Port Tampa Bay takes long-term approach to business development.
Port Tampa Bay has large amounts of land and big ambitions to become a trade gateway for all kinds of new cargo.
But the hype hasn’t matched results so far.
Port authority officials have talked for several years about initiatives to drum up container and auto business, but cargo volumes remain tiny. Other publicized plans to diversify the cargo base have born limited fruit.
The reality is that Tampa’s cargo business is stagnant, hindered by its location in the Gulf and competition from other seaports.
Nevertheless, port executives with a long view are pushing all available buttons, laying a foundation of infrastructure and relationships in the hope that regional and international trade, investment and demographic trends could soon change transportation dynamics for shippers and carriers, and push cargo their way.
If that happens, they say, Port Tampa Bay will be ready.
“The fact is that Florida has many logistical, time-saving and cost advantages that can be leveraged. And Port Tampa Bay has two of the most clear-cut advantages of all—location and available land. But this is not the kind of industry where things happen overnight. We must continue to address the infrastructure needs, capacity needs and connectivity needs,” Chief Executive Officer Paul Anderson said in his second “State of the Port” speech on Jan. 27.
Tampa is the largest port in Florida in terms of tonnage and real estate, with 5,000 acres of land. In fact, from a pure acreage standpoint it is one of the largest ports in the nation, with plenty of undeveloped property.
Bulk cargo is Tampa’s primary ticket, but even there growth has been anemic. In fiscal year 2014, ended Sept. 30, total bulk cargo was off 2 percent to 12.1 million tons, primarily because of small declines in petroleum and other liquid products. Dry bulk cargo grew 10 percent to 4.1 million tons.
The primary areas of growth were steel, up 20 percent to 245,345 tons, and limestone due to a resurgence of road and building construction in Florida.
Tonnage is down from a peak of 15.5 million tons in 2006. That year the port handled 462,518 tons of steel.
Anderson was hired from the Port of Jacksonville in 2013 with a mandate to expand into more profitable lines of businesses such as autos and containers.
Last year, the port authority changed its logo and name from the Port of Tampa to Port Tampa Bay to emphasize its regional reach beyond the city, and attract more business from carriers and shippers.
In his annual address, Anderson, who recently received a four-year contract extension from the board of commissioners, touted the 11 percent growth in container volume last year and that the number of TEUs grew 22 percent (total 13,213 TEUs) in the first quarter of fiscal year 2015 versus the previous year’s quarter.
That fact remains, however, Port Tampa Bay annually handles fewer than 49,000 TEUs. Compare that to the three main Florida ports—Jacksonville, Everglades and Miami—that each process about 1 million TEUs. The Port of Palm Beach moves more than 200,000 TEUs per year, mostly exports to the Caribbean.
Tampa primarily is an intracoastal Gulf port on the western side of Florida that doesn’t handle a lot of international cargo. The lion’s share of business is petroleum products, most of which are shipped on tankers and barges from Gulf facilities in Texas and Louisiana for distribution to the Central Florida market.
Volumes have barely doubled from 23,000 TEUs since the opening of the container terminal on Hooker’s Point in 2006. ZIM and Mediterranean Shipping Co. are the two primary carriers that serve Tampa. Most container lines prefer to call ports on the East Coast.
Officials at Port Tampa Bay and Ports America, the operator of the container and breakbulk terminals, are optimistic that the opening of an expanded Panama Canal and booming population growth in Central Florida will make Tampa a desired location for imports and exports.
Tampa has a population of about 350,000 people, while the tri-city region has more than 2.8 million people. Port officials have stressed for years that Tampa is an ideal gateway for the entire central Florida market that includes Lakeland and Orlando.
Florida recently became the third largest U.S. state, with 20 million residents, but the population swells with close to 100 million visitors each year. There are 8.5 million people living within a 100-mile radius of Port Tampa Bay and another 55 million visitors along the Interstate-4 corridor every year.
Over the next decade, the Florida Department of Transportation estimates the population of Central Florida will grow by another half million—twice the rate of growth in South Florida.
Retailers and logistics providers have been planting distribution centers in the middle of the state to reach consumers and minimize inland trucking costs. Amazon, for example, last year opened two 1 million-square-foot fulfillment centers in Lakeland and Ruskin. Class I railroad CSX Transportation a year ago opened a new intermodal facility in Winterhaven and plans to develop a logistic park around it.
