Northwest Florida’s Ports See a Bright Future on the World Stage

A Rising Tide

Canal Expansion Improvements to the Panama Canal will dramatically change shipping by allowing super tankers to cross the isthmus between the Atlantic and Pacific.

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There’s an old saying that goes: “A rising tide lifts all boats.” And as a wider Panama Canal opens its locks for the world’s mega-ships, Northwest Florida’s local ports — Port Panama City, Port of Pensacola and Port St. Joe — are taking stock of what that means for their business, as well as the economic health of the region they serve.

“I feel very strongly that what Florida ports need to be focused on is using our assets to attract industry to the state,” said Wayne Stubbs, executive director of Port Panama City. “It’s great to handle a lot of cargo, but if you fail to translate all that cargo into high paying manufacturing jobs in the state, then you’re not getting the largest advantage from your ports.”

The three ports are located in some of the more rural areas of the state that need all the economic advantages they can muster, according to Doug Wheeler, president and CEO of the Florida Ports Council.

“The impact of our Florida Panhandle ports on the economic health of their communities cannot be overstated,” Wheeler said. “They are already providing much-needed jobs and have the potential to see significant increases as the Central and Latin America markets continue to grow.”

While ports along the Gulf Coast are looking to advance the economy of their home regions, they live in a global market. And the billion-dollar expansion of the Panama Canal is set to satisfy the increasing demand of world maritime trade. The massive project involves the construction of a third lane of traffic that will allow the passage of large Post-Panamax vessels, which will double the Canal’s capacity and have an important impact in world maritime trade. The expansion was 62 percent complete in August. Only time will tell how this change will affect the ports of Northwest Florida as larger ports on the Gulf Coast and East Coast jockey for position, but they stand ready to take advantage of whatever opportunities float their way.

Port Panama City

Located in St. Andrews Bay, Port Panama City is easily the busiest of the three and annually handles 1.7 million tons of cargo valued at $3 billion. Imported commodities such as aluminum ingots, copper plates and wire, steel pipe, plates and coils fill the warehouses, and tons of wood pellets from Green Circle Bio Energy’s Cottondale plant await shipment every week to European ports.

Stubbs said the port has worked very hard over the past 10 or 12 years to diversify and grow its cargo base because cargo activity shrank in the 1990s — a combination of the shifting of cargo from break bulk ports on the Gulf Coast to East Coast container ports and a decline in export markets for forest products.

The Panama City Port Authority is focused on two priorities: supporting industrial development in Bay County and developing modern seaport facilities to promote trade. But the latter has been hurt by the shifting economy.

“By the year 2000, port activities were actually down to 300,000 to 400,000 tons a year in cargo, and 60 ships a year coming and going, and that’s just not sustainable. So we made a concerted effort to turn this port around and grow our cargo activity to become a sustainable port and have the funds to keep reinvesting in facilities,” he said. “That’s been successful for us. We made a number of key investments. We dredged the port deeper in 2003, from 32 feet to 36 feet, and that made us a lot more attractive to new customers, particularly in the copper trade.”

The dredging opened the door for getting the wood pellet export business from Green Circle. The port authority also invested $60 million in facilities over the past 10 years. That’s paid off in terms of helping to attract and retain some key customers, among them a container operator that moved from New Orleans in the wake of Hurricane Katrina. Since 2005, Panama City has also developed the most active container trade business with Mexico of any U.S. port.

It doesn’t end there, as pallets of copper plating fill the warehouses. The copper import business was something Panama City’s port really focused on winning from places like New Orleans and Mobile. 

“We were successful in building partnerships with key shippers in that trade,” he said. “We became, over time, the most active port in the country for handling imported copper. That really boosted the value of the cargo we were handling because copper is so valuable. When we went into the copper business, we went from handling $800 million to $900 million worth of cargo to almost $3 billion worth of cargo. It put us on the map.”

The container trade tonnage has also steadily increased over time. In 2001, the port handled 400,000 tons and in 2013 it was looking at 1.7 million tons. Over the next three or four years they hope to push the overall tonnage to at least 2.3 million tons a year.

The investments in the port were made possible as the state became more aggressive in offering significant financial aid through matching grants over the past decade.

“Over the last three years, since Gov. Rick Scott’s been in office, the support from the state has grown — to the range of $250 million in the last year in matching grants for ports around the state,” Stubbs said.

