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176 Concord Street, P.O. Box 22287, Charleston, SC 29413-2287
Contact: Erin Dhand, Manager, Corporate Communications and Community Affairs
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State of the Port Address 2006


2006 STATE-OF-THE-PORT ADDRESS - 14 November 2006

Bernard S. Groseclose, Jr.

Thanks to the Propeller Club for the invitation to speak tonight. And, thanks to all of you for being here for my 10th State-of-the-Port Address.

Looking around at the product display and the centerpieces tonight, we're reminded of the role the Port of Charleston plays in our state's economy. Our customers are near and far. They're right next door, or across the state - in fact, they're in every county of our state.

And our customers are obviously pleased with the job we're doing. Last month, World Trade magazine reported that in a poll of more than 5,000 readers, supply chain executives ranked the Port of Charleston number one in customer satisfaction.  Number one.  And our competitors weren't even close.

That's a testament to each and every business in this room.  And to every man and woman who works each day on this waterfront to make our port the best in the world.  You all deserve a round of applause...

Our productivity remains world-class. In fact, earlier this year in Copenhagen, the world's largest ocean carrier said Charleston was their most productive port in the world for the prior year.

We've continued to build on that reputation. Crane productivity has reached new highs, surpassing 41 moves per hour per crane in the first quarter. Importantly, this productivity is not coming at the expense of safety. In fact, the stevedores and longshoremen are working hard to ensure a safe environment, and a joint safety team that includes the Ports Authority continues to meet regularly.

To handle the increasing rush of world trade, the Ports Authority has responded with new equipment and other improvements. I told you last year the Ports Authority would order 16 new container stacking cranes, or RTGs, for about $24 million. Well, the first of those are already operating and the rest will be in service by the end of the year. That means new capacity.

The four new super-post panamax container cranes ordered last year are in the final assembly phase in China and are due to be shipped on December 30th and to arrive in Charleston by March 1st. Those four cranes, and the related improvements, come with a $38-million price tag. That means new capacity.

Our board, lead by Chairman Bill Stern, has shown a commitment to investing in and improving this port.

Beyond physical improvements, the Charleston waterfront and our customers have endured some pretty big operational changes. For several years I have been challenging us as a port community to improve the way we have traditionally done business in order to improve the efficiency and utilization of our assets.  It's no exaggeration to say that over the past decade, the Port of Charleston has been reborn. While these changes have not always been welcomed with open arms, they have been necessary.

First, we moved from a wheeled operation where each slot on the terminal held one container to a grounded operation where containers are stacked up to seven high. Then we extended operating hours at our gates. Then we implemented a new computerized container yard system. And last year, the Authority implemented new rules and fees to ensure containers don't stay on terminal for extended periods of time.

With seven days of free time on imports and the seven-day rule for exports, we've seen some tremendous results. Dwell time, or how long a container sits on our terminals, has been slashed by 40-80%. That creates immediate space and it translates into higher productivity for the ocean carrier and for the trucker. It hasn't been easy, but looking at the numbers, it's hard to argue with the effectiveness. That means new capacity.

Recently, new rules went into effect covering unusable equipment that's stored on terminal. Overnight, bad equipment inventory was cut by more than two-thirds. Over the coming year, we'll implement a new South Atlantic Consolidated Chassis Pool to more effectively manage equipment inventories in the port. We joined with Georgia and the ocean carriers association, OCEMA, to ensure maximum participation and impact. This should benefit truckers, the ocean carriers and the importers and exporters. That means new capacity.

These terminal improvements and process changes are vital to serving the economic development projects landed by our state Department of Commerce and local development agencies. Beyond the industrial successes, like the expansion of BMW and Michelin, and the DaimlerChrysler announcement to make the Sprinter vans in South Carolina, we're encouraged by several new distribution center announcements, such as QVC in Florence, Foodhandler here in the Tri-county area and other major development deals, some of which have yet to be announced.

Showing confidence in the growth of international trade and South Carolina's ability to handle it, we've attracted additional ship calls to the port. Since last year's state-of-the-port, there have been five new ocean carrier services announced for Charleston, covering South America, Asia, India and Europe. That means new capacity.

So, although our attempts to build a new terminal in Charleston have been stymied, we have been creative and resourceful in expanding and meeting the needs of our customers in a rapidly growing global marketplace.

