By Lisa H. Towle

Like clockwork, once a week since late last fall, one or two barges bearing scrap steel and slag from New Jersey and South Carolina have glided quietly along the Intracoastal Waterway to their final destination, a dock on the Chowan River at Tunis. There, Marine Terminals has off-loaded the material and stored it in preparation for recycling in Nucor Steel Corp.'s new Hertford County mill.

But what had proceeded at a pace about as languid as “Ol' Man River” is now at full throttle. That's because the N.C. Ports Authority has just completed the installment of a 40-ton bridge crane at the Morehead City Terminal that allows oceangoing barges or ships laden with steel products bound for Nucor to be transloaded to river barges. These take the Intracoastal, cross the Pamlico River to the Pungo River, negotiate a series of canals that brings them to the base of the Alligator River in the Albemarle Sound and ultimately to that same dock on the Chowan.

This successful alliance, one of several coalitions recently initiated by the North Carolina ports, reveals its “enhanced” approach to business — utilization of strategic alliances in order to realize a strategic vision — and is illustrative of why the ports authority believes this first year of the new millennium may well prove to be a watershed year.

Giff Daughtridge, general manager of Nucor-Hertford, is happy. The domestic market's demand for finished steel is healthier than that of the world market right now, yet he can envision opportunities for export to Mexico and depending on the Asian economy, China. No matter the market, however, “(access to) water transportation was an extremely important factor in locating here ... in many cases, water remains the most economical way to transfer (our) products.”

Bill Brackett, production supervisor for Marine Terminals, which exists to service Nucor, is happy. Although they also off-load scrap from rail cars and trucks, he sees the number of barges jumping to at least six a week and his employee count growing from 10 to 30.

And Erik Stromberg, executive director of the Ports Authority, is happy. This partnership — determinedly forged in spite of the shorter waterway transit available through marine terminals in Virginia's Hampton Roads area and an unwieldy number of participating companies — will bring additional ships to the docks and create more jobs and activity, not just at the port but inland.

The authority's 2001 Strategic Plan, of which identifying and implementing such compatible business opportunities is a key focus, is timely for several reasons.

The shipping industry is going through revolutionary change. For example, distribution patterns and logistics management are becoming increasingly globalized and sophisticated with ever greater reliance on information technology.

Internally, the authority is in the midst of an historic capital investment program. With the help of the state, more has been spent over the past six years on facilities and equipment than in the previous 15 years. With the money has come not only upgrades to critical port facilities and terminal infrastructure, but also the strong signal sent throughout the trade that the ports are competitive.

Additionally, fully one-third of the authority's work force will be eligible to retire in the next three to five years.

Last, says Stromberg, “Our state is now the 12th largest exporter to world markets, and ranks first in the nation for location of new foreign-owned facilities. North Carolina's ports handle over $3 billion of the state's exports. Clearly, our ports have a role to play in North Carolina's present and future economy.”

Britt Cobb, who as assistant director of marketing for the N.C. Department of Agriculture is in charge of international marketing programs, agrees. “I think our Ports Authority has been pretty aggressive in evaluating and developing new ways for business and industry to use our ports,” he says.

To wit: The authority and Wilmington Bulk LLC, a consortium of the state's poultry and swine producers, have signed an agreement forming a joint venture partnership to build a new facility to handle animal feed imports at the Port of Wilmington. Currently, the majority of feedstock comes from out of state by rail. Use of waterways means easier access to sources of feed in Canada, South America and certain regions of the United States.

This new facility, slated to become fully operational over the next five years, will consist of a dockside conveyor and hopper system connected to five domes to be built on about five acres at the north area of the port.

The Ports Authority will issue up to $10 million in “special user” bonds to finance the project, with Wilmington Bulk responsible for its portion of the debt — approximately $5.5 million. The ship unloading equipment will be operated by the authority, while the consortium will run the facility itself. Under long-term agreement, Wilmington Bulk will lease the property from the ports authority and guarantee a minimum yearly output.

