s expansion of the Panama Canal, Ashar said.
He said Port Canaveral should continue to develop its profitable cruise-line business, which he said generates higher return on investment than containers. “That’s where they have a relative advantage,” he said.