South Carolina: Invested in Logistics Excellence
Businesses reap big benefits when they locate manufacturing facilities in South Carolina, an established leader in logistics, supply chain, and distribution.
South Carolina’s economy is thriving like the palmetto palm trees that line the state’s coast. In 2011, more than 20,000 new jobs were created in the Palmetto State, representing a $5.2-billion investment.
The state’s logistics sector helps fuel this powerful economic engine. In the past year, South Carolina has seen $229 million in capital investment and thousands of jobs created by distribution and logistics companies alone.
“Transportation, distribution, and logistics are vital to South Carolina’s economy,” says South Carolina Secretary of Commerce Robert M. Hitt III. “The state recognizes the need for constant investment to maintain the sector’s vibrancy and help businesses grow and compete.”
To support that effort, South Carolina’s Department of Commerce has joined the newly formed TDL Council, a partnership program led by New Carolina, South Carolina’s Council on Competitiveness. Other champions of the program are South Carolina Department of Transportation Secretary Robert St. Onge, South Carolina State Ports Authority CEO Jim Newsome, and Alliance Consulting Engineers President Deepal Eliatamby.
“The Department of Commerce is focused on creating jobs and having an impact through a team approach,” says Hitt. “Building strong relationships helps us make that impact.”
The TDL Council brings together public and private sector leaders to compete for jobs, investment, and industry leadership. The Council identifies and eliminates major industry obstacles to competitiveness, drives solutions to address these issues, and helps direct focused investment of public sector funds. The TDL Council will develop its growth plan in phases over the next several years.
Hitt cites progress on a new port terminal in North Charleston and a boom in distribution center construction as key factors positioning the state for a wealth of potential new port business. This growth will ignite the TDL cluster when widening of the Panama Canal is completed in 2014.
The building blocks for South Carolina’s logistics leadership have long been in place. They begin with geography.
South Carolina’s location in the middle of the Eastern Seaboard makes it an ideal site for supply chain planners and distribution networks. The state boasts accessibility to major East Coast cities and the South’s growing population.
But the state’s ideal location midway between New York City and Miami would count for little if not for the transportation assets that take full advantage of South Carolina’s spot on the map:
- Interstate highways I-85, I-26, I-77, I-95, and I-20, along with another 41,000 miles of state-maintained highways, put trucks on the road in every direction.
On the Road in South Carolina
Thanks to South Carolina’s extensive highway system, shippers can quickly get products on the road to just about anywhere. Five major interstates traverse the state, providing easy access to its many warehousing and distribution hubs.
- Five primary airports give shippers access to a commercial airport within one hour of anywhere in the state.
- Rail service in every metropolitan area enables movement of some 50 million tons of freight across the state annually.
- The Port of Charleston already features the deepest water in the Southeast region, and will serve as an even more important gateway to the world as it deepens its channels to accommodate increased Panama Canal traffic. (See sidebar “Deepening the Waters.”)
But South Carolina doesn’t rely on its geography alone to remain at the head of the pack. The state’s government does all it can to capitalize on its geographic advantages.
“South Carolina is an easy state to work with,” says Bruce Mantz, executive vice president, ADS Logistic Services, an Edison, N.J.-based third-party logistics (3PL) provider that operates a facility in Gaffney, S.C. “Government representatives are accessible and willing to help. The bureaucratic red tape businesses often encounter in other states isn’t a problem in South Carolina.”
On Track with Rail Services
The state’s railway assets—CSX Transportation, Norfolk Southern, and seven affiliated and combined rail lines—are enhanced by an example of outstanding public-private cooperation in the form of South Carolina Public Railways, a division of the Department of Commerce. Like the state’s port authority, South Carolina Public Railways is an enterprise agency and does not receive appropriations from state government.
Established in 1969, the agency’s mission is to provide safe, efficient, and cost-effective rail solutions to facilitate freight movement and contribute to the state’s economic viability.
“South Carolina Public Railways is typically involved in rail-focused economic development projects with the Department of Commerce, the state port authority, and local economic development agencies,” explains Jeff McWhorter, South Carolina Public Railways’ president and CEO. “We invest in these projects if it makes economic sense for us to do so.
“The agency also provides technical assistance and consulting services in railroad matters to state, local, and municipal governments,” he adds.
South Carolina Public Railways operates three common carrier railroads. The Port Utility Commission of Charleston and the Port Terminal Railroad provide switching services to the South Carolina Ports Authority’s terminals, interchanging with Class I railroads CSX and Norfolk Southern. The East Cooper and Berkeley Railroad, a shortline railroad located in southern Berkeley County, serves BP Chemicals and Nucor Steel.
