China to the Rescue

Metro East proponents of the distribution center strategy for economic development are banking on the year 2015 - and an assist from China - for a big score.

That is when new, larger locks go into operation on the Panama Canal. The Panama Canal Company is building two new sets of locks, widening and deepening navigation channels in Gatun Lake, and building a new access channel from the Pacific Ocean, so that today's larger freighters can use the canal.

The expanded canal will let large freighters from China bypass Los Angeles-Long Beach, CA, and other clogged west coast ports and head for the Gulf of Mexico and the east coast of the United States. St. Louis and New Orleans interests have teamed up to snare a big chunk of that business.

Gary LaGrange, president and CEO of the Port of New Orleans, described the steps that St. Louis and New Orleans are taking to capitalize on the expected boom in Chinese shipping while speaking at a recent Freight Industries Opportunity Forum in Collinsville, IL.

Two years ago, the Port of New Orleans made the Tri-City Regional Port its sister port. Together, they are working to develop contain on barge services. While river barges traditionally have been used for bulk shipping - such as sand or grain or other products that can be poured, unpacked, into barges, most of the freight that comes to the United States from China is packed in shipping containers. New Orleans and the Tri-City ports are working to build services that can place shipping containers on barges for movement up the river and them transfer them from barges to trucks or railroads for movement east or west.

New Orleans opened its first container terminal in 2004 to unload containers from ocean freighters. That terminal can handle 366,000 TEUs a year. TEUs, twenty-foot equivalent units, are the measure of the capacity of freighters and terminals based on the 20-foot-long container as the standard unit. New Orleans currently is building a second terminal that will almost double its capacity, and has drawn up plans for a third terminal to increase capacity to 1.36 million TEUs a year.

"This is a real opportunity for St. Louis," said Dan Mecklenborg, senior vice president for Ingram Barge Company, the largest dry cargo barge operator in the nation. He said two layers of containers, 24 containers per layer, can fit on a standard barge; three layers, "if you can figure out the anchoring."

Terry Stieve, senior vice president at Colliers Turley Martin Tucker, a commercial and industrial real estate broker, noted that St. Louis has the infrastructure to compete in the intermodal freight business: six Class 1 railroads, three switching railroads, five rail-to-truck intermodal terminals, rail service to 48 states, and canal service to 33 states and three Canadian provinces.

Despite the area's advantages, St. Louis has not done much as an intermodal hub, Stieve said, and he called on everyone at the meeting to start working to make it happen. Clayco's planned Discovery Business Park in Dupo, IL, he said, "could become an intermodal park."

Developer TriStar Business Communities launched the idea that metropolitan St. Louis could become a major regional distribution center for consumer products when it began developing Gateway Commerce Center in Madison County, IL, in 1997. The early success of the project, which now includes over 9.3 million square feet under roof, prompted the development of the neighboring Lakeview Commerce Center, the Sauget Business Center, and now the planned Discovery Business Park. Since 1998, 40 percent of all industrial buildings constructed in metro St. Louis have been built in these Illinois business parks, Stieve said, and the average industrial building constructed in Illinois is nearly twice the size of the average industrial building erected in Missouri.

Recently, however, real estate industry professionals have warned that metro St. Louis is losing - or has lost - the race to be a regional distribution hub.

Stieve warned that St. Louis "is getting bracketed" by Chicago, Memphis, and Kansas City, the latter because of the development of a major rail-to-truck intermodal terminal linked to the Port of Houston. J. Patrick Reilly, senior director, Gateway Commercial/Cushman & Wakefield, told a recent gathering of real estate professionals that the wholesale movement of manufacturing out of the United States in the last decade has fundamentally changed logistics models and already it has left St. Louis behind. Going forward, successful regional distribution hubs will be "where there is a rail connection to a deep water port, and St. Louis does not have that," he said.

Tim Cantwell, director of Mid-America St. Louis Airport, said, dismissed any talk that urban competition to distribute Chinese products is over. "It is just the end of the first inning, not the game." He said that development of container on barge services from New Orleans could compete with rail connections, such as Kansas City's rail connection to Houston.

The barge industry, however, has talked about container on barge services for decades without doing much about it. "We are interested in it, if metro areas can make it work," Mecklenborg said. He speculated that it would take commitment from a Wal-Mart for a multimodal logistics system that includes barges to work.

Paul Wellhaussen, president of Lewis & Clark Marine, laid out the steps that he said were necessary for metro St. Louis to succeed as a multimodal hub with container on barge service. "We need a regional master transportation plan, public-private partnerships, and aggressive marketing of our great transportation assets," he said.

"The problem is that before, these discussions were kept in the barge industry. Now that we got it out there, we can get something done," Cantwell said.

The Freight Industries Opportunity Forum was the second of four multimodal workshops planned and sponsored by Mid-America St. Louis Airport and the Tri-City Regional Port District.

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