Wednesday, March 4, 2009

Jafza Americas to be part of $700m project

Dan McCue on Wednesday, March 04, 2009

From: Emirates Business 24/7

Jafza Americas, a subsidiary of Dubai-based Economic Zones World, is being cast as the cornerstone behind an ambitious $700 million (Dh2.5 billion) plan to restore South Carolina's place in the global supply chain.

The proposal was outlined in a white paper distributed to members of the US Congress and the White House Office of Intergovernmental Affairs by the Orangeburg County Development Commission (OCDC) last week.

It calls for the creation of a new freight rail shuttle service between Charleston and Orangeburg, where containers would then flow in all directions from a planned 61-acre intermodal yard on Jafza's property.

The OCDC is a local economic development agency in South Carolina that has been working closely with Jafza on its inaugural American project, is taking the lead on championing the plan.

Gregg Robinson, the OCDC's Executive Director, said while much of the plan would fall outside the parameters of project deadlines of the $787bn federal economic stimulus package, passage of the stimulus package should "free up some of the normal or traditional sources of funding", such as the federal highway fund, over the next several years.

That said, Robinson made plain that he sees the Orangeburg plan as an integral part of the economic recovery process, both for the state and the Port of Charleston, which like other ports around the world has seen its cargo volumes shrink as a result of the global trade slump.

"What we're putting out there is a regional solution to a statewide problem – a plan that will create hundreds of construction jobs in the near term and thousands of sustainable jobs over the next 20 years," he said.

"My philosophy is, build the infrastructure, add the value businesses need to be successful, and then get out of the way and let the private sector do its thing," Robinson added. Senator Lindsey Graham described the proposal as "one of the most transformational projects in South Carolina by creating thousands of new jobs, and generating tens of millions of dollars in revenue at the local, state, and federal level."

Graham and Congressman James Clyburn have been securing federal funds for infrastructure projects in the area since Jafza International purchased the land last year.

"I have been pleased to work with the Orangeburg County Development Commission in their effort to make the corridor a reality," Graham said, vowing to work with the commission, state leaders and their partners in moving the global logistics corridor forward.

Joel Sawyer, a spokesman for Governor Mark Sanford, said the proposal "represents a real opportunity for our state, of which we are still learning the details".

"We will be following all of the various moving parts of this project as it goes forward," Sawyer said.

The corridor is an extension, rather than a replacement of, the Global Logistics Triangle concept Orangeburg has been employing as an economic development strategy for the past eight years.

Intermodal hub

At its heart will be a logistics and distribution park for the processing and distribution of both import and export cargo. "The way we see it, the park will be a centralised, regional facility where multiple distribution centres will be located, along with ancillary businesses related to the movement of import and export cargo, such a trucking firms and logistics providers," Robinson said.

The linchpin of the plan is Jafza South Carolina, which has already invested more than $22m in the development of 1,324 acres near the convergence of Interstate-95, Interstate-26, and US Highway 301. The Dubai-based company has provisionally agreed to donate 61 acres of its site, as well as public access to all roadways leading to and from its property, for the creation of an intermodal hub.

The Jafza project, which will be developed in five phases through 2032, is currently undergoing zoning approval for its entire 1300-acre parcel. The first phase of the project, expected to get under way later this year, will focus on light manufacturing and assembly type businesses.

Robinson described the creation of the intermodal hub as a public-private partnership, with some of the players known – Jafza, Orangeburg County, among them – and others to be determined. He said the creation of a shuttle service between the Port of Charleston and the intermodal hub is essential to the commercial viability of the global logistics triangle, but will also help to shift trucks away from the congested Charleston metropolitan area.

"The model we are pointing to in discussing the concept is Front Royale, an inland port created by the Virginia Port Authority in 1989 to compete with the Port of Baltimore in serving the lucrative Ohio Valley market," Robinson said.


