March 26, 2019 Driving Southeastern Infrastructure Growth

Southeastern states have been the beneficiaries of significant investment by automakers.

March 26, 2019

By John P. Kavanagh, Jr.

Growth in the automotive manufacturing sector required public and private stakeholders to vigorously address and strengthen the infrastructure needed to support the burgeoning industry.

Although the “Big Three” U.S. automakers had manufacturing facilities in the Southeast before the arrival of Mercedes Benz in 1993 – to Alabama of all places! – the move by the luxury German automaker spurred a host of foreign car manufacturers to also establish manufacturing plants in the area.

Strengthening and improving infrastructure was critical to the Southeast’s growing automotive industry. Of course, there is the obvious need for safe and efficient movement of finished goods, but the “just-in-time” manufacturing methods used by automotive companies demands a robust and reliable system to deliver needed inventories of parts and supplies.

In his August 2010 letter to support the Port of Mobile’s grant application seeking funds to develop an intermodal transfer facility, Jason Hoff (Vice-President, Purchasing & Logistics for Mercedes Benz US) wrote: “Adding the ability to transfer containers to rail at a location adjacent to the marine terminal will not only increase Mercedes’ market opportunities for growth, but will support the objectives of reducing emissions and congestion caused by highway traffic, while at the same time reducing the required maintenance of the U.S. highways and bridges.” The Port’s Intermodal Container Transfer Facility (ICTF) opened in 2016, providing a dedicated rail facility that tied the Port’s deep-water access to five Class I railroads, and offering shippers and logistics providers a cost efficient, inland freight transportation solution.

Cleary, the increase in auto manufacturing in the Southeast has prompted states and public authorities to strengthen the supporting infrastructure, such as ports and inland transportation systems. At the 2018 “State of the Port” address, the Executive Director of the Georgia Ports Authority touted the Port of Brunswick and its success in capitalizing on the region’s nascent automobile industry. Over 600,000 cars, trucks and tractors passed through Brunswick’s roll-on / roll-off facility at Colonel’s Island in 2018. The facility is expanding, adding approximately 60 acres to increase the available storage area by 8,250 vehicle spaces. This comes on the heels of a $5.2 million appropriation from Congress in September 2018. The funds are earmarked for the Port of Brunswick to use for dredging activities and maintenance.

The South Carolina Ports Authority announced in December 2018 that it was the receipt of a $25 million BUILD Grant (Better Utilizing Investments to Leverage Development) from the U.S. Department of Transportation. The funding will be used to finance expansion at the Port’s Inland Port Greer, as well as extend rail services. These improvements were aimed at increasing terminal capacity and on-site storage, as well as extending rail tracks inside the terminal to improve rail capacity, efficiency and flexibility.

The grant application received input and support from public and private stakeholders: The South Carolina Department of Transportation, Norfolk Southern, BMW and the South Carolina Ports Authority. Currently, BMW’s Spartanburg, South Carolina manufacturing facility is the leading U.S. exporter of completed passenger vehicles. Some 237,000 vehicles were shipped through the Port of Charleston in 2017. The resulting improvements to the Port’s multimodal operations were touted by BMW representatives as being essential for day-to-day logistic operations, as well as BMW’s ability to expand production and add new models.

The Jacksonville Port Authority (Jaxport) has long been one of the busiest U.S. ports for roll-on / roll-off vehicle shipments. This position will be further solidified following the development of a 100-acre vehicle processing facility at its Dames Point Terminal. This facility will grow the Port’s auto-handling capacity by 25%, and provide more efficient transshipment processing, with direct waterside access and closer proximity to Interstate 10 (east-west) and Interstate 95 (north-south).

Jaxport has also been allocated almost $100 million in federal funds to deepen 11 miles of the St. Johns River to 47 feet, a depth sufficient to accommodate the post-Panamax vessels. State funds have matched local funds, which have come from a combination of public (Jaxport) and private (port tenant) contributions.

As a final example – and in an effort to compete for its piece of the automotive logistics market – work is underway at the Port of Mobile on a vehicle processing roll-on / roll-off facility. The new terminal will replace an unused bulk material handling facility. Like the container terminal at the south end of the port of Mobile, the Port Authority touts the unique mix of deep-draft water access, Class 1 rail service, and ease of access to interstate highways as the drawing cards for its new, state-of-the-art automotive processing and logistics terminal.

Improving infrastructure – sea-ports, rail and roads –will only become more important if the anticipated growth in the Southeast’s automotive manufacturing sector continues. The benefits of strengthening infrastructure will expand far beyond the auto industry, however, as it will enhance logistical efficiencies for all users.

John P. Kavanagh, Jr. is the Co-Chair of the Transportation and Maritime Practice Group at Burr & Forman. He can be reached at jkavanagh@burr.com.

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