The Port of Miami has fought an uphill battle to compete with rivals for Florida-bound international sea freight. The expanded Panama Canal may level the playing field.
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Bill Johnson has glimpsed the Holy Grail in his own backyard, and he is determined—come hell or deep water—to capture it.
Johnson, the hard-charging director of the Port of Miami, has spent the past five years looking into why so much of the Asian import cargo destined for Florida enters the country through ports outside the state. According to port data, only about 38 percent of Asian import traffic bound for Florida actually enters via the state's ports. About 36 percent enters through the ports of Los Angeles and Long Beach, 13 percent through the Port of Savannah (Ga.), and the remaining 13 percent through various other U.S. ports.
In particular, Johnson has focused on why Savannah, nearly 500 miles to the north, has been such a strong competitor for trans-Pacific cargoes destined for Central and Southern Florida. There are good reasons for Savannah's strength. Though it has a relatively shallow harbor depth of 42 feet, it remains one of only two East Coast seaports—the other being Norfolk—with on-dock rail connections to the two Eastern Class I railroads, CSX Corp. and Norfolk Southern Corp.
Savannah is also near the robust manufacturing areas of Southern Georgia and Northern Florida, where goods are shipped, usually by truck, into Florida's Central and Southern regions for distribution to a population approaching 13 million people.
Port officials acknowledge Miami has been outflanked by Savannah in the battle for the wallets of Florida's importers and exporters, and, by extension, the state's consumers. Johnson, for his part, said Miami has learned a lot from Savannah and plans to use that knowledge to beat the formidable Georgia port at its own game.
"The Florida ports have lost market share to Savannah over the years, and I intend to win that business back," he said in an interview. Port officials believe the state can recapture about one-third of the containerized traffic bound for markets within Florida but which arrives at out-of-state seaports.
A game-changer
The catalyst for Johnson's strategy is, not surprisingly, the opening of the expanded Panama Canal scheduled for August 2014. The $5.2 billion project will deepen the canal by as much as 10 feet, while new lock construction will enable it to accommodate ships built to carry a maximum of 12,600 twenty-foot equivalent unit (TEU) containers, up from a current maximum of 5,100 TEUs.
The expansion promises compelling economies of scale for the seagoing supply chain because carriers can move more containers per vessel through the canal than ever before. It could also permanently reshape shipping patterns if importers that normally bring Asian-originating ocean cargo in through West Coast ports for movement inland via surface transport instead opt for a less-costly all-water route for drop-off at East and Gulf Coast ports. Only 30 percent of all seagoing cargoes are discharged at points east of the Mississippi, although 70 percent of the U.S. population lives there.
Miami port officials estimate an all-water voyage from China to Miami takes 24 days, while a sailing into Los Angeles and cross-country rail service to Miami would take about 22 days and generally be more expensive.
In preparation for the canal expansion, Miami has embarked on a $150 million project—with half the funds coming from state taxpayers—to dredge its harbor and channel from its current 42-foot depth to the 50-foot depth needed to accommodate the larger "post-Panamax" ships. Perhaps just as important, the port is constructing the first on-dock rail terminal to be operational there in 20 years.
The rail terminal will be served exclusively by the Jacksonville-based Florida East Coast Railway (FEC) and will be used to transport cargo to points north and west of Miami, bringing the port within a one- to four-day delivery window of 70 percent of the U.S. population. The first train there will begin operating in the first quarter of 2012, but the service's real impact won't be felt until the opening of the expanded canal.
A shift in distribution patterns
Officials at Miami, which vies with Port Manatee on Florida's West Coast for the title of the closest U.S. port to the canal, believe the deepening of Miami's harbor and the launch of on-dock rail service will make it the first port of call for post-Panamax vessels. They also believe the expansion project will change the way goods are distributed within Florida, across the Southeast, and even into the nation's midsection.
"We will be able to serve markets like Atlanta and Charlotte in two days, and Memphis and Nashville in three days," said James Hertwig, FEC's president and CEO. FEC is also the exclusive on-dock rail provider at Fort Lauderdale's Port Everglades and the Port of Palm Beach farther to the north.
Between 12 million and 13 million people reside in Central and South Florida, making it the largest East Coast population center outside of the New York metropolitan area. Because of its large retiree and tourist population, however, the region is heavily skewed toward consumption, with relatively little production.
