N.C. ports best to stick with what they do well

Editorial by Wilmington Star-News, December 14, 2013.

North Carolina's ports are bustling again after suffering through the recession with three straight years of big losses. While the current fiscal year that runs through June doesn't look as rosy as the one that just ended, a $5.1 million profit in the 2012-2013 budget year is reason for port officials to celebrate.

That double-digit operating margin followed a smaller gain of $394,000 the previous year. That looked like a turning point after a recession-driven slump, but one year does not make a trend. Nor do port officials expect the 13.7 percent margin – an impressive gain in a time in which the state's economic growth has been somewhat anemic – to be repeated this fiscal year.

Nevertheless, it is clear the state ports are on better financial footing than they were when multimillion-dollar losses had replaced a previously steady gain in volume and revenues. With the focus on beefing up facilities at the existing ports, such as the proposed cold storage unit and a new facility to store wood pellets that are used as power in many European countries, the N.C. Ports Authority looks to be on course to remain busy.

The average person may not fully realize the impact of the ports on the local and state economies, but the cargo moving in and out of the facilities at Wilmington and Morehead City are important to the entire state's economic well-being. When seeking locations, companies look for excellent infrastructure, including convenient access to ports, airports and railroads, as well as a good highway system.

With finances looking up, the N.C. Ports Authority board of directors is again eyeing expansion, something that concerns residents who oppose a deepwater port near Southport. The proposed $2 billion international terminal has been effectively dead since U.S. Rep. Mike McIntyre, D-N.C., refused to support federal funding for the project, given other budget priorities. It may be resurrected, but as interim ports director Jeff Miles noted, there is no current market to justify spending taxpayer dollars to build a new port.

That caution is warranted. Although shipping continues to change and cargo ships are getting much larger than the size ships the Wilmington and Morehead ports can accommodate, the need for a deepwater facility is years away at best. The current ports are large enough to handle cargo projections in the near future.

And realistically, North Carolina's ports are unlikely in the coming decades to compete with the larger ports that handle many times the volume of our smaller and more confined facilities. The port at Wilmington, for example, handled 270,000 TEUs of cargo last year – that's twenty-foot equivalent units, an inexact measure of volume as opposed to tonnage; it is based on how much space the load takes up.

Now take the Port of Los Angeles, the nation's busiest port, which handled 8 million TEUS last fiscal year. That's nearly 30 times as much cargo. The state ports are sandwiched between much larger facilities at Norfolk, Va., and Charleston, S.C.; other East Coast ports also dwarf Wilmington's port.

For the foreseeable future, it would be wise for the ports to focus on less grandiose improvements, such as the continued emphasis on facilities to handle existing and projected demand, as well as negotiations to get service from more than one railroad company at both ports. The big stuff can wait.