The purchase of Aviation Fuel Terminal (AFT) on Radio Island in the Morehead City harbor last October, and the long-term lease with PCS Phosphate for a portion of that property, is another example of the ports' plan to examine existing core lines of business and evaluate new opportunities for their short-term and long-term potential.

Radio Island is one of the last major pieces of undeveloped deepwater property on the east coast of the United States. In conjunction with the acquisition of AFT, the Ports Authority and PCS Phosphate agreed that PCS, a longtime customer of the Port of Morehead City, would lease and operate 12 of the terminal's 48 acres, including six tanks dedicated to sulfur and nitrogen storage.

Then in late February the authority's board of directors cleared the way for El Paso Merchant Energy Co. of Texas to begin the process of leasing 46 acres on the island for a liquefied natural gas (LNG) terminal, one of four in the continental U.S. Some area residents, who had successfully opposed an ethanol plant on the island, also objected to a LNG terminal and pipeline distribution system, citing incompatibility with neighboring beaches, waterways and tourist attractions.

However, officials of the port opted to proceed with the project — a $250 million to $400 million investment — noting its potential to boost development in the southeastern reaches of the state where a lack of natural gas has stunted economic growth.

“Three-quarters of all industrial facilities have a requirement for natural gas as a prerequisite to locating their operation in a new area,” says J. Richard Futrell, chairman of the authority board.

Finally, there may not be a better example of an alliance that has been achieved against greater odds, depended more on partnerships or is more strategically important than the Wilmington Harbor deepening project.

Last October the Wilmington District of the U.S. Army Corps of Engineers, working in close coordination with the ports authority, the Cape Fear River Pilots, the U.S. Coast Guard, shipping agents and Great Lakes Dredging and Dock Co., began the $377.4 million effort (nearly $250 million of that is being federally financed) that will deepen the ocean bar entrance from 40 to 44 feet, and the Cape Fear navigation channel from 38 to 42 feet.

This channel is expected to reach the port at Wilmington by 2003. (Five thousand truckloads of “beach quality sand” have already been removed. This sand is being used for the renourishment of Brunswick and New Hanover County shorelines. The beginning stages of the project have also focused on the creation of a 32-acre primary nursery area for fish and other aquatic species on Island 13, a mid-river dredged material disposal site.)

“Simply put, the aim is to get better access to world ports for North Carolina's business and industry,” says Karen Fox, spokesman for the ports authority.

Mike Lanier, for one, can hardly wait for that access. As general manager for Solar International Shipping Co., the agent for Taiwan-based Yang Ming Lines, the Port of Wilmington's largest container customer, he's witnessed the super-sizing of container carriers. Weight, of course, has a direct bearing on how much of the vessel is below the water line “draft.”

And in North Carolina, exported cargo weighs, on average, twice as much as imported goods thanks to the nature of the state's products: forestry and agricultural items, textiles and furniture, to name a few.

“The ideal situation is to utilize all of a vessel's capacity,” Lanier says. “That means you discharge and load back an equal number of containers. Right now, though, roughly speaking, for every two containers we discharge we can only load back one, otherwise there's too much draft for the channel.”

The much anticipated deepening of Wilmington Harbor, he says, will “nicely” address that issue, thus boosting revenues.

John Kinney, president of the state chapter of the Council of Logistics Management, the largest logistics organization in the world, equates the ports' need for more depth to airports that must lengthen runways in order to attract non-stop flights.

As sales and customer service manager for Sumitrans Corp. in Raleigh, Kinney sees to the import and export needs for a variety of Piedmont-area clients, including those in the furniture, chemical and pork industries. Some 50 percent of his business is done through the Port of Wilmington.

“If the port is going to compete in a global marketplace, if it's going to keep its existing lines and attract even bigger vessels, then it has to offer a way for ships and barges to get in and out on a timely basis,” Kinney says. “A deeper channel accomplishes those goals.”

In and of themselves, none of these alliances or projects is what Stromberg terms a financial “home run.” Put them together, however, and an entirely new picture begins to emerge, evidence that a smarter, more flexible and strategic-minded ports authority has found ways to respond to the needs of business and industry while generating substantial economic impact throughout the state.

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