The expanding program allowing many Latin American perishables to enter the United States through Southeast ports is a transformative advance that should continue to grow in scope and commensurate savings, according to a commercial banking expert on logistics.
“This is a game-changer for South Atlantic and Gulf Coast ports,” Taylor Howerton, senior vice president and ports and logistics industry manager in the commercial banking sector of Atlanta-based SunTrust Bank, told the American Journal of Transportation.
Indeed, the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service already has added several ports to its in-transit cold treatment pilot program since rolling it out four years ago at a pair of South Florida seaports.
This year’s additions to the program include Central Florida’s Port Canaveral, joining such Florida ports as PortMiami and Port Everglades, both of which were in on the 2013 launch, as well as Port Manatee and Port Tampa Bay, both on Central Florida’s Gulf Coast, and North Florida’s Port of Jacksonville, each of which gained program approval in 2015.
Whereas the pilot program has been championed by the not-for-profit Florida Perishable Trade Coalition, beyond the Sunshine State, the Port of New Orleans garnered federal approval this May as well, while the Georgia’s Port of Savannah and South Carolina’s Port of Charleston have been cleared for participation, respectively, since 2014 and 2016.
In the May announcement from the Port of New Orleans, the port’s president and chief executive officer, Brandy O. Christian, termed pilot participation “a significant gain,” pointing to its potential for presenting options to reduce transit time from origin to consumer compared with traditional routings via U.S. Northeast ports.
Before the pilot program, USDA, as a safeguard against unintended importation of hitchhiking fruit flies and other pests, required perishables from Latin America to arrive by ship at U.S. ports in cooler climates – north of the 39th parallel – meaning produce has a long history of streaming into ports such as those of Philadelphia, Baltimore, New York and New Jersey, and Wilmington, Delaware.
By deploying modern technology in treating produce for 15 days when in transit on ships from Latin America and allowing it to enter ports farther to the south, five to seven days typically can be shaved off overall transit times to Southeast consumers who previously had to wait for the goods to be trucked back southward. Total transport cost savings have been pegged at as much as $3,000 to $3,500 per container.
“Obviously,” SunTrust’s Howerton said, “if you can eliminate that transportation move of trucking that product down to end destinations that are in the Southeast and instead have an all-water service effectively move the product to a South Atlantic port or a port in Florida, you reduce the total landed cost of the shipment.
“It’s been aligned with technology as well,” Howerton added, noting progressive capabilities for in-transit treatment and the development of suitable infrastructure in and around Southeast ports, from large contingents of on-port refrigerated container racks and chassis plug-ins, known as reefer plugs, to a burgeoning number of on- and near-port cold storage facilities.
Also, he said, ports are advancing marketing strategies aimed specifically at attracting such cargos, one example being PortMiami’s “Faster Is Fresher” campaign.
And others points to environmental benefits achieved because fewer truck miles driven translate to decreased harmful emissions.
Howerton said he believes it may not be long before the pilot program moves forward to a more permanent status.
“They [USDA] would not be adding more ports unless they’re having success with the ones that they’ve been monitoring closely,” he said. “If one solidifies the sustainability of the pilot program, it’s probably moving beyond what they might define as a pilot phase into a more permanent phase as well.
“You wouldn’t think they’d be adding additional ports if they had concerns about the initial phase,” he said. “So I would think it’s probably likely at some point that it would move from pilot to more permanent, because they have to recognize there’s a lot of capex [capital expenditures] going into the systems on the ports, as well as private funding of cold storage capacity, which is expensive warehousing to develop.
“It’s a tremendous opportunity for more capacity to be built in the Southeast,” Howerton added. “You wouldn’t want to roll back something like this, given the amount of investment that’s going in.”
In fact, Howerton said he anticipates the roster of approved port participants to grow, along with the list of items and countries the program encompasses.
Commodities currently included in the program are blueberries, citrus and grapes from Peru; blueberries and grapes from Uruguay; and blueberries, apples and pears from Argentina. When the program began in fall 2013, it only included imports into PortMiami and Port Everglades of cold-treated blueberries and grapes from Peru and Uruguay.
While this business is expected to keep growing at ports to the south, more directly serving consumers in the increasingly populous Southeast, ports of the Northeast should continue to receive plenty of perishable cargos.
“There’s certainly still business,” Howerton said. “Just given the dense population in those areas in the Northeast, there’s going to be plenty of opportunity for those ports. There’s going to be plenty of business for everyone; it just might not be in every single segment.”
Howerton said he anticipates overall U.S. demand for fresh produce will keep rising, not just on the part of supermarkets but also fast-food establishments and school cafeterias.
“We certainly see demand growing for fresh fruits and vegetables as consumers tend to gravitate toward healthier items as they become more educated and health conscious,” he said.