Memphis readies itself for Octobers first container ship

The first 5500 containers of consumer goods will arrive at the Fairview Container Port on October 31st, 133 hours later a good number of those containers will find a southern welcome that could change the economic dynamic in Memphis, Tennessee.

The Memphis Commercial Appeal sent correspondent Jane Roberts to the Northwest to get a first hand look at the Pacific port that is going to have such a huge impact on the American south.

Their website features her findings about Prince Rupert, the Fairview container port and the infrastructure that CN is building in Memphis, three unique pieces of a puzzle, all set to come together at the end of this month.

Far-west Canadian harbor closes distance between Memphis, Pacific markets
By Jane Roberts (Contact)
Memphis Commercial Appeal

Sunday, September 30, 2007

PRINCE RUPERT, BRITISH COLUMBIA -- On the foggy, rainy shores of this outpost in northern Canada, a statue of Charles Hays stands like a sentry over the comings and goings of what until now has been a quiet Pacific fishing and logging town.

Nearly 100 years ago, Hays, an American, was in charge of building the grand trunk rail line across northern Canada, what was to be major link in the silk trade between China and Europe.

He chose Prince Rupert because it not only had the deepest warm-water harbor of any city on the West Coast, it was also closest to China.

When the line petered out after Hays went down with the Titanic, the little town with the deepest natural harbor on the continent faded.

On Oct. 31, when the first Asian shipping vessel docks in what Canadians call The New World Port at Prince Rupert -- loaded with 5,500 containers of consumables, electronics, clothing and all manner of goods North Americans buy every day from China -- the whole economy will change.

The magnitude will ripple across the continent -- arriving in Memphis 133 hours later by train -- in an uptick at Canadian National's Intermodal Gateway Memphis terminal in Frank C. Pidgeon Industrial Park.

In the first year, CN expects 30 percent of the shipping containers -- or 75,000 -- will come through Memphis for storage and shipment across the region.

By the time the port's second phase is built in 2011, Prince Rupert will have capacity for 2 million containers. About 300,000 a year could be headed to Memphis, more than doubling CN's container business in Memphis.

"It's the opening of a brand-new trade route between North America and China," said John Moore, president and chief executive of the Memphis Regional Chamber. "That's very significant for us because China is Tennessee's No. 3 largest trade partner.

"As that extra capacity comes online, it allows for more expedient shipping of goods arriving from China, which is good for our distribution companies who will be managing more and more of these containers. That means more revenue, and more revenue generally means jobs."

Quite suddenly, Memphis and Tennessee will have cheaper and faster access to Asia, which experts say will do more to recruit business here than almost any combination of other factors.
Prince Rupert is nearly 58 sailing hours closer to Far East markets than Long Beach and Los Angeles, giving shippers the equivalent of an extra round-trip a year.

Transit times will be so quick, fishermen in Prince Rupert figure they will be able to ship their famous halibut fresh to the center of the United States.

"We think there will be tremendous market for beef and pork from the prairies of North America headed to Asia," said Barry Bartlett, spokesman for the Prince Rupert Port Authority.

"Really, anything going to Seattle from here would be in Memphis by the time the load gets to Seattle."

The reason is that Prince Rupert will unload directly from ship to train.

"That means there won't be any trucks going through the city," Bartlett said. "That takes a link out of the supply chain."

Without the congestion and the time it takes to get a load of seafood from Vancouver to Shanghai, Bartlett says transportation costs will go from 17 cents a pound down to 6 cents.

"We're creating opportunities in other potential markets for value-added products,'' he said.
With oil trading at $83 a barrel and competition for global markets rising, CN says Prince Rupert has been an easy sell.

"The reception has been outstanding," said Doug Hayden-Luck, head of international intermodal sales and based in Calgary. "The customers we've talked to in Asia understand totally the value proposition that the new service brings."

CN, the only railroad serving Prince Rupert, has signed contracts with COSCO, the second-largest ocean shipping company in the world, for 25 percent of capacity. Other contracts are expected within weeks after CN announced Thursday it was buying a major portion of a Chicago railroad, allowing it to shave a full day off transit time from Prince Rupert to Memphis.

"All in all, Prince Rupert is going to bring this area a tremendous amount of business," said Pete Aviotti, special assistant to Memphis Mayor Willie Herenton. "This is going to open the eyes to a lot of new industry as far as moving to Memphis because freight will be received here a lot quicker than in other parts of the country."

By 2020, the Prince Rupert Port Authority expects 44 million shipping containers will come through the West Coast ports. British Columbia's goal is to get 17 percent or 9 million. Nearly half of that will come through Prince Rupert, based on current projections.

In Memphis, there's reason to think cotton could ship more efficiently through Canada.

"We haven't done it yet, but we're studying it," said Billy Dunavant, chairman of Dunavant Enterprises. "Trimming a whole day off the transit between Chicago and Memphis is a big thing."

Since the $170 million port opened in mid-September, Bartlett's been giving port tours nearly full time to Asian journalists and businesspeople, selling them on Rupert's strategy and mind-set.

"CN has purchased 50 locomotives and 2,200 railcars dedicated only to Prince Rupert," he tells a handful of journalists from Asian shipping magazines and newspapers. "We're prepared for ships carrying 12,500 containers. They are so big they haven't even been built yet."

Maher Terminals, the company running the port, also runs the Port of New York and New Jersey, two of the biggest in the United States.

Because Prince Rupert is such an isolated part of the world, there is very little congestion both in the harbor and on the rail lines heading to interior markets, which the port authority says will trim days off the storage and wait times shippers experience coming through Long Beach and Los Angeles, the busiest port in the United States.

CN has capitalized on that by investing $30 million in the port itself and $25 million to lower bridge decks and make its tunnels higher so it can double-stack containers on its cars through to Chicago.

It has spent more than $100 million in Memphis in the last few years, calling Memphis its most important U.S. city behind Chicago for its ability to get goods to and from the populated east and midsections of the country.

"We have ample capacity in Memphis and that is the key for us," said Hayden-Luck, who said competitors in Memphis, including Union Pacific and Norfolk Southern, are running out of space.
"All these guys in a sense are congested and need to build additional infrastructure to take on more business," he said. "We did that two years ago. We're ready."

-- Jane Roberts: 529-2512