In addition, the agency owns a railyard in North Charleston that is leased to the North Charleston Terminal Company, a CSX/Norfolk Southern jointly owned company. This yard serves MeadWestvaco, a global packaging solutions company with facilities in Summerville and North Charleston, S.C., and Summerville-based KapStone Paper and Packaging. The agency also owns a rail spur at the Eastport Industrial Park in Summerville, a spur line to the Michelin Tire facility in Anderson, and the underlying real estate for a rail line to the BMW plant near Spartanburg.
South Carolina Public Railways is currently developing the $126-million Intermodal Container Transfer Facility (ICTF) on its North Charleston site. “The ICTF will ensure competition among the Class I railroads, benefiting all shippers using the state’s port facilities,” McWhorter says. More efficient freight rail transportation will also reduce truck traffic and highway congestion.
Riding the Rails
Among those taking full advantage of South Carolina’s rail access capabilities is Eastern Distribution, a full-service warehouse management and distribution company. Eastern Distribution owns and operates six warehouses totaling more than 500,000 square feet of space in Greenville, S.C., where the company is based.
With rail service provided by both CSX and Norfolk Southern, the company benefits from access to major national and less-than-truckload carriers. Eastern Distribution receives, loads, and unloads containers from the ports of Charleston and Savannah, Ga.
“As an established company with more than 40 years experience, Eastern Distribution is well-situated to take advantage of shippers’ growing interest in rail transportation as a way to cope with rising fuel prices,” says Terrence Smith, president and CEO, Eastern Distribution.
“We have many long-standing customers because we tailor our services to meet their unique needs,” says Smith. “We are small enough to adapt and large enough to provide any service customers need.”
One Eastern Distribution facility, the 163,000-square-foot Warehouse K, is designed to accommodate trains inside the terminal, shielding high-value goods from inclement weather. The warehouse’s Greenville location is far enough inland that the area is largely protected from shutdowns due to hurricanes or other adverse weather.
All Eastern Distribution’s warehouses are maintained to food grade and, in addition to being rail accessible, are convenient to I-85 and I-26.
Yet another advantage for customers is that South Carolina levies no taxes on inventory.
“Both South Carolina’s business environment and its climate offer great benefits to warehousing,” Smith says.
With such logistics advantages, it is little wonder that some of the country’s most impressive companies are investing heavily in South Carolina. Recent examples include:
Continental Tire the A mericas, a $500-million investment and 1,620 new jobs in Sumter County.
BMW, a $900-million investment and 300 new jobs in Spartanburg County.
GKN Aerospace, a $38-million investment and 250 jobs in Orangeburg County.
ZF Group, a $430-m illion investment and 1,200 new jobs in Laurens County.
“These developments are game-changers for South Carolina,” says Amy Love, director of marketing and communications, South Carolina Department of Commerce. “The state is a great, exciting place to do business.”
ADS Logistic Services illustrates that excitement. Located on a 77-acre site, the company’s Gaffney facility features more than 500,000 square feet of logistics processing area, offering quick throughput with 44 dock doors and a large-capacity containeryard for 350 trailers.
The company has expanded considerably in recent years. In addition to its South Carolina location and two in New Jersey, ADS now operates two facilities in California.
This expansion has allowed ADS to diversify its 3PL offerings. The Gaffney facility, for example, has become a national depot and repair center for Peco Pallet, a leader in the North American pallet industry. ADS handles more than 100,000 pallets per month at the location.
Building Big Business
“The fact that BMW and Boeing have located plants in South Carolina reflects the state’s appeal to global corporations,” says Arch Thomason, CEO of Greenville-based 3PL Sunland Distribution. Thomason and other logistics sector leaders cite several reasons for South Carolina’s attractiveness to some of the world’s biggest and best manufacturers.
In addition to its transportation infrastructure and location, the state offers an outstanding workforce and superior educational opportunities, with particular emphasis on technical skills.
South Carolina generates sufficient business to sustain local companies. Sunland Distribution, for example, is a quintessential South Carolina company that focuses exclusively on the South Carolina region. “We think there’s plenty of business right here,” explains Thomason. “We want to be able to drive to all our facilities. Our strategy is to own South Carolina.”
The company offers specialized services for its South Carolina customers. “We provide warehousing, but we also handle hazardous materials,” Thomason says.
“Our goal is to supply solutions,” he adds. “We find the customer’s pain, and we find their solution.”
