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Port Canaveral invests in warehousing to attract shippers

The Florida port is trying to jump start its container business and install infrastructure to make Central Florida a more attractive logistics option for importers and exporters.

   Last month’s groundbreaking for a 240,000 square-foot warehouse in Titusville, Fla., is the latest aggressive move by Port Canaveral to establish a first-ever container business. Officials involved in the project say cargo will come soon enough even though no shipping service has materialized yet to make that a reality.
   Port Canaveral inaugurated its new container terminal in June and Gulftainer, the United Arab Emirates company it hired to operate the facility, is working to convince an ocean carrier to call the port to serve shippers in the growing Central Florida market.
   Having Class A distribution space within 25 miles of the port is designed to increase Canaveral’s value proposition to shippers who are able to influence where container lines take their vessels.
   “We are confident in the market,” Robert Richter, vice president of business development for Flagler Global Logistics, said in an interview.
   Flagler is developing a 320-acre, master-planned logistics park in Titusville with zoning approval for up to 2.9 million square feet of industrial property. The Port Canaveral authority has signed a 10-year master lease on the first building with the intent of sub-leasing space to retailers, manufacturers or logistics service providers. The facility will have a spur connecting it to the Florida East Coast Railway’s line, which runs along the coast from Miami to Jacksonville, and is near Interstate 95.
  It is not common for ports to control distribution centers outside their gates. Some ports have enough space for warehouses on their property, but in most cases warehouses built around ports are owned and operated by private sector entities.
   Port Canaveral, Gulftainer and Flagler are marketing the port as the closest import/export location to Orlando and warehouse clusters along Interstate 4, which bisects the booming Central Florida region between Tampa on the Gulf and Daytona Beach on the East Coast. Competitors just within Florida include the ports of Jacksonville, Miami, and Everglades (Fort Lauderdale), as well as Palm Beach and Tampa on a lesser level. But officials say the real target is cargo that still moves through Southern California or Southeast ports such as Charleston and Savannah, noting that cargo owners face much lower trucking costs by using Canaveral than out-of-state alternatives.   
   Richter said most of the cargo handled at the Titusville Logistics Center initially would come in and out of the Orlando area, but that having intermodal connectivity would allow shippers to use rail or truck to reach customers in the Southeast or further north, as well as in Southern Florida, after any necessary deconsolidation, manipulation, labeling or other services had been performed at the logistics center. 
   The Florida East Coast Railway (FECR) connects with the Norfolk Southern and CSX Transportation rail networks in Jacksonville.
   Canaveral CEO John Walsh said some shippers are starting to include the port in their bid packages to ocean carriers to compare prices with other port options, including drayage costs. Gulftainer is working with several shippers and is “optimistic” about matching up carriers with potential demand, he added.
   Trucking can add several hundred dollars to the all-in transport costs and an extra half-day of transit time for a container routed through Savannah or Charleston, according to industry officials.
   Gulftainer officials say there is demand for up to 60,000 TEUs of volume in the region if a container service becomes available.
   (A Container Analytics column in the August 2015 issue of American Shipper examined the question of whether there really is enough cargo volume to support another container port in the already crowded and highly competitive U.S. South Atlantic market.)
   Initially, cargo transport between the Titusville Logistics Center and Port Canaveral would take place by truck. Walsh said an unnamed chassis pool operator and a trucking company that owns its own chassis have said they are prepared to move equipment to the Gulftainer terminal as soon as ocean service commences. Some containers could also be driven to the FECR’s small intermodal ramp in nearby Cocoa Beach.
   Port Canaveral expects to take advantage of a purchase option in the Flagler lease when the new building is completed next year because it would lower carrying costs, Walsh said. As a public entity, the port authority can borrow money at lower rates than private firms and the payment terms would be better than rent, he explained.
   The Canaveral Port Authority is also striving to bring rail onto port property to increase the efficiency of inland transport. One option being explored is to extend south and east a mostly dormant rail line that connects the Kennedy Space Center to the Florida East Coast Railway. NASA has approved moving ahead with a preliminary environmental assessment of the project and the Surface Transportation Board, which issues permits for new rail services, is reviewing it and other options for a short line to the port. Realization of on-dock rail is at least two to four years away, according to Walsh.
   An interim solution to reduce drayage costs, especially for bulk commodities, is to establish a rail barge service between the port and an existing dock on the Indian River near Titusville.
   Hopper cars would be carried on the barge to terminals in the port, where they would be loaded at the berth with commodities such as such as fertilizer, scrap steel and slag (leftover byproduct of smelting ore often used in concrete and other industrial activities). The rail cars would be rolled off the mainland dock onto a spur that extends to a FECR marshalling yard.
   Walsh said the port is in discussions with a barge operator, but it could take six to nine months to complete approval and construct necessary infrastructure to support the barge.
   Phase one of the Titusville Logistics Center includes about 27 acres of additional land that can be used as a staging area for bulk cargo.
   “This represents a new potential era for Brevard County,” said Richter. “As the cargo business grows, it will diversify that market, create jobs and put it on the map as a global logistics destination.”
   (For more info about Port Canaveral’s diversification strategy read the profile “Canaveral ready for blastoff” in the October 2014 issue of American Shipper.)