To help fund our current needs, and the needs that lie ahead, the Ports Authority is taking a hard look at all our assets. That's why we're disposing of excess property such as the degaussing station which we are selling for $5.25 million. Hopefully, the sale and redevelopment of the Port Royal and Daniel Island properties will also contribute positively to our cash position, because port expansion is not cheap.

As most of you know, our Ports Authority, unlike those in other states, is not subsidized by the state on either a capital or operating basis. While the State of South Carolina has funded a portion of harbor deepening to facilitate the ships calling both public and private terminals, the Ports Authority hasn't received any capital or operating support in decades. That makes our financial position extremely important.

Fortunately, I'm pleased to report that your Ports Authority is doing very well. Revenues, volumes and, more importantly, earnings hit all-time records last year. Therefore, we are positioned to handle port expansion needs without any tax dollars for the terminal construction.

We've had plenty of good news. Our customers have confidence in our abilities. However, our competitors are catching up. Other states are expanding their ports and building new terminals. They're looking to steal our state's lucrative international business.

While we have created capacity for the near-term, South Carolina must expand its port system. If we don't, we will lose the edge on one of our state's most important tools for business attraction and economic development. In order to fulfill our legislative mandate the Ports Authority is committed to expanding both in Charleston and on the Savannah River in Jasper County. And, we are moving forward concurrently on each of these projects.

As soon as we get the permit - which we now expect in April -- we're ready to roll at the Navy Base. I have to tell you, from the information we have from the Corps of Engineers, I am as optimistic as I have ever been that we are on the verge of actually getting a permit. And, as you know, I've had my share of bad permitting experiences in the last ten years. The final environmental impact statement will be released by the Corps in the next 30 days. So, we've hired an engineering firm to do preliminary site planning work. That way, when we receive the necessary permits, we'll be ready to let the first major contract for construction. This won't be a small project. The initial work will total $180 to 200 million -- about a third of the first phase cost.

To get us here, we've finalized a community mitigation agreement with our future neighbors in North Charleston and successfully addressed concerns about the possible extinction of the right whale. With regard to the former, I'd like to recognize the presidents of the seven North Charleston neighborhoods who worked so closely and in good faith with us to reach a positive resolution. So many folks today are anti-everything. Anti-growth. Anti-development. Anti-this. Anti-that. But these community leaders saw an opportunity to capitalize on the inevitable growth and expansion to ensure the most positive impact on them and their community.

While we've addressed air quality, water quality, whales, and community issues, our road infrastructure is the only major issue standing between South Carolina and port expansion. The state, as it committed in 2002, must fund the new Port Access Road linking the proposed terminal to I-26 and it must provide whatever improvements are necessary on the interstate. Holding port expansion hostage is not an option. In fact, port expansion will bring tremendous economic benefits and increased tax revenues, helping to fund these and other needs of South Carolinians.

Late last month, the people of a country in Central America nearly identical in size to South Carolina approved a five billion infrastructure project. Of course, I'm referring to Panama and its almost 100-year old canal. Just like Panama, we have our own infrastructure needs here in South Carolina. Just like Panama, our economy and job creation is based largely on trade. And just like Panama, we need to invest in our infrastructure. The people of that country saw the need, acted and will be rewarded for it. The Port of Charleston is well positioned to reap the rewards of increased trade flow through the expanded Panama Canal - IF we are ready with our expansion.

A few months ago I heard an economist speak on the keys to international competitiveness. He identified three elements. First, we must open all the doors to trade. Second, we must focus on productivity. And, third, we must expand our ports and our inland infrastructure.

Here in South Carolina, we've focused on international investment and trade. We've been branded as a world-class port, focused on productivity. We've deepened our harbor. We've built a new bridge and removed the old. We've invested tens of millions of dollars in new port equipment and technology. Now, we're ready to expand the port.

But we must have the road infrastructure to support this development.

I'd like to thank everyone in this port community who has been a part of our past success.

I'd also like to thank each and every one of the elected officials here tonight for joining us. We have challenges before us as a port, and you have a challenge before you. But together we have the business skills and the political muscle to keep us competitive on an international level.

Help us by funding the port access road and other necessary infrastructure improvements.

Help us leverage this fabulous asset that our state is so fortunate to have.

Help us make port expansion possible, and thereby galvanize our future economic success.

Thanks, and good night…