On a recent balmy spring day, a crane operator sits high above a terminal in the Port of Philadelphia and methodically grabs a container off a cargo ship from Germany and lowers it to the ground.
Here at this busy port on the Delaware River, nearly 500,000 containers were handled last year, filled with billions of dollars in domestic and foreign consumer goods from cocoa beans to cars.
Since Gov. Tom Wolf’s announcement last fall that the Philadelphia port would get $300 million from the state to upgrade its terminals and infrastructure, officials expect to double the port’s container capacity and be more competitive with other ports along the East Coast.
And they’re looking northward to the Lehigh Valley, Berks, Montgomery and Bucks counties and central Pennsylvania to persuade companies to ship out of Philadelphia, instead of ports in New York/New Jersey and Baltimore.
The Lehigh Valley would appear to be ripe for picking. As one of the most sought-after locations in the country for manufacturing, warehouses and distribution centers, the Lehigh Valley is serviced by an efficient and robust network of interstates and rail systems to move those goods to reach 68 million people along the entire Northeast.
“With the amount of goods coming in and out of the Lehigh Valley, the port authority views it as a potential growth market,” said Don Cunningham, president and CEO of the Lehigh Valley Economic Development Corp.
“From the Lehigh Valley’s perspective, we sit in a very fortunate position. We’re pretty much equidistant to two great ports on the East Coast,” said Cunningham, referring to Philadelphia and the Port of New York and New Jersey.
WOOING THE REGION’S BIG PLAYERS
Officials from the Philadelphia Regional Port Authority, the state agency that manages and markets the port, have been courting key players in the Greater Lehigh Valley in recent months, including LVEDC officials, whom they have led on a tour of the port.
They’ve also mixed with regional corporate heavy hitters at a supply chain seminar at Lehigh University and spoken at regional international trade conferences where they’ve touted the improvements coming to the Port of Philadelphia.
“Manufacturers in the Lehigh Valley may be going to the Port of New York and New Jersey out of habit and tradition,” said Dominic O’Brien, senior marketing representative for the Philadelphia port authority.
BETTER ACCESS TO N.Y., N.J.
Philadelphia may have an uphill climb persuading businesses in the Lehigh Valley to switch ports. Ninety percent of freight in the Lehigh Valley is moved by truck to the Port of New York and New Jersey, according to Becky Bradley, executive director of the Lehigh Valley Planning Commission.
“There’s a reason for that,” Bradley said. “It’s quicker to get to the Port of New York and New Jersey than the Port of Philadelphia. In the Lehigh Valley, we have direct access to the Port of New York and New Jersey largely through Interstate 78.”
The routes to the Port of Philadelphia are hampered by congestion – the Pennsylvania Turnpike (Interstate 276), I-476, I-95 and the Schuylkill Expressway, Bradley said. And the turnpike is a toll road, which truck drivers try to avoid, she said. Some truckers seek alternatives off I-476, near the Quakertown exit, for example, and end up crowding residential roads not intended for traffic from big rigs.
It comes down to transportation, Bradley said.
When it comes to moving freight, one of the main factors a company considers is ease of mobility. Time is money.
MORE THAN PROXIMITY IS INVOLVED
O’Brien said there are numerous factors that go into a company’s decision to use a port.
Philadelphia’s port may be more cost-effective compared to neighboring ports because it may have shorter wait times for trucks, while warehousing and port charges might be lower.
The Philadelphia port recently added new optical equipment that helped speed the process of checking in truckers and their cargo, he said.
“We are hearing about delays at the Port of New York and New Jersey from congestion. Trucks sit in line for eight hours,” O’Brien said. “They come down to Philly and have a very different experience because they can get in the terminal and out in 40 minutes or less.”
PANAMA CANAL INFLUENCE
The revitalization of Philadelphia’s port, like other ports up and down the East Coast, was spurred by the $5 billion expansion of the Panama Canal, which opened in 2016 after more than a decade of construction.
The Panama Canal was widened and deepened to remain competitive in the global shipping industry, where supersized ships carry significantly more containers – up to 13,000 – that also are larger.
To accommodate this new generation of giant vessels, so-called neo-Panamax ships, and the glut of goods expected to be arriving from Asia, American ports began expanding and deepening their ports, and in one case, raising a bridge. In July, the Port of New York and New Jersey is expected to be able to receive the enormous ships when the $1.6 billion project to raise the 85-year-old Bayonne Bridge will be largely completed.
Philadelphia’s $383 million dredging of the Delaware River’s main channel from 40 feet to 45 feet is expected to be completed in December.
