AS PORTS ON both coasts work feverishly to handle record-breaking levels of import and export cargo, one American port stands out for its ability to expand to meet the current demand. South Carolina invested more than $2 billion in recent years in the Port of Charleston to increase capacity and accommodate the increasing size of mega container ships. The changes include modernizing the existing Wando Welch Terminal, establishing the new state-of-the-art Leatherman Terminal, and deepening the Charleston Harbor to 52 feet.
The new Hugh K. Leatherman Terminal opened in March of 2021 and it is the first new container terminal to open in the United States in more than a decade. The initial phase of construction adds an annual capacity for 700,000 TEUs through one berth. When completed, the terminal will have three berths and an annual capacity of 2.4 million TEUs. The harbor-deepening project will give the Port of Charleston the deepest harbor on the East Coast.
As a result of these infrastructure investments, the Port of Charleston has seen an unprecedented increase in volume. It went from around 1 million TEUs in 2019 to 2.8 million TEUs over the 12-month period ending in July of this year! This is an extraordinary rate of growth and there are more port improvements to come.
Satellite photos of the Port of Charleston reveal undeveloped land that offers the potential for further development, which underscores the fact that this area is not close to being fully utilized. All indications are that the growth at the Port of Charleston is not a shortterm phenomenon. We may in fact be witnessing a long-term restructuring of freight volume at ports along the East Coast. That translates into a long-term demand for truckload capacity in the Charleston market. The influx of cargo caused by the expanded port activity means that there is an emerging market for all forms of truckload carriers—dry van, reefer, and flatbed.
The Story Told by Rate Data: Spot and Contract Rates Are Converging
The demand for trucks in the Charleston market is by itself vital news to brokers, but there is another side to this story—rates. By mining data from hundreds of freight companies and applying the ability to separate spot rate data from contract rate data, we can see something remarkable occurring here. Rates in the Charleston market for spot loads and contract loads are converging.
Even though weekly rate averages will always exhibit a degree of volatility due to an assortment of factors, such as weather, the overall movement so far in 2022 indicates that spot market rates and contract rates are reaching common ground.
What does this mean for brokers? It means that the Charleston market offers a rare opportunity where demand for truckload freight capacity is high and expected to remain high, plus rates are stable and expected to remain stable. Given the growth of the port and the analysis of the data on rates, there’s an opportunity not only for volume growth, but also for profit growth. There is a steady demand for trucks to haul loads in and out of this market, and there are good rates for taking the freight.
If this market isn’t on your radar screen as a broker, it should be, because it’s poised for a sustained period of growth. If you can establish a reputation there with expertise known for running lanes in and out, there is a tremendous opportunity to grow organically with the Port of Charleston. The earlier you get on board with that, the faster you’ll grow your company’s volume and the bottom line.
In the end, if you’re not doing business in Charleston, you need to ask yourself why.