Historically, goods bound for Central and South Florida have been produced in manufacturing centers in South Georgia or Northern Florida around Jacksonville. They would then usually be trucked—at a significant cost—down the lengthy peninsula to the southern part of the state, or be diverted west toward its center near Orlando. Generally, there are few backhaul opportunities due to the lack of manufacturing in the region.
The traffic imbalance is striking, according to various sources. Hertwig said that for every four loads headed south there is only one moving north. Charles W. Clowdis, managing director-transportation advisory services for consultancy IHS Global Insight, said the ratio is closer to five to one in favor of southbound loads.
But as more Florida-bound goods come from Asia, all that could change. Florida port interests believe that deepening Miami's harbor to handle post-Panamax vessels will open up the state's Southern and Central regions to an avalanche of Asian imports that can be whisked across Florida and into surrounding states, thus remedying the directional imbalance.
In a 2010 report, the Florida Chamber Foundation said the widening of the canal, along with the continued growth in Latin American and Caribbean markets that already use Miami as their main port of entry, offers Florida a "once-in-a-lifetime opportunity to transform its economy by becoming a global hub for trade, logistics, and export-oriented manufacturing activities." The state is located "at the crossroads" of east-west and north-south trade lanes that will be home to more than 1.1 billion consumers by 2030, the report said.
Miami, which is expected to handle 900,000 TEU containers in 2011, expects a doubling of its traffic to between 1.7 million and 2 million TEUs by 2020, and to between 3 million and 3.5 million TEUs by 2030. About half of the growth over the next decade will come from a general increase in waterborne commerce, with the remainder coming from stronger trade flows through an expanded canal, according to port officials.
Showdown with Savannah?
Still, it will not be easy to wrest market share away from Savannah. The Georgia port is in a geographically desirable position, capable of feeding western, northern, and southern destinations via rail and truck. Miami, by contrast, is at the end of a long peninsula and lacks Savannah's geographic advantages.
Johnson, however, argues that Miami's location is actually a benefit because of its proximity to Latin and Caribbean markets, as well as its strategic positioning in the middle of an enormous arc sweeping between Texas and Virginia.
Another potential shortcoming is that Miami's basin, unlike Savannah's, is too small to allow the post-Panamax vessels to turn around in the harbor to head out. Kevin T. Lynskey, the Port of Miami's assistant director for business development, said the port has come up with a plan to address that shortfall. He said the turning radius in the basin is being widened as part of the dredging project, and that the port should be able to handle the larger ships.
A Florida-based source close to the situation said Savannah's solid position as an on-dock rail feeder will make it a formidable impediment to Miami's plans for growth in the post-Panamax world. Miami "will get some traffic, but not to the degree that everyone expects," said the source, who asked not to be named.
Making connections
Yet developments are afoot that suggest the opposite. Private-sector interests have joined forces to develop Florida's first inland port—a facility designed to link the seaports, via road and rail, with a centralized warehouse and distribution cluster that will serve population centers throughout Florida and the Southeast United States. The 2,300-acre facility, located in southwest St. Lucie County about 90 miles from the Port of Miami and 50 miles from Port Everglades, will cost about $2 billion and take about 15 years to complete.
The first phase will be finished in 2014 to coincide with the expanded canal's opening and the completion of Miami's dredging project.
The inland port "will create an entirely new industrial model for Florida, ultimately providing a connection to direct on-dock rail service at Florida's key seaports, along with easy access to all major highways," said John Carver, who heads the ports, airports, and global infrastructure practice for Chicago-based real estate and logistics services giant Jones Lang LaSalle (JLL), which has been named the exclusive project advisor.
According to JLL data, there are 12 inland ports in operation across the United States. Each port shares several common characteristics, namely proximity to at least 3 million residents living within a 200-mile radius, a direct connection to a seaport via one of the four major Class I railroads, designated status as a Foreign Trade Zone, and access to an abundance of industrial real estate.
Florida is perhaps the most glaring hole in the inland port network, Carver said. "It's the only state in the country with this kind of volume that doesn't have a dedicated facility like this," he said.
Editor's Note: MODEX 2012, coming to Atlanta's Georgia World Congress Center February 6-9, will feature a keynote by Panama Canal Authority CEO Alberto Alemán Zubieta. He will be discussing the expansion of the Panama Canal and its impact on supply chains and global trade. For more information, go to www.modexshow.com.
As the Trump Administration threatens new steps in a growing trade war, U.S. manufacturers and retailers are calling for a ceasefire, saying the crossfire caused by the new tax hikes on American businesses will raise prices for consumers and possibly trigger rising inflation.