Another project in development is the Port Panama City Intermodal Distribution Center about 15 miles north of town. A 150,000-square-foot warehouse was recently built for transferring dry and liquid bulk products between rail and trucks. Rail sidings have been added, and work continues to improve the 250-acre site with the hope that new manufacturing can be brought to the area. Actually, it’s larger than that, because an additional 50-acre site is being prepared for use. 

The governor in August announced the $1.9 million distribution center project would get a $900,000 grant from the Florida Department of Transportation. 

“I’m committed to ensuring that our transportation projects create more job opportunities for Florida families,” said Scott, a big advocate of Florida’s ports.

Meanwhile, the port continues to support the industries that exist on site, which include long-time tenants like Berg Steel Pipe (a major employer in Bay County that makes large-diameter steel pipe) and newcomer Oceaneering International Inc., which arrived at the port in 2004. Oceaneering invested about $50 million in facilities when it first set up business and just committed to spend another $15 million on more capital projects, Stubbs said. Oceaneering makes large-scale underwater cable systems called umbilicals.

Port of Pensacola

Located in historic (and strategic) Pensacola Bay, this port has its sights set high. Its top strategic priority is to become the most diverse port of its size by incorporating cargo, non-cargo commercial maritime, marine-related manufacturing and assembly, and other business opportunities. Currently, it’s more a service-oriented port, and tonnage isn’t the primary metric used to determine success.

“When we talk tonnage stats and that sort of thing, we’re a little different animal than other ports that you might visit. And that business is as a support base for the vessels that work out in the U.S. oil and gas industry in the U.S. Gulf of Mexico,” said Clyde Mathis, longtime port director until his resignation in Novemeber.

The main business partner engaging in that service is Offshore Inland Marine, which specializes in project mobilization and de-mobilization, topside repair and maintenance services to offshore oil and gas exploration and production fleets, including supply boats, pipe layers and construction vessels, dive support vessels and tankers.

“There’s a lot more happening finally again in the Gulf, so we expect their business to increase,” Mathis said. “They have a long term lease with us here at the port.”

Aside from providing support for service vessels, the port also does a booming business exporting locally produced wind turbine nacelles for GE Wind.

“General Electric has an assembly facility here in Escambia County where they assemble the nacelle, which is the generator unit of a wind turbine,” Mathis said. “They have had a huge project in Brazil, which they’ve been exporting to for the past year or so. Just this year to date they have loaded 359 units, had 14 vessel calls and there’s about 100 or so units on port now waiting to be exported.”

The port also works with GE Energy to handle the storage and transportation of portable generator units that can power upwards of 42,000 homes in the event of emergencies such as natural disasters. The units are essentially rolling power plants in the form of four separate trailer-mounted components that, when fully assembled and connected, can power a small city. The port’s responsibility is to keep these units maintained and ready for deployment around the world. And while that’s certainly important, it means the port functions in a different capacity than other cargo-bearing shipping facilities. 

“Both GE operations involve very large pieces of equipment but they don’t weigh very much, and Offshore Inland doesn’t move any cargo at all,” said Amy Miller, who took over the port director’s post on Nov. 20. “So when we measure our success, it’s the number of vessel dockage days that is important to us, because that is where we generate our revenue. When we look at GE, we look at the number of units. They’re actually billed on a per-unit basis. So that’s how we measure our success, more so than looking at the number of tons of cargo.”

However, the port still does a healthy bit of export in the form of lumber products that are shipped to the Caribbean. All types of wood products, such as plywood, fence board, posts, timber poles and rolls of paper ship out of Port Pensacola, along with some steel products. But lumber is the primary commodity, and Sapphira Shipping of Savannah, Ga., has been a port customer for close to a year now, its business growing each month.

“I think they’re at 24,000 tons total that they’ve exported,” Mathis said. “And the principals have many, many years of experience in Caribbean trade, so they’re very savvy with what they’re doing and their results have proven that as well.”

That’s not the only type of cargo, though. CEMEX moves bulk cement products for local construction and road building projects, Martin Marietta Aggregates imports aggregate rock from the Bahamas, which also goes toward local construction, and the port has been successful in exporting gondola rail cars to Columbia for the Columbian coal trade.