US East Coast ports to ship more resin
As U.S. plastics exports grow, suppliers are looking to diversify supply chain solutions and mitigate risk by creating options outside of Texas, where most of the product is made.
A&R Logistics, a supply-chain-service provider for North American chemicals, announced on Oct. 17 the latest spending to add resin export capacity to the East Coast as an alternative to the Gulf area.
New Savannah facilities “will provide the supply chain infrastructure for the world's largest chemical producers to compete on a global scale," said CEO Mark Holden.
Related work for this project scheduled for late-2020 completion include OmniTrax railroad company’s plans to build a seven-mile switching operation with two interchanges.
Earlier this year, Plastic Express, which also helps with chemical shipping, announced plans to invest $172 million in the Savannah area.
Frontier Logistics, another resin supply-chain service and logistics provider, confirmed to Petrochemical Update its own expanded Charleston resin exports operations will be ready by next July.
Frontier advances work at Charleston’