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.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.