North Carolina

Economic Growth through Global Logistics and World Trade

Executive Summary
By Earl Brinkley
efbsr146@aol.com

Seaports are vital to our nation’s economy.  They are the key to imports, exports, industrial plant locations, cruise industry and to our national defense. They are our gateway to the world.  They are vital to coastal states and their local communities in providing jobs, tax revenue and fueling the economy.  North Carolina is strategically located in the center of the East Coast but in 2006 our ports only obtained a market share of 1.01% of the East coast general cargo tonnage and 1.15% of the East Coast Containers.

The world economies are becoming more integrated every day.  Container traffic and the demand for containers to move material is growing at an increasing rate each year.  It is estimated that today, 90% of the world’s goods move by containers.  In 2006 over 26 million containers were received in the United States --- and it’s growing.  Container ships are getting larger and larger, and one day will force the smaller ships out of service because of being less efficient.  As this process evolves, we must prepare our ports for these larger ships or we will lose the small 1% market share we have today. We have already lost quality companies to other areas (Airbus, Target, and Boeing) and we will lose many more unless we act now to make Eastern North Carolina a more desirable location for manufacturing and distribution.

The three neighboring ports of Norfolk, VA, Charleston, SC, and Savannah, GA obtained market shares of 13.5%, 13.5% and 14.3% respectively of East Coast containers.  Charleston with its 13.5% accounts for over 282,000 jobs, pays $9.4 Billion in wages, generates $2.5 Billion in state and local income taxes, and pumps $23 Billion into the state’s economy each year. Both Georgia and South Carolina have stated that their ports are the state’s number one economic driver. Georgia and South Carolina have announced a joint port just North of Savannah in South Carolina. All three are involved in expansion activities of their current ports to ensure they maintain their current volumes and to ensure they obtain their share of the growing increases.  One needs only to visit each of the port’s web sites to see their progress and their construction of new container terminals.

North Carolina must build a business culture and a business structure to get companies to locate in our state or we will continue to spend millions on temporary incentives. We must act now with vision and commitment.  We have the opportunity to open North Carolina to more World markets, if we make shipping to or through our state easy for our ocean carriers, easy for our inland carriers and efficient for companies locating in our state. 

Based on my 40 plus years experience in the field of logistics and order fulfillment, I make the following recommendations to improve North Carolina’s economic growth through greater participation in world trade and global logistics:

• Place our entire infrastructure of highways, Railroads (Freight and Commuter), Ports, Inland Terminals and Airports under the responsibility of a newly created cabinet position, “Under Secretary for Logistics” or a similar, all inclusive position reporting direct to the governor. This will allow for more concentration of effort to our total infrastructure, ensure available funds are spent for maximum results and to ensure that we maintain or rapidly exceed the capacity of our neighbors.  
• Build a new modern efficient port in Southport that can handle the newer larger container ships. The port will be only 8.5 miles to the open sea and will save ships time and fuel.
• Create a second deep water container port at the current Morehead City port that can handle the new mega ships. It is only 4.5 miles to the open sea which saves ships both time and fuel.
• Create Inland Inter Modal Terminals in Wilson, Pembroke and Ashville to compliment the ones located in Charlotte and Greensboro. This will make containers available to customers within one hour drive time. Each terminal will be able to not only receive containers daily from the two North Carolina ports but also from Norfolk, Charleston and Savannah -- A unique opportunity to receive containers from five ports located in four states. These five locations have excellent rail and interstate highways already in place.
• Re-invent Railroads, upgrade Railroads and utilize Railroads to move freight and people fast and efficient.  Place containers direct from ship to rail and move direct to inland terminals. Connect all terminals and ports with nightly dedicated trains. Do not store containers at the port, unless needed in immediate area. This will make containers available quicker and remove trucks form the highways. Containers will only travel the last few miles by truck.
• Consolidate commercial flights from three regional airports (Jacksonville, New Bern and Greenville) into one Eastern Regional Airport located in Kinston, NC – The Kinston JetPort. The regional airports have runways that can only accommodate commercial regional jets. As the regional jets are replaced by larger jets we should create one large airport in Kinston that already has a sufficient runway. More flights from one airport means lower cost for tickets and provides a means to move air cargo quicker.
• Create a Cruise Terminal at both Wilmington (Southport) and Morehead City ports to support tourism. Our state has lots of history, fantastic beaches and great golf; however, we have no cruise terminal so cruise ships can take advantage of these facilities and points of interest.
• Integrate and operate all locations (Ports, Inland Terminals, and the Global TransPark) as one seamless unit to deliver and/or ship as customers so demand. This is key because customers need and want a total process for shipments and deliveries.
• Create a Logistics Operations Center at the Global TransPark to serve both ports and all Inland Inter Modal Terminals to give our customers one place to call for total customer service. Such a center will give us a competitive edge over our neighboring ports.  
• Brand and market as the North Carolina Global Logistics Network. The collaborative efforts of a North Carolina Global Logistics Network combining the marketing efforts of all parties concerned would allow North Carolina to position itself as an innovator and creative leader in 21st century logistics, providing companies that locate in our state the very best in logistics speed and efficiency.

I firmly believe that if we take the initiative now and do these and/or other similar things, North Carolina ports could easily improve their container volume by one million units which is only 50% of what Charleston handles today. This additional volume generated by larger ships, more frequent ships and ships from other ports, especially European ports (which there are none today), would add at least 164,000 jobs and many others associated economic and tax benefits based on the results already attained at Charleston, Savannah and Norfolk. Also, just imagine if we handled 2 million containers which is what Charleston, Savannah & Norfolk handle today! Then, we too could be experiencing a $23 Billion economic impact.

We can rationalize and defend our current position and our incremental progress for as long as we wish and it gets us nowhere.  We absolutely must develop and agree on a strategic plan to logistically bring our state into the 21st century. A decision to accept the status quo only weakens our competitive position with our neighboring ports and could put additional tax liability on our citizens. Our state simply cannot afford political and regional gridlock on these extremely vital issues. 

Our state is known for many things.  We are known to have one of the best university educational systems in the world (including our Community Colleges) and the Research Triangle Park is known for its commitment to business. To accomplish these milestones, our politicians, business leaders and educators had to step outside the box. Now is the time for our leaders to again step outside the box and place North Carolina in a position where it can compete and become a major player in the globalization process through leading edge logistics. We can do it if we have the vision, commitment and leadership to stay the course.

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