Most of the state’s $300 million – about $200 million – will go to upgrading the Packer Avenue Marine Terminal, the port’s largest, where the berth will be deepened to 45 feet by the end of the year. Other upgrades include the purchase of four electric cranes, at $12.5 million each, to handle the supersized Panamax containers.
Old warehouses will be demolished and new warehouses built. The electrical grid will be updated and $90 million will be spent to expand automobile processing buildings.
Hyundai and Kia, which delivers 150,000 vehicles a year to the port, has renewed its lease and plans to increase the load to 350,000 vehicles a year.
From a business’ perspective, shipping cargo into or out of Philadelphia all comes down to time and money. And the more competition among ports, the better it is for Lehigh Valley companies, said Zach Zacharia, associate professor and director of the Center for Supply Chain Research at Lehigh University.
“The fact is you’re getting another viable port that could help you reduce your costs. It can only be a benefit,” Zacharia said.
The new investment into Philadelphia’s port got the attention of Fuling Global Inc., a Chinese plastics manufacturer that opened its first United States plant two years ago in Upper Macungie Township.
Gilbert Lee, chief financial officer at Fuling Plastics, said the local plant uses the Port of Elizabeth, N.J., to import raw and finished material from China.
Lee said he began to look into switching to Philadelphia, but hasn’t had a chance to dig deeper into what is a complicated analysis to determine if it would save the company money or time.
“The company has been using the Port of Elizabeth for a very, very long time to ship the products from China to the U.S. or East Coast, so they must have already done their analysis,” Lee said.
PROSPERING WITH PAPER PULP
Deep in the bowels of a cavernous 300,000-square-foot warehouse at the Tioga Marine Terminal, an exotic bird shriek pierces the silence.
The call, a recording of a predatory bird, is periodically broadcast to scare away vermin considering taking up residency among the tons of paper pulp made from eucalyptus trees in Brazil, neatly stacked from floor to ceiling.
The pulp, which must remain pristine before it gets shipped out by rail and truck, will head north on Norfolk Southern and CSX rail cars to a Procter & Gamble plant in Mehoopany, outside Scranton, where it will be made into diapers, paper towels and other paper products.
More than five years ago, the port authority actively sought Fibria Celulose, the world’s largest producer of wood pulp, to ship its eucalyptus paper pulp from the Port of Philadelphia instead of Baltimore.
“Fibria used to bring the pulp into Baltimore and send it by rail to Mehoopany,” O’Brien said.
“We approached them and said, why not come directly to Philadelphia? You’ll be closer and save money on rail,” he recalled.
Your terminal is not ready, they said. You’ve got to make improvements.
“We went to the governor and said, ‘Let’s fix up the terminal so we can attract Fibria,’ ” O’Brien said.
The state spent nearly $30 million to upgrade the Tioga terminal then, which helped lure another global paper pulp company, CNPC of Chile. The terminal has been allotted $12 million for improvements in the latest funding.
SEEKING INTERNATIONAL COMPANIES
The Philadelphia port handles $5 billion in food products a year, about $2 billion of that was fruit, much of it from South and Central America.
Port officials said they want more global companies to lease space at the terminals.
Sean Mahoney, director of marketing for the port authority, said 80 percent of the cargo at the port is inbound.
“We’d love to be able to have more exports,” he said.
ADDING TRADE ROUTES
“People are not necessarily aware of the expansion that’s been going on [in Philadelphia] and we’ve been trying to help to get the word out,” said Tina Weyant, executive director of the World Trade Center, a Harrisburg-based group that helps Pennsylvania companies connect to international trade opportunities.
In March, the center hosted a forum for businesses in the foreign trade zone in central Pennsylvania to update businesses about the changes coming to the Port of Philadelphia.
The Philadelphia port is not only expanding capacity but also trade routes, including to Mexico and Europe, she said.
‘WHEN ONE DOES WELL, WE ALL DO WELL’
The World Trade Center, like the LVEDC, does not favor one port over another; that’s a decision best left up to an individual company and its needs, officials at both organizations said.
But having Philadelphia “step up its game and broaden its capabilities is good for the Lehigh Valley and companies that are here and those we are presenting to,” Cunningham said.
“Are we really supportive of what Philadelphia is doing with their port? Absolutely,” she said. “When one does well, we all do well. It’s not us against them or the Port of New York and New Jersey against Philadelphia.”
EFFECT OF E-COMMERCE
Not only is the widening of the Panama Canal providing more opportunities to get more goods to the East Coast more quickly, but with the primacy of online ordering – one of the prime factors driving the growth of warehouses and distribution centers in the Lehigh Valley – the greater the need to move those goods.
“Philadelphia is going to get some of that business, just as the Port of New York and New Jersey and the Port of Baltimore are,” Bradley said.
“There’s plenty to go around.”