Driving down South Carolina’s interstates, you might think this is the warehouse capital of the world. Ain’t so. Fact is, South Carolina is losing badly the race with Georgia in attracting large, import-based distribution centers, such as Home Depot and Walmart.

As a result, traffic at the port of Charleston plummeted 37 percent
from 2004 to 2009, dropping it to ninth in the nation from fourth.

During the same time, shipping at the port of Savannah rose 42 percent, increasing its rank in the nation from fifth to fourth.

Charleston’s slip means that, despite its prime location on the East
Coast, the state has failed to create distribution jobs that were
within reach, experts say.

Distribution centers now provide about 34,000 jobs in the state, but that number could have been more.

“We weren’t as aggressive as we should have been,” said Jim Newsome, who took over as the port’s president in September.

It’s not just the port that has struggled with distribution centers.

The Midlands lags behind other regions in landing distribution centers despite some recent successes by a private developer.

And a huge, 1,322-acre “land port,” planned by the sheik of Dubai for
Orangeburg County, is on hold until the economy here and in the United
Arab Emirates improves.

But a chance for a do-over is coming.

In 2014, a widened Panama Canal will open, bringing a tsunami of
manufactured goods from Asia to East Coast ports for the first time.
And state officials are ramping up efforts to attract mega-warehouses
to be ready when those ships come here, instead of the West Coast.

“This will be the most significant event since the start of
containerization,” Newsome said. “And the state is now attuned to that.”

CHARLESTON’S DROP

South Carolina’s problems in recruiting distribution centers began in the late 1990s, based on a common misconception.

Distribution centers drive shipping, not the other way around.

But the port of Charleston had focused on courting and retaining
shipping firms, rather than working closely with state and local
officials to recruit customers – the large retailers who would go on to
build or lease huge distribution centers to get their goods to the
then-exploding Southeastern market.

While state and port officials quarreled over a new terminal and busied
themselves with the needed work of dredging and building a new Cooper
River bridge, Georgia and other states were getting busy in acquiring
land and building infrastructure.

Meanwhile, with the support of their state and local governments, the
port of Savannah and the twin ports of Norfolk and Suffolk, Va., worked
with developers to nail down key property along nearby interstate
highways, improve interchanges, install infrastructure and lay the
foundation to reel in the distribution center expansion to come.

As a result, Savannah landed the lucrative 1.5 million-square-foot Home
Depot distribution center. It also boasts Walmart, Target, Sears/Kmart,
Lowe’s and IKEA.

Ships followed.

Traffic to Charleston dropped, and shipping to Savannah skyrocketed.

The loss of the import race affects exports as well. All those ships coming in fill up before they leave.

From 2004 to 2009, 20-foot containers hauled into and out of Charleston
plunged to about 1.2 million a year from nearly 1.9 million, while
Savannah’s traffic spiked to 2.3 million from 1.7 million.

“We lost our competitive edge,” Port of Charleston spokesman Byron Miller said.

HARD TIMES

While the state pledges a renewed push to attract distribution centers, some quietly question whether that effort is worth it.

Generally, the centers pay low wages – in the $10- to $15-a-hour range.
And the distribution centers, unlike large manufacturers like Boeing,
don’t have suppliers and other spinoff industries.

“Distribution centers are important,” said Jim Gambrell, Columbia’s
economic development director. “But the return on investment doesn’t
rank up with an advanced manufacturing center. A distribution center
doesn’t create wealth.”

But these are hard times – South Carolina has the country’s
fourth-highest jobless rate at 12.6 percent – and a job is a job is a
job, USC economist Doug Woodward said.

“We can’t seem to keep up with manufacturing, so we have to distribute what other people make,” he said. “It’s a trend.

“And Georgia figured it out before us.”

Distribution centers are best suited for rural areas, he said. Counties
like Orangeburg, Florence, Dillon and Dorchester, with low-cost land,
cheap labor and good interstate access, are ripe for distribution
centers.

“We have to serve the population that we have,” he said. “People in
some areas will line up for these jobs. It’s better than working
retail.”

OPPORTUNITIES

Deepal Eliatamby is president of Alliance Consulting Engineers, a firm
that specializes in infrastructure – water, sewer, roads – for
distribution centers.

He said state, regional and local governments have to work more closely
together and with private developers to get more modern buildings and
facilities – “product” he calls it – in place to attract the kind of
distribution centers that drive imports and create jobs.

Already mega-centers are being built around Jedburg in the Lowcountry
by companies like Rockefeller Group, Johnson Development and Ross
Perot’s Hillwood Investment Properties.

The port last week weighed in with a $15 million grant to continue that
momentum. About half of the money went to Tire Kingdom’s parent, TBC
Retail Group, for site preparation and moving expenses for a 1.1
million-square-foot facility in the Rockefeller park.

The rest of the money will go to improve an intersection on I-26,
opening more land around Jedburg to development and making access
easier for firms already located there.

The developments around Jedburg build on a few other successes around
the state, such as QVC’s 1.4 million-square-foot distribution center in
Florence, a 1.8 million-square-foot expanded Target center in Lugoff
and Adidas’ giant 1.9-million-square-foot facility in Spartanburg.

“We have some incredible opportunities ahead,” said Eliatamby, who
heads the distribution “cluster” for New Carolina, a
research-and-education group that works to makes the state’s industries
more competitive.

“But we’ve got a lot of work to do.”

Short of direct cash incentives – “You have to be careful with that,”
economist Woodward says – state, regional and county recruiters should
assist private developers by offering tax incentives, worker training
programs and infrastructure assistance, the experts say.

Those have all been offered piecemeal in the past, and the state has
scored some successes, such as landing Adidas and Starbucks
distribution centers.

“But now there’s a difference,” said Jack Ellenberg, the S.C.
Department of Commerce’s deputy secretary for new investment. “We have
new management at the port and a cohesive statewide team.”

That means the port, the Commerce Department, local governments and
developers all are pulling together to recruit distribution centers by
showing retailers that they can get up and running quickly.

“That means product,” Ellenberg said. “Speculative buildings. Land permitted and ready to go. Infrastructure.”

Adds the port’s Miller, “Some would say that our neighbors have beaten us and the game is over.

“But it’s not over yet.”

Source: TheState

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