Tariffs are taxes charged by a country on its own businesses that import goods from other nations. Until they can invest in long-term alternatives like building new factories or finding new trading partners, companies must either take those additional tax duties out of their profit margins or pass them on to consumers as higher prices.
The Trump Administration on Thursday announced it may impose “reciprocal tariffs” on any country that currently holds tariffs on the import of U.S. goods. That step followed earlier threats to apply tariffs on the import of steel and aluminum beginning March 12, another plan to charge tariffs on the import of materials from Canada and Mexico—now postponed until early March—and new round of tariffs on imports from China including a 10% blanket increase and the elimination of the “de minimis” exception for individual items under a value of $800 each.
Various industry groups say that while the Administration may have legitimate goals in ramping up a trade war—such as lowering foreign tariff and non-tariff trade barriers—applying a strategy of hiking tariffs on imports coming into America would inflict economic harm on U.S. businesses and consumers.
“This tariff-heavy approach continues to gamble with our economic prosperity and is based on incomplete thinking about the vital role ethical and fairly traded imports play in the prosperity,” Steve Lamar, president and CEO of The American Apparel & Footwear Association (AAFA) said in a release. “Putting America first means ensuring predictability for American businesses that create U.S. jobs; affordable options for American consumers who power our economy; opportunities for farmers who feed our families; and support for tens of millions of U.S. workers whose trade dependent jobs make our factories, our stores, our warehouses, and our offices function. Sweeping new tariffs — a possible outcome of this exercise — instead puts America last, raising costs for American manufacturers for critical inputs and materials, closing key markets for American farmers, and raising prices for hardworking American families.”
A similar message came from the National Retail Federation (NRF), whose executive vice president of government relations, David French, said: “While we support the president’s efforts to reduce trade barriers and imbalances, this scale of undertaking is massive and will be extremely disruptive to our supply chains. It will likely result in higher prices for hardworking American families and will erode household spending power. We encourage the president to seek coordination and collaboration with our trading partners and bring stability to our supply chains and family budgets.”
The logistics tech firm Körber Supply Chain Software has a common position. "The imposition of new tariffs, or the suspension of tariffs, introduces substantial challenges for businesses dependent on international supply chains. Industries such as automotive and electronics, which rely heavily on cross-border trade with Mexico and Canada, are particularly vulnerable,” Steve Blough, Chief Strategist at Körber Supply Chain Software, said in an emailed statement. “Supply chains that are doing low-value ecommerce deliveries will have their business model thrown into complete disarray. The increased costs due to tariffs, or the increased costs in processing time due to suspensions, may lead to higher consumer prices and processing times.”
And further opposition to the strategy came from the California-based IT consulting firm Bristlecone. “Tariffs or the potential for tariffs increase uncertainty throughout the supply chain, potentially stalling deals, impacting the sourcing of raw materials, and prompting higher prices for consumers,” Jen Chew, Bristlecone’s VP of Solutions & Consulting, said in a statement. “Tariffs and other protectionist economic policies reflect an overarching trend away from global sourcing and toward local sourcing and production. However, despite the perceived benefits of local operations, some resources and capabilities may simply not be available locally, prompting manufacturers to continue operations overseas, even if it means paying steep tariffs.”
The Google-backed humanoid robot maker Apptronik on Thursday announced it had raised $350 million in venture funding to fuel the deployment of its “Apollo” model and to scale up operations, accelerate innovation, and hire more staff.
That innovation push will be specifically aimed at expanding Apollo’s capabilities, enabling it to address a wide range of applications in industries like logistics and manufacturing, as well as eldercare and healthcare.
Texas-based Apptronik is also scaling up manufacturing of Apollo units to fulfill growing orders across priority verticals—including automotive, electronics manufacturing, third-party logistics providers (3PLs), beverage bottling and fulfillment, and consumer packaged goods.
The “series A” venture round was co-led by B Capital and Capital Factory, with participation from Google. It follows $28 million in previous funding. Apprtronik was founded in 2016 at the University of Texas at Austin’s Human Centered Robotics Lab.
“With Apptronik, we see a world in which humanoid robots play a vital role in addressing societal challenges—from assisting with disaster relief and elder care to supporting space exploration and medical advancements. Industry leaders like Mercedes-Benz and GXO Logistics are already seeing the real-world impact of Apptronik's technology,” said Howard Morgan, chair and general partner of B Capital.
