Friday, December 12, 2008

Brunswick chips away at Jaxport auto imports

Jacksonville Business Journal - by Mark Szakonyi Staff Writer

Editor’s Note: This story is the first in a series examining how the Port of Jacksonville stacks up against competing ports in the Southeast.

BRUNSWICK — The Port of Brunswick in the past seven years has poached the importing of four major foreign auto manufacturers’ vehicles from the Port of Jacksonville.

The most recent loss was Mercedes-Benz USA, which plans to transfer operations from Jacksonville to a yet-to-be-built 70,000-square-foot facility at Colonel Island in summer 2009. In 2002, Wallenius Wilhelmsen moved its Volvo-carrying operations to Brunswick, and in 2004, Glovis America moved its automobile processing operations for Hyundai Motor America and Kia Motors Inc.

The Port of Jacksonville, which is the country’s second largest handler of cars, trucks and other vehicles, dwarfs its frisky neighbor to the north in the amount of roll-on/roll-off cargo handled. But the recent losses reflect an increasingly competitive East Coast market. That’s partly because West Coast ports have reached their capacity, and their East Coast counterparts expect increased traffic once the Panama Canal is expanded.

“The East Coast is a dog-eat-dog world,” said Roy Schleicher, the Jacksonville Port Authority’s senior director of trade development and global marketing. “People fight for every pound of freight.”

Although Jacksonville has more regular shipping carrier service, the Port of Brunswick tends to be able to offer tenants more financial incentives. Whereas the Port of Jacksonville is one of 14 ports vying for state funding, the Port of Brunswick is one of two ocean ports seeking funding through the state, Schleicher said. Georgia Port Authority officials declined to comment.

Brunswick is “a decent port,” Schleicher said. “It’s just that Jacksonville has been big so long and they started draining our business.”

One of the clearest signs of the state’s generosity to the Port of Brunswick is that it has already completed the dredging of its channel so post-Panamax ships can call. It’s an asset but not much of one since roll-on/roll-off ships don’t require the extra depth, said Bill Kerrigan, founder of KGI Global Logistics Consulting, a logistics consulting firm specializing in the automobile and roll-on/roll-off industries.

Brunswick also received funding to build a new bridge so larger ships could pass under. Its growing agriculture bulk business is spurring it to build an additional 10,000-ton grain storage tank, which is expected to be finished by April.

Brunswick may peel away some of the Jacksonville Port Authority’s tenants, but Jacksonville will stay on top as long as the demand for Asian-produced cars continues. Even with the proposed auto industry bailout, Kerrigan expects American manufacturers to continue to sink. In the next several years, he expects the national ratio of purchased imported cars to increase from one in four to two in four. Toyota, which imports and exports through Jacksonville, will continue to be an industry leader.

Bob Moore, vice president and general manager of vehicle processing for Southeast Toyota, said the company considered moving operations to Brunswick after it outgrew its Jacksonville facility in 2000. Georgia Port Authority officials made an attractive offer, but a good relationship with Jacksonville Port Authority officials and their willingness to build a new dock for the Talleyrand facility convinced the company to stay put.

“Right now we have 400 people on payroll, and we would lose the majority of them if we moved to Brunswick,” Moore said.

In a news release, Mercedes said the new site’s closer proximity to the port will allow it to reduce processing time, but Kerrigan said having access to the CSX Corp. and Norfolk Southern rail lines was also a key factor. The Jacksonville site gave the German manufacturer access to only the CSX line, and access to two lines will help it get the vehicles that are produced in Alabama faster.

“Georgia has been very aggressive,” Kerrigan said. “Everyone from the governor on down has been trying to get them there.”

Another factor that was out of the Jacksonville Port Authority’s hands was that Brunswick has a niche for European carrier service, with its other tenants, such as BMW and Volvo, using the same trade lanes. Brunswick “also has room to expand,” Kerrigan said. “Jacksonville hasn’t used all of its capacity but they’re pretty close.”

Making an “apples-to-apples” comparison is unfair since Amports feeds different markets with its Brunswick and Jacksonville operations, said David Haviland, the company’s general manager. The company handles more cars in its Jacksonville facility but that’s all subject to change if its car manufacturer customers change their supply chains.