The goal is to get more Tampa-area cargo to come through Port Tampa Bay. Much of it currently is shipped through ports such as Savannah, Charleston and even Los Angeles/Long Beach. More than 60 percent of Florida’s import cargo comes through ports in other states, according to state DOT officials. Florida’s strategy of investing in container ports is designed to re-route some of that market through the state’s ports.
Furniture retailer Havertys is routing Asia cargo to Tampa and trucking it 35 miles to its recently expanded distribution center in Lakeland, according to the winter issue of Port Tampa Bay’s magazine. The company saves $50 to $250 in door-to-door shipping by using the Tampa gateway instead of Jacksonville or Savannah to serve 26 Florida stores, company officials said. Havertys’ ocean carrier is ZIM and its drayage provider is Landstar System Inc.
“We’ve just scratched the surface of that potential,” Wade Elliott, the port’s vice president of marketing and business development, acknowledged in an interview during a port industry conference held in Tampa early this year. “It’s going to take some time.”
The port authority is educating ocean carriers and beneficial cargo owners about the port’s advantages and believes there is interest in Tampa, he said.
Ports America has two post-Panamax cranes on order that are scheduled to be delivered and ready for operation by the end of first quarter 2016. The cranes were purchased with the help of a $12 million grant from the state of Florida. If needed, the container terminal could be tripled in size to handle about 1 million TEUs, according to the port authority.
The terminal operator is even willing to subsidize drayage moves to the CSX intermodal ramp about five miles from the port, Doug Wray, a Ports America vice president, said. No intermodal imports currently go through Tampa for markets to the north, but the port does receive some exports from the Southeast via the rail-truck mode.
Another part of Tampa’s strategy is to collaborate with the ports of Houston and Mobile, Ala. The three ports in 2010 began jointly marketing themselves to carriers as the “Gulf Coast Advantage.” The idea is that a carrier can hit all three markets, with complimentary import and export profiles, in a single itinerary.
The focus is on all-water transport from Asia that would transship cargo to smaller container vessels in Panama or the Caribbean for Gulf destinations, as well as perishable commodities from Central America and the west coast of South America, officials said.
“I think once the Panama Canal widening is completed we’re going to see some spillover of the new feeder ports, which will create opportunities for Tampa. We have 43-feet of draft, which is comparable to anywhere else in the Gulf” and can handle 5,000-TEU vessels, Wray said.
Perishables. Elliott said the port authority is still actively pursuing shippers and ocean carriers interested in establishing an express train service between Tampa and a Midwest depot to move Latin American and Florida fruits and vegetables north, and export American meat and agriculture products.
Tentative plans with a start-up transportation wholesaler for a dedicated, refrigerated shuttle-train service called the “Green Express” between Port Tampa Bay and an inland port in Indiana fell through last year. Elliott did not provide any details, but an outside source familiar with the discussions said the port’s partner, Providence Logistics, failed to follow through on infrastructure investment at the inland port.
Port Tampa Bay has already done some site preparation, but has yet to build a rail-served warehouse for transloading operations. CSX remains committed to the project, which is designed to offer a more direct transit in 56 hours and steal market share from the Port of Philadelphia or intermodal rail service running from other Florida ports up the East Coast.
“The perishable business is another area we’ve targeted for growth. We think there are some significant advantages that we have given our proximity to Central America, to our huge consumer market here,” Elliott said.
Tampa faces an uphill battle to gain container business, especially since the Central Florida market is being contested by much bigger ports such as Miami, Everglades and Jacksonville. Port Canaveral is even in the process of opening its first container terminal this spring, although there have been no announcements about any customers so far. Miami is dredging its ship channel to 50 feet, which will enable it to handle the largest post-Panamax vessels that can fit through the Panama Canal.
“Are you going to get hundreds of thousands of containers [in Tampa]? That’s very questionable because of its location, competition from the East Coast and the use of larger ships,” Richard Wainio, Anderson’s predecessor who retired in 2012, said. Even if Tampa picked up a share of the estimated 400,000- to 500,000-TEU market in Central Florida, it likely would be very limited. Nonetheless, port staff is taking all the right steps to prepare for potential cargo opportunities, especially if Gulf feeder services tied to Panama Canal transshipment take off, he said.
Port officials are also focusing on expanding exports through Tampa. The commercial team is working with local economic development agencies to try and attract manufacturers to set up plants in the Tampa area, including on port property. The port recently hired a vice president of real estate to ramp up property development.