Warehouse automation orders declined by 3% in 2024, according to a February report from market research firm Interact Analysis. The company said the decline was due to economic, political, and market-specific challenges, including persistently high interest rates in many regions and the residual effects of an oversupply of warehouses built during the Covid-19 pandemic.
The research also found that increasing competition from Chinese vendors is expected to drive down prices and slow revenue growth over the report’s forecast period to 2030.
Global macro-economic factors such as high interest rates, political uncertainty around elections, and the Chinese real estate crisis have “significantly impacted sales cycles, slowing the pace of orders,” according to the report.
Despite the decline, analysts said growth is expected to pick up from 2025, which they said they anticipate will mark a year of slow recovery for the sector. Pre-pandemic growth levels are expected to return in 2026, with long-term expansion projected at a compound annual growth rate (CAGR) of 8% between 2024 and 2030.
The analysis also found two market segments that are bucking the trend: durable manufacturing and food & beverage industries continued to spend on automation during the downturn. Warehouse automation revenues in food & beverage, in particular, were bolstered by cold-chain automation, as well as by large-scale projects from consumer-packaged goods (CPG) manufacturers. The sectors registered the highest growth in warehouse automation revenues between 2022 and 2024, with increases of 11% (durable manufacturing) and 10% (food & beverage), according to the research.
The Swedish supply chain software company Kodiak Hub is expanding into the U.S. market, backed by a $6 million venture capital boost for its supplier relationship management (SRM) platform.
The Stockholm-based company says its move could help U.S. companies build resilient, sustainable supply chains amid growing pressure from regulatory changes, emerging tariffs, and increasing demands for supply chain transparency.
According to the company, its platform gives procurement teams a 360-degree view of supplier risk, resiliency, and performance, helping them to make smarter decisions faster. Kodiak Hub says its artificial intelligence (AI) based tech has helped users to reduce supplier onboarding times by 80%, improve supplier engagement by 90%, achieve 7-10% cost savings on total spend, and save approximately 10 hours per week by automating certain SRM tasks.
The Swedish venture capital firm Oxx had a similar message when it announced in November that it would back Kodiak Hub with new funding. Oxx says that Kodiak Hub is a better tool for chief procurement officers (CPOs) and strategic sourcing managers than existing software platforms like Excel sheets, enterprise resource planning (ERP) systems, or Procure-to-Pay suites.
“As demand for transparency and fair-trade practices grows, organizations must strengthen their supply chains to protect their reputation, profitability, and long-term trust,” Malin Schmidt, founder & CEO of Kodiak Hub, said in a release. “By embedding AI-driven insights directly into procurement workflows, our platform helps procurement teams anticipate these risks and unlock major opportunities for growth.”
Here's our monthly roundup of some of the charitable works and donations by companies in the material handling and logistics space.
For the sixth consecutive year, dedicated contract carriage and freight management services provider Transervice Logistics Inc. collected books, CDs, DVDs, and magazines for Book Fairies, a nonprofit book donation organization in the New York Tri-State area. Transervice employees broke their own in-house record last year by donating 13 boxes of print and video assets to children in under-resourced communities on Long Island and the five boroughs of New York City.
Logistics real estate investment and development firm Dermody Properties has recognized eight community organizations in markets where it operates with its 2024 Annual Thanksgiving Capstone awards. The organizations, which included food banks and disaster relief agencies, received a combined $85,000 in awards ranging from $5,000 to $25,000.
Prime Inc. truck driver Dee Sova has donated $5,000 to Harmony House, an organization that provides shelter and support services to domestic violence survivors in Springfield, Missouri. The donation follows Sova's selection as the 2024 recipient of the Trucking Cares Foundation's John Lex Premier Achievement Award, which was accompanied by a $5,000 check to be given in her name to a charity of her choice.
Employees of dedicated contract carrier Lily Transportation donated dog food and supplies to a local animal shelter at a holiday event held at the company's Fort Worth, Texas, location. The event, which benefited City of Saginaw (Texas) Animal Services, was coordinated by "Lily Paws," a dedicated committee within Lily Transportation that focuses on improving the lives of shelter dogs nationwide.
Freight transportation conglomerate Averitt has continued its support of military service members by participating in the "10,000 for the Troops" card collection program organized by radio station New Country 96.3 KSCS in Dallas/Fort Worth. In 2024, Averitt associates collected and shipped more than 18,000 holiday cards to troops overseas. Contributions included cards from 17 different Averitt facilities, primarily in Texas, along with 4,000 cards from the company's corporate office in Cookeville, Tennessee.