US Ports must become supply chain authority

Ports must step up to influence supply chain efficiency as the US becomes a top petrochemical exporter in the global markets, a supply chain expert told Petrochemical Update.

US Ports must collaborate and facilitate supply chain improvement locally if US is to be a top global market. Image: South Carolina Ports Authority

“In many cases, I think people view ports as just catching or sending cargo out. We can’t operate and grow our business that way. We must ourselves be supply chain experts,” said Paul McClintock, chief commercial officer and senior vice president of sales and marketing for the South Carolina Ports Authority (SCPA).

Supply Chain Authority

The SCPA recently initiated the Supply Chain Authority locally, an internal consulting service offering resources and expertise to assist its customers in improving their supply chains.

The Supply Chain Authority represents an internal team working across port functions – operations and terminals, commercial and economic development, information technology – to provide a customer-centric process focused on understanding individual companies’ unique logistics challenges.

The exploding plastics and resins growth in the US is a great example of how ports can influence the supply chain, McClintock said.

“We are offering the same service for manydifferent products. It is about collaboration and facilitation,” McClintock said. “How does a company like Samsung, who is putting up a big facility in our small state, decide to come here and really put together a world class supply chain? That is what we do. We help companies do that.”

SCPA has made tremendous strides to prepare for the incoming flux of plastics and resins exports from the US Gulf.

From bagging and loading

“For 25 years of my career, I was involved in doing container business in the Gulf and recognized that there had always been an issue for exporters to do business there. I knew we had to create a supply chain quickly here that can efficiently and effectively handle that business coming from the US Gulf, and that meant involving every aspect of the supply chain.”

The Port of Charleston got a head start on the game servicing its first railcar from the US Gulf in 2011 and then began making tremendous efforts to grow and support this business.

The Port of Charleston is now servicing 17 import and export plastic resin companies and has seven bagging and transloading facilities. The facilities are operated by four companies which include Frontier Logistics, Midstates, A&R Bulk-Pak and Wyse Logistics.

“We are spending a lot of time to try to expand that,” McClintock said. “The best way to expand it is to attract companies to invest in infrastructure here locally“Exporters can’t just decide they want to do business somewhere. There must be a company there to handle it. And these receiving companies must believe that the business is coming and that their investment is going to pay off,” he added. 

Since 2011, SCPA has 11 active exporters sending railcars to Charleston for loading.

One of the benefits, SPCA did not expect was the import advantage, so imports of polypropylene (PP), polyethylene terephthalate (PET) and purified terephthalic acid (PTA) require the same infrastructure as exporters.

“One of the things the transloaders in Charleston have done is attract the importers, and this is important as they can turn the boxes back around quickly,” McClintock said.

To Truck and Rail

Rail rates for resins have since been reduced by 50% since the port became actively involved with developing the supply chain in 2011, McClintock said.

“These things happened because of our direct involvement and working with the railroads. We are now dual served. We have facilities here that are on both railroads, so we have competition among the railroads now. We have competition among the bagging facilities as well,” McClintock said.

SCPA has also worked hard with the trucking companies to make it more efficient for them to move the product locally.  

“We want to see trucks turn at least eight times a day, so we have had to work with trucking companies to make sure our gates are open for the appropriate hours,” McClintock said. “We have had to make sure that once they get into the terminal, we handle them with efficient operations."

“None of this business of moving resins to Charleston, the 7 operations, the 4 facilities, the rail rates, the trucking improvements, or the new projects we are working on would have happened without our absolute direct involvement,” McClintock said.

Collaborate and Facilitate

The SCPA Supply Chain Authority also works with partner organizations and agencies in the state and region that customers may find difficult to access on their own.

“We have facilitated some of the investment here by connecting investors with people who want to build facilities,” McClintock said. “Everything, from A to Z, we have been involved in and facilitated. These are not port investments; we are simply involved to facilitate the supply chain.”

“When it comes to something as basic as plastic, you either have the best supply chain in the world or you are subject to losing your business,” McClintock said.

“We must everything perfect to capture this export business. This is a low value, low margin, high volume business and every piece of the supply chain has an important impact. The supply chain must be efficient, not just as compared with other US ports but as compared to the global markets,” McClintock said.

Plastics and Resins

Rapidly growing U.S. ethylene production and investment in new polyethylene (PE) capacity will increase North American PE production to more than 56 billion pounds by 2020, up from about 44 billion pounds in 2015 as supply grows faster than domestic demand, according to Petrochemical Update’s US Polyethylene Export report.

U.S. PE production will exceed domestic demand, adding up to 6-9 billion pounds of excess inventory for export through 2020.

But PE is not the only resin growing at rapid pace, polystyrene (PS), polyvinyl chloride (PVC) and polypropylene (PP) are also skyrocketing. Analysts predict that eventually nearly half of all resin produced in the U.S. will be exported.

By Heather Doyle