Sunland Distribution operates more than two million square feet of warehousing and distribution space in Greenville and Charleston. With more than 200 employees, Sunland serves about 85 clients representing a wide variety of business sectors.
As the largest locally owned 3PL in South Carolina, Sunland embraces four verticals: automotive, chemical, retail, and import-export. “We have become a plant-support company,” says Thomason. “We’re continuing to invest in our infrastructure and—with the addition of our staffing company, Sunstaff, and our transportation services group, Landstar—we can provide beginning-to-end supply chain solutions. This allows Sunland to dive deeper into our customers’ supply chains, providing more services to the same customer base. We want to be a single-source provider.”
Gateway to Everywhere
Access to the rest of the country—and the world—is quick and easy, with airports in every South Carolina region complementing its highway, rail, and port assets. A good example is the Greenville-Spartanburg International Airport, located midway between Charlotte, N.C., and Atlanta on the Interstate 85 corridor.
“Greenville-Spartanburg International Airport is well-positioned within the southeastern United States, and connects it to the rest of the country,” says Nathan Garner, the airport’s cargo program manager.
“This is the commercial service airport for upstate South Carolina,” Garner says. “The airport has one of the longest runways in the Southeast, and expansive and robust infrastructure. It can meet the air cargo needs of companies doing business internationally.”
Among its international cargo benefits, the Greenville-Spartanburg airport offers two federal inspection stations on its property, as well as U.S. Customs and Border Protection in close proximity. The airport also recently opened a Customs Container Freight Station. The net result is speed and efficiency for international shippers.
For domestic freight mover Eleets Transportation, South Carolina represents a land of opportunity.
“Eleets is well-positioned for growth in the South Carolina market,” says Al Steele, the company’s president and CEO. He cites container drayage and domestic truckload opportunities made possible by the upcoming Panama Canal expansion. “We operate facilities at the Port of Charleston, as well as in the middle of the state, with easy access to all major interstates and rail.”
Established as a Florida corporation in 2007, Eleets Transportation has quickly evolved. Revenues reached $120 million in 2010, and the company employs 120 people with sales offices and trucking terminals in nearly one dozen states. The company operates full-service branch offices and truck terminals in both Charleston and Orangeburg, S.C., where it also maintains a warehouse.
Eleets plans to continue its expansion across North America, and has set its sights on international markets through partnerships with non-vessel-operating common carriers and other global transportation services providers.
The potential for growth likewise appeals to Performance Team, a Santa Fe Springs, Calif.-based 3PL with warehouse facilities in Charleston. “Our goal is to double our size, and Southeast hubs are a key component of our plan,” says Cliff Katab, president of Performance Team. “The region represents one of our biggest growth areas.”
Performance Team operates a 350-truck fleet and two million square feet of warehouse space in eight states. The company’s South Carolina site is essential to its goal.
“Our Charleston hub is strategically located on the Eastern Seaboard to serve the north-to-southeast coast region,” says Katab. “And 250,000 square feet of warehousing space extends our distribution and consolidation services.”
The Right Environment
Yet another vital ingredient in South Carolina’s recipe for success is the state’s extraordinary lifestyle. Each region offers something special.
“Upstate South Carolina is a wonderful part of the state to live in,” says Rosylin Weston, vice president for communications, Greenville-Spartanburg International Airport. “It’s the fastest-growing part of the state, with lots of diversity and work opportunities.”
“It’s a charming metropolitan area,” adds Garner. “And those two words don’t normally go together.”
Most important to manufacturers are the state’s economic and workforce advantages.
“South Carolina is a right-to-work state,” notes Garner. “It’s not surprising that many manufacturers are moving to this area. We have a comparatively low cost of living, numerous high-tech industries—including automotive, aerospace, and advance materials—and great educational opportunities.”
Among the region’s educational opportunities is the Clemson University International Center for Automotive Research (CU-ICAR), a partnership program of Clemson University and several automotive companies, including BMW. “It’s a great example of a public-private partnership,” Weston says.
With more than $200 million in commitments, CU-ICAR represents the ultimate public/private partnership, directly fueling a knowledge base critical to the automotive industry. (See sidebar “Driving Automotive Industry Expertise.”)
Such educational opportunities help make a strong labor pool even stronger. “There’s a tremendous workforce in South Carolina,” says Bruce Mantz of ADS Logistic Services. “They are fine, ethical, hard-working people.”
Whether working in logistics, education, manufacturing, government, or some other role, South Carolina’s residents are driving the state’s economic growth.