Tampa Tank and sister company Florida Structural Steel—manufacturers of petroleum storage tanks and structural sections for bridges—recently became new tenants at Port Redwing, a 270-acre greenfield industrial property owned by Port Tampa Bay.
Elliott said the recruiting effort includes other companies in the steel fabrication business to create a natural cluster that can serve local construction companies, industrial steel manufacturers and export markets.
Tampa Tank exports project-type cargo, but also containers and flat racks for orders in Latin America. Port Redwing has a dock that can accommodate large dimensional loads and container shipments can easily be trucked to Hooker’s Point, Elliott said.
“There are not too many places in the state of Florida that have deep water and land available to attract these types of industrial projects and users,” he said. Plus, the location is adjacent to the highway, has rail connectivity and is next to Tampa Electric’s power plant so industrial users get low-cost, high-volume electricity because of the short transmission distance.
Autos. Port Tampa Bay continues to pursue auto business from Mexico. In December 2013, the port authority inked an agreement with auto processor AMPORTS to develop and operate a new auto terminal. Auto manufacturers continue to open new plants in Mexico to keep up with booming demand in the United States and water transport is increasingly viewed by some shippers as a good alternative to railroads, which often have shortages of equipment to move new cars. Florida is a major car market and port officials say Tampa could handle local deliveries to dealers and send cars to other regions on CSX trains.
AMPORTS also operates facilities in Mexico.
AMPORTS and Port Tampa Bay are waiting to secure a customer before fully developing their 75-acre property, but the berth, yard and building, which previously served as a passenger car ferry terminal, already exist. AMPORTS has already reconfigured the warehouse for processing cars.
“We were probably a bit early in terms of making sure we were ready, but better to be early and ready than to be late and miss the boat,” Elliott said.
Port Tampa Bay currently handles some used vehicles and wheeled equipment on an ad hoc basis.
The challenge is that there are other ports vying for the same business, including Jacksonville; Brunswick, Ga.; Baltimore; and Port Canaveral, which is exploring development of an auto terminal.
“We’re not going to conquer the world or anything, but we do think there’s a book of business that’s a natural fit for Tampa,” Elliott said. “Several of these ports have space constraints. We are blessed with having land to accommodate that business.”
Cuba Opportunities. President Obama’s recent opening to Cuba eventually could lead to more regularized trade with the island nation and Port Tampa Bay sees itself as a major gateway for people and cargo.
“Tampa’s emerging container business positions the port as a natural gateway to Cuba when ties are re-established, particularly in view of our historical ties and short transit times,” the port said in a statement responding to the news in December. “This will be driven by cargo demand and carrier decisions to serve the market. Moreover, the port would anticipate opportunities for bulk cargoes, general cargoes and cruise activity.”
Cuba is roughly 307 nautical miles and 15 hours transit-time from Tampa.
Any trade would likely begin with a combination of roll-on/roll-off and passenger services similar to giant ferries common in other parts of the world that carry trucks, vehicles and people, Ports America’s Wray said.
He and Elliott, along with the Tampa Bay Chief Commercial Officer Raul Alfonso, last summer visited several European carriers that provide ro/pax service. Those companies, he said, have a lot of interest once the U.S.-Cuba market opens up.
“That’s the kind of thing that’s going to come into Tampa because it will roll cargo right on, so all you have to do is drop a ramp at the other end without a lot of infrastructure. And from a passenger perspective, you don’t have to worry about hotel rooms either” because the vessels have small cabins, which will be useful until enough hotels for tourists can be built, Wray said.
Florida has a lot of aggregate suppliers and the port has substantial laydown space for construction materials, which would make Tampa an ideal shipping location, he suggested.
“We’ve been anticipating this for years. So we’re prepared. We have our contacts. We are ready to go if things happen,” Wray said.
Finances. Port Tampa Bay continues to operate in the black.
In fiscal year 2014 it posted record revenues of $48 million, Anderson said. The port’s annual report had not been published as of press time, but in 2013 Tampa achieved a modest profit of $511,247 on $44 million in revenue. The cruise business—Tampa is a top 10 U.S. cruise port—and revenue from a two-year-old rail depot for unit trains of domestic ethanol shipments have helped overcome downturns in other commodities, according to financial statements and people close to the port.
The port has solid scores and stable outlooks from credit rating agencies, a reflection of its revenue, low-debt service levels, strong liquidity position and the local economy.
This article was published in the March 2015 issue of American Shipper.