Prior to the economic slowdown, the intermodal yard in Virginia handled 30,000 cargo containers a year, reducing the number of trucks that had been contributing to congestion on nearby interstates, and serving to boost economic development in surrounding counties.

"We see this as adding value not just for one county, but for all of them, because there is not a county in this state that is not in some way touched by the Port of Charleston," Robinson said.

From Orangeburg, some cargo would remain on rail, while the rest would leave the site by truck. The long-term plan calls for time-sensitive shipments to be directed to Columbia Metropolitan Airport.

"This really is about thoughput," Robinson said. "We have an amazingly efficient port. In terms of container moves, it is one of the most efficient in the world.

"The creation of the intermodal facility and shuttle train system, will only increase the volume of containers it can handle," he said.

Michael Flack, Executive Director of Columbia Metropolitan Airport, said he did not know anything about the proposal, but said the airport would embrace the opportunity to be included in such a corridor.

"Certainly we would be happy to be part of that effort as it ties in to our air cargo operations," Flack said. "Our proximity to Orangeburg and Interstte-26 makes that an easy proposition. "At the same time, both UPS and FedEx have good operations at this airport, so I would think that their participation would have to be helpful," he said.

Robinson deflected a suggestion that the proposal might be seen as favouring one developer – Jafza – over the Rockefeller Group, Hillwood Development and others developing distribution centres along the Interstate-26 corridor near Jedburg.

"I think this proposal will only enhance the success of their projects," he said. "Having more containers coming through the Port of Charleston rather than somewhere else is good for everybody."

Higher cargo volumes

Robinson also asserted that the plan would benefit truckers by moving their activities inland, and away from the overburdened roads around Charleston.

"There is an awful lot of backlash and conflict that they would not have further inland, and they'd also be the beneficiaries of higher cargo volumes," he said.

Robinson said based on numerous studies conducted over the past five years, the corridor project would raise personal income in Orangeburg County by $130m, and generate an additional $382m in additional business activity, while creating 3,765 jobs. He said the project would also generate $450m in additional business activity in the rest of the state, amounting to a $164m increase in personal income in the state's other 45 counties, with the creation of an additional 5,294 jobs.

Robinson said if the strategy is implemented, by 2020, the county would be receiving an additional $12m in tax revenue from activities directly related to the corridor, with the state receiving another $22.5m, and the federal government approximately $54m. But Robinson readily conceded the plan is not without challenges and that even with state and federal support, some heavy lifting needs to be done: particularly in regard to the rail connection between the Port of Charleston and the proposed intermodal site.

To begin with, he said, the efficiency of the shuttle service would be dependent on there being "dual and competitive rail access" to the port's terminals, including the new, $600m facility being built at the former Charleston Navy base, A memorandum of understanding between the SC State Ports Authority and the City of North Charleston currently prohibits cargo-laden trains from leaving the north side of the new facility, where the Norfolk Southern railroad's tracks enter the Navy base. CSX Transportation has rail access from the south side of the property.

The OCDC plan calls for the SC Public Railways to run the shuttle train between the port and Orangeburg, after acquiring sections of rail near Creston and Pregnall currently belonging to the respective railroads, and getting permission to operate over existing CSX and Norfolk Southern tracks between Pregnall and the terminals. "In our view, SC Public Railways is the entity best positioned to provide fair, equitable, efficient and competitive rail shuttle service under our proposal," Robinson said.

Increasing capacity

SC Public Railways, a division of the State Department of Commerce, is in effect a holding company that owns and operates three railroad companies; two terminal yard-switching operations within Port of Charleston facilities; and a short-line railroad in Berkeley County that serves BP Chemicals and Nucor Steel.

SC Public Railways President Jeff McWhorter confirmed that "very preliminary" discussions with the two railroads have occurred, but declined to discuss the specifics of those talks.

"There are some real benefits to the rail component of the proposal, a big one being the better management of congestion on Interstate-26," he said.

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