“Companies like to locate in communities where people are working together for the good of the state,” says Love.
It is no surprise, then, that business loves to come to South Carolina.
For information on featuring your region in an Economic Development Supplement, contact James O. Armstrong at 314-984-9007 or [email protected].
Deepening the Waters
Charleston Harbor has been a key economic driver in South Carolina for more than 300 years. With the deepest water in the region today, Charleston offers a maintained harbor -45 feet deep at mean low tide throughout the main shipping channel and -47 feet deep in the entrance channel. A five- to six-foot tidal lift provides even deeper access for several hours during the day.
In addition to having deep water now, the Port of Charleston is advancing a next-generation harbor deepening project. The U.S. Army Corps of Engineers completed the project’s reconnaissance study in summer 2010 and determined that there is not only a federal interest in the further deepening of Charleston Harbor, but also that it was most likely the best value for scarce public dollars. The project is currently in the feasibility phase, with a commitment from the Corps to an accelerated time frame.
The post-45-foot feasibility study examines the economic benefits and environmental impacts of the deepening project and determines what depth would be recommended for construction. The South Carolina Ports Authority has signed the cost-sharing agreement with the Corps and agreed to accelerate its half of the study cost to the Corps to initiate the work. The Ports Authority will provide around $2 million to the Corps for ongoing work in fiscal 2012.
Source: South Carolina Ports Authority
South Carolina’s Pro-Business Environment
With one of the lowest corporate tax rates in the nation, highly competitive wages for workers, and low unionization, it’s no wonder South Carolina is consistently ranked among the country’s most business-friendly states.
In addition, South Carolina offers a wealth of opportunities to help businesses maintain low operating costs, including:
- A five-percent corporate income tax rate
- No state property tax
- No local income tax
- No inventory tax
- No sales tax on manufacturing equipment, industrial power, or materials for finished products
- No wholesale tax
- No unitary tax on worldwide profits
South Carolina also provides a variety of customized incentive programs to meet the needs of any company, including:
Discretionary property tax incentives. Job tax, corporate headquarters, research and development, investment, biomass resources, and ethanol or biodiesel.
Discretionary property tax incentives. Job development, job retraining, corporate income tax moratorium international trade incentive, and port volume increase.
Discretionary property tax incentives. Negotiated fee in lieu of property tax.
Discretionary property tax incentives. Apprenticeship Carolina, readySC, and foreign trade zones.
Source: South Carolina Department of Commerce
Driving Automotive Industry Expertise
For automakers seeking new production facility locations, a workforce equipped with industry knowledge often tops the requirements list. South Carolina offers a unique educational resource to fill that need. The Clemson University Center for International Automotive Research (CU-ICAR) is an advanced-technology research campus where university, industry, and government organizations engage in synergistic collaboration.
The 250-acre CU-ICAR campus in Greenville is composed of five technology neighborhoods, each uniquely designed to optimize an innovative and collaborative environment for automotive and motorsports research.
Clemson offers the nation’s only Ph.D. in automotive engineering. Its master’s and doctoral automotive engineering programs are supported by direct engagement with industry-leading original equipment manufacturers and suppliers on curriculum development, research capabilities, and defining industry needs. These rigorous programs, designed with input from world-class companies such as BMW and Michelin, require foreign language training in addition to a lengthy course of study and a six-month international assignment within the industry.
With more than $200 million in commitments, CU-ICAR represents the ultimate public/private partnership, directly fueling a knowledge base critical to the automotive industry.
Arriving at Port: An On-Terminal Transload Operation
A new container transloading facility at the Port of Charleston will soon speed shippers’ supply chains. Performance Team, a Santa Fe Springs, Calif.-based third-party logistics provider, is leasing space at the Wando Welch Terminal’s container freight station, where it will transload cargo from ocean-going shipping containers to trucks for distribution to its network of customers throughout the Southeast.
“Performance Team is excited to offer shippers on-port transload and distribution services,” says Cliff Katab, president, Performance Team.
The Wando site is expected to handle both import and export cargo as Performance Team continues to expand in the Southeast. Transloading goods on-site allows for greater efficiencies, reduced costs, and faster speed to market for retail imports.
“We welcome Performance Team’s expansion in the Charleston region,” says Jim Newsome, president and CEO, South Carolina Ports Authority. “This on-terminal transloading service offers added value to shippers who rely on Charleston’s high productivity, proximity to population centers, and extensive service network to get their products to market.”
The Port of Charleston’s Wando Welch Terminal processes shipments bound for points throughout the southeastern United States.