Thursday, April 18, 2024

The big picture: What a new agricultural transload facility means for Port of Wilmington

Three weeks ago, the North Carolina State Ports Authority announced that a major player in ag business, Scoular, was going to build a new facility at the Port of Wilmington to make it easier to export crops. 

It is called an agricultural transload facility, and it will basically receive truckloads of crops, primarily soybeans, and store them until they can be stuffed into containers and loaded onto ships.

But there is more significance to this announcement than new construction at the port that will resemble a bunch of grain elevators. The larger story is about an ambitious port that is trying to build up export markets for North Carolina. 

The port

The Port of Wilmington sits on 284 acres up the Cape Fear River 26 miles from the ocean, and it has been scrambling, like every East Coast port, to accommodate the massive container ships made possible by the completion of the Panama Canal expansion in 2016.

The port is doubling the number of containers it can handle in a year with the expansion of its container yard, increasing its refrigerated container capacity to handle more exports like pork and poultry. The port installed three new giant cranes, and increased the turning basin in the Cape Fear, and got Duke Energy to raise power lines, because bigger ships need more clearance. The port is hoping — if Congress comes up with a big chunk of funding — to deepen the channel another five feet, to keep up with other East Coast ports.

Last May, its $200 million capital improvement plan was rewarded with the arrival of one of the largest container ships to call on East Coast ports, the MV Hyundai Hope, with a carrying capacity of nearly 14,000 TEUs — maritime jargon for twenty-foot-equivalent containers.  

What this showed, according to Hans Bean, the port’s chief commercial officer, was that Wilmington was “big ship-ready.”

“We had to do some fundamental things over the past years which were a big part of that — the cranes, the infrastructure here at the ports, the cold storage . . . and to be honest, we got a seat at the table,” Bean says. “We had to get big-ship ready because the industry was scaling at such a rapid pace after the Panama Canal expanded.”

“All of a sudden, the ships on the East Coast, basically, the size quadrupled.  Fortunately, we got out in front of that. We got a lot of signals from the ocean carriers, from their headquarters, about what we needed to be ready for to be in the game. So, we accomplished that.”

And the arrival of the large vessels and the port improvements helped to attract Scoular, Bean says. “That was an indication to them, ‘OK, we can think long regarding the Port of Wilmington.’”

And Scoular was also attracted by the global potential of our soybeans.

North Carolina soybeans

North Carolina farmers were pioneers in growing soybeans in America, and a hundred years ago produced more than half the nation’s crop. But soybeans quickly spread to the Midwest.  In 2019, Illinois produced more than 500 million bushels, compared to North Carolina’s 53.2 million. 

Still, North Carolina is the East Coast’s top soybean-growing state. The 2019 value of North Carolina soybeans was $468.2 million, making it, with corn and tobacco, one of North Carolina’s top three crops. Most of the biggest soybean counties are east of Interstate 95 (Union County being an exception), and most of it is being grown for feed for the state’s vast hog and poultry operations.  Over the past 30 years, the soybean acreage has increased by more than a third and the harvest more than doubled from 1987 to 2017, according to U.S. Department of Agriculture statistics.

But not a lot of it goes through the port, maybe a few thousand containers trucked to Wilmington. “There are a limited amount of inland elevators where they can stuff containers here in the state,” Bean says.

Unlike at bigger ports, we don’t pour tons of grain into the holds of massive ocean carriers. We ship in containers, and containers can be a challenge to find in the right quantity and at the right price. Having a facility like Scoular’s at the port can take advantage of containers full of imports that otherwise might return empty. Scoular, headquartered in Omaha, also has relationships with shipping lines that will allow it to set up a steady export program with dependable amounts. 

Doug Grennan, a Scoular vice president, says it was obvious more than 15 years ago that many containers were arriving from Asia full and leaving the U.S. empty.  (Just to review the numbers: In 2000, we were importing around $83 billion a year more from China than we were sending them. By 2018, the trade deficit was $418 billion. A lot of empties. But the challenge is keeping track of where they are before they head back.)

What also was happening was a desire of many export customers using soybeans in food products to have specific varieties sealed in containers with a higher level of quality control and tracing. This is a big deal in global trade. And because smaller quantities could be exported with containers — as opposed to shiploads — there was what Grennan calls “a democratization of supply.”  More companies could get into the soybean-export business, instead of just the “ABCD” grain trading giants — ADM, Bunge, Cargill and Louis Dreyfus. 

Scoular opened a facility in 2019 at the inland marine terminal in Richmond, Va. “Wilmington is additive to our network,” Grennan says.

Bean says that the overall goal is to make a Wilmington stop an easy decision for the ocean container lines. He knows about this. A native of Southport, down the river from Wilmington, he graduated from the U.S. Merchant Marine Academy and then worked as a deck officer on ocean vessels.  He worked in port management in the New York area and also worked for Maersk, one of the world’s largest shipping companies, including a stint in Hong Kong. So, he has seen global trade from a lot of different perspectives. 

“The last 10 or 15 years, they’ve had a very rough time,” he says of the ocean carriers.  “Right now, they’re making money for the first time in a long time.

“But they don’t have massive teams to manage their business, and knowing that a port has this type of facility, and major ag players like Scoular to coordinate export programs with, really makes it easier to extract the exports here,” Bean says. “A lot of what we try to do here at the port is to make this an attractive gateway, a preferred gateway for the ocean carriers.”

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