With channel dredging, automotive terminal expansion, Alabama’s port takes shipping to next level

With channel dredging, automotive terminal expansion, Alabama’s port takes shipping to next level

By WILL WHATLEY, Alabama Daily News

Alabama State Port Authority Director and CEO James K. “Jimmy” Lyons wanted to do a few things before he decided to retire. He wanted to deepen the channel, build a freezer facility and start work on an automotive terminal.

Now, as he prepares for his retirement at the end of the year, he can look back on his work and know all three projects were accomplished, and that he helped leave the state in a better position to expand industry.

Last year, MTC Logistics broke ground on a $58 million, 12-million-cubic-foot refrigerated container facility at the Alabama State Port Authority. The project will attract exporters of poultry and seafood who need the blast freezing capabilities and also allow imported goods to be refrigerated. Alabama’s port had recently lost business to New Orleans and Savannah for such shipping.

Beginning in 2021, the port will open a new automotive terminal that will allow for the exporting and importing of vehicles.

And earlier this month, Sen. Richard Shelby announced that the U.S. Army Corps of Engineers has allocated $274.3 million for the Port of Mobile. Securing the dredging money has been a decade-long pursuit for Shelby, who called it a “transformative project” that would “stem immeasurable economic growth and will position Alabama and the Gulf Coast region for success for generations to come.”

According to Judith Adams, Vice President of Marketing for the Alabama State Port Authority, the deepening allows for anywhere from 8,000-13,000 TEU ships and bulk carriers to fully or near-fully load.

“Currently, some of these class ships call the port, but are inefficient because they cannot fully load at our port due to depth restrictions,” said Adams. “That added capacity is lost to the shipper, who in part pays through ocean carriage rates for the use of the ship. The deepening creates those economies of scale – shipping more cargo for essentially the same rate as a partially loaded ship.”

According to Adams, the channel dredging will also allow for most ships to pass each other instead of having to take turns. This will help with the flow of traffic and hopefully increase the number of ships using the port.

“Time is money in the ocean carriage industry,” Adams said. “Delayed ships may result if those carriers moving to more efficient ports or forcing our shippers into smaller class vessels. In either case, we lose capacity for our shippers or at a minimum, our shippers do not enjoy the cost savings provided by larger and more efficient ships.”

And it’s this increase in traffic, according to Lyons, that will enable for the exporting of more products, such as automobiles potentially, from the port.

Lyons said the port authority has been working on the automotive terminal since 2002.

“There’s a market need for it, and the location and infrastructure should be appealing to manufacturers,” said Lyons, who added the port has five class-one railroads coming into the facility, whereas most ports only have one or two.

Adams stated that the port authority has several channel users, such as cruise ships or Navy ships, that require one-way transit in and out of the port. However, it also has now the Post Panamax, Panamax Bulk and the wide-body bulk crude carriers calling the port. The width of these ships do not allow passing in the channel. The result is that the ship must wait either at berth or at the sea buoy for the channel to clear. The three-mile long widener creates a passing lane to get ships in and out of port more quickly.

State leaders were quick to recognize the importance of the port’s improvements and voiced their opinions on the matter.

“The Port of Mobile plays a significant role in expanding Alabama’s global footprint and ensures that the ‘Made in Alabama’ brand is recognized worldwide and subpar to none,” said Gov. Kay Ivey. “The Port’s economic impact is substantial at $25 billion, but with the successful passage of the Rebuild Alabama Act, it is poised to become a major hub for automotive export activity. A new roll-on-roll-off facility is a giant step forward in supporting automotive logistics in the Americas and abroad. Exports create jobs, and more jobs mean greater opportunities for the hardworking men and women of Alabama.”

Private sector leaders also praised the improvements.

“We commend the State Port Authority on this key expansion and look forward to it’s transformative impact on Alabama’s automotive industry and our business community as a whole,” said Business Council of Alabama President and CEO Katie Boyd Britt.

Alabama state lawmakers visit the Port of Mobile courtesy of the Alabama State Port Authority.

The terminal’s upcoming arrival comes at an opportune time as the state’s automotive industry is thriving.

According the the Alabama Department of Commerce, the state is in the top five states in the country for the production of cars and light trucks. Vehicles have become Alabama’s top export, with shipments to around 90 nations worldwide every year. In 2018, exports of Alabama-made vehicles and parts totaled $7.5 billion, led by shipments to Canada, China and Germany. That same year, assembly plants operated by Mercedes in Tuscaloosa, Honda in Lincoln, and Hyundai in Montgomery combined to produce around 1 million cars and light trucks. Honda, Toyota and Hyundai also produced 1.6 million engines. Additionally, Toyota Mazda will be completing construction on a $1.6 billion jointly-operated facility in Huntsville that will produce around 300,000 vehicles once the plant is fully functional.

Another sign of the state’s strong automotive sector is the number of jobs it supports. As of December 2019, Alabama’s automotive industry supports more than 67,000 jobs according to the Alabama Department of Labor. An estimated 4,000 jobs are expected once the Toyota-Mazda plant is operational.

“The automotive industry is an important part of Alabama’s economy, and it’s continuing to show strong growth,” said Tara Hutchison, communications director at the Alabama Department of Labor. “In fact, motor vehicle manufacturing employment is at a record high (14,600), and motor vehicle parts manufacturing just set a new employment record in December, with employment measuring 26,000. This sector has high-wage, high-skill job opportunities that will help Alabamians support their families, and help Alabama’s economy continue to grow. It’s certainly a sector worth paying close attention to.”

Once operational, the automotive terminal will support a number of high-wage jobs. According to Lyons, anywhere from 34 to 40 people are needed to work on a ship. These positions will pay up to $35 an hour, and the employees would be able to work on other ships as well.

“These new employees will receive on-site training to work swiftly but safely,” he said, adding that each ship will be able to move 1,000 to 1,500 units.

The terminal could be an attractive destination for manufacturers when it is up and running, depending on global economic trends.

Robert Burns, Vice President of Human Resources & Administration of Hyundai Motor Manufacturing Alabama, LLC, said that Hyundai works with automotive sales and distribution companies from Puerto Rico and El Salvador.

“Currently, Puerto Rico-bound vehicles ship out of Jacksonville, Fla., while El Salvador-bound vehicles ship out of Port Everglades,” he said. “If Hyundai vehicle sales grow in Central and South American markets, these sales and distribution companies may consider the Alabama State Port Authority’s automotive terminal.”