Up and down Philadelphia’s Delaware River terminal sites there is redevelopment, upgrades and even a new berth soon to be built – the first in fifty years. All reasons for the region’s shippers and shipping community to be optimistic about the future.
The Port of Philadelphia — now operating under the moniker PhilaPort — is located on the Pennsylvania side of the Delaware River, about 90 miles upstream from the sea. It is a location that can either be a handicap or advantage. After all, for an ocean going ship, 90 miles is a long push to find a pier. Alternatively, right outside the terminal gates is a location in the middle of one of the densest extended metropolitan areas in all of North America. It’s a place where the freight is close to the DCs (distribution centers) that serve the region and ultimately put product in the hands of consumers. It all comes down to making certain port proximity to consumers trump transit. That’s both the challenge and motivation behind PhilaPort’s ongoing efforts — $550 million worth — to make the port efficient and competitive with other East Coast ports.
On December 15th, 2023, the CMA-CGM’s 14,400 TEU containership, J. Madison, docked at the Packer Avenue Marine Terminal — the largest vessel to ever call in Philadelphia. Not that long ago, it would have been all but impossible for a boxship the size of the J. Madison to safely make its way up the Delaware River to the Packer Avenue Marine Terminal. But with the completion of the Delaware River dredging project in 2022, as the J. Madison’s voyage attests, the big ships are calling (and at this writing a 16,000 TEU ship is scheduled to call on March 6th) and there are lots of developments a foot in PhilaPort.
Opening the Door
Before going forward to the array of projects underway in PhilaPort, it is probably worth taking a step back and considering the impact of the dredging project. The 102 mile Delaware River Main Channel Deepening project deepened the federal channel to 40-45 feet, which with an additional 6-feet that comes with the tides. This gives the port a working depth of up to 51-feet, again depending on the tidal bubble. However, one problem with playing the tides is that the tidal bubble dissipates as it travels upstream, and the Port of Philadelphia is 90 miles from the sea mitigating the tidal advantage.
Nonetheless, the dredging project and port investment has opened the door for “big ship” calls — line haul container ships — for the Port of Philadelphia with the results now being measured in rising TEUs. In 2022 the port posted a record throughput of 762,632 TEUs. And while the TEUs were slightly off to just over 743,000 TEUs in 2023, there is optimism throughout the Port community that there is real growth potential at PhilaPort. An optimism that the port has the ability to compete with other East Coast ports for market share. Shippers are by nature port-blind. Efficiency, ease of use and cost are keys to the choice of ports. These are the hallmarks of the business that will bolster TEU numbers.
To put the PhilaPort numbers into context, the main reasons for the downturn have more to do with global supply chain disruptions. The key examples are ongoing Red Sea disruptions with the Houthis and the low water levels in the Panama Canal.
Take the aforementioned J. Madison call. The Madison is part of the CMA-CGM Columbus service, which provides service to and from South China and Southeast Asia via the now beleaguered Suez Canal. Nearly all box carriers using the vital Suez Canal route into the Mediterranean Sea, have had to reassess the route options — all of which takes more ships and more time to accomplish the same route goals.
And there was a general market correction after the import boom in 2022 in nearly all North American ports. As Sean Mahoney, Director of Marketing at PhilaPort explained, the low water problem in the Panama Canal didn’t have a major impact on the TEU throughput, the Houthis disruption in the Red Sea and the Suez Canal connection did, noting, “Definitely with the Houthis, we suffered right at the end of the year [2023]. Instead of putting us over the top and being flat, we were down about two, three percentage points.”
Philly Freight
Although TEUs are the commonplace measurement for ports, there is a great deal more to consider in assessing the Port of Philadelphia. PhilaPort is one of the most complex on the East Coast because of a highly diverse commodity mix. For instance, the port is the largest in the US for refrigerated cargo, but it is also a major entry point for autos and forest products.
The refrigerated cargo is Philadelphia’s calling card and what was once a seasonal enterprise is now year round. “We used to be a seasonal business in Philadelphia, it’s year round now when it comes to perishables.” As Mahoney illustrates of the seasonal mix, “We get mangoes early in the year. You get the early cherries from Chile and then Argentina and you get the grapes earlier from northern Brazil before the Chilean season starts, and then towards the summer months, you get the citrus from South Africa. Now we’re getting the mango, we’re getting the clementines from Morocco. It’s really become a year-round business.”
The success of the perishables business has led to a demand for more reefer warehousing space from temperature-chilled to hard frozen. The port received a $246 million grant from the Commonwealth of Pennsylvania in 2022 and is using the funds to build a 150,000-160,000 sq/ft temperature-controlled warehouse on a cleared Packer Avenue site that previously had older warehouses.
But while Philly is dominant in refrigerated freight, it is “very interested in growing traditional cargoes” like furniture and forest products, Mahoney said. And a $20 million grant was awarded to build a 100,000 sq/ft warehouse dedicated to handling forest products.
And the forest products business has been brisk and diverse, “We’re doing a lot of eucalyptus pulp, but we’re also doing some dimensional lumber… [And] boxboard…is still very strong. Boxboard goes into the making of Amazon boxes. So, it’s a real growth market and we believe in the forest products…I think there is a general push to get away from polymers and try and use more recyclable, more sustainable products like boxboard,” Mahoney said.
Auto imports are another segment of the port’s cargo portfolio that has done well in recent years. Last summer PhilaPort’s SouthPort Marine Terminal celebrated the milestone of handling two million cars. And in 2023 the SouthPort Marine auto terminal set a record by handling 250,000 vehicles. Most of the vehicles are Hyundais and Kias handled by Hyundai’s Glovis America auto processing subsidiary. The terminal has grown from 88 acres and one VPC (vehicle processing center) to 285 acres and two VPCs. And recently it was announced that for the first time in over 50 years, Philadelphia will build a new berth. Two years ago, the Port secured $50 million in infrastructure funding to build a new berth at the SouthPort terminal. The berth is designed to be a 1,000 feet but the Port has a permit for 2,000 feet. In the first phase the berth will be built to handle autos but in the future the berth could also handle breakbulk, and, in the future, it could even handle container gantry cranes.
Destination 2040
PhilaPort has and is aggressively addressing the infrastructure challenges that come with being a port located far upstream of the sea and spread along a riverfront. The vision of the future which is encompassed in the Destination 2040 plan outlines a strategy already in play. The goal of PhilaPort is to move more freight, both inbound and outbound (PhilaPort is trying to develop opportunities for more export freight in the region) that will ultimately lead to much higher TEU throughput than even the 760,000 plus recorded last year. How much more? Maybe twice or even more than the existing volume. But to achieve that goal the key is densification. Over the years PhilaPort has been strategically adding acreage — a process still underway. The additional acreage, including that of near dock, has enabled the port to reshuffle usage to create greater efficiencies. But ultimately densification means stacking higher and moving containers and with greater velocity — enabling the facilities to move more boxes through the existing port footprint. And it’s a process already well underway at PhilaPort which offers the region’s shippers a reason to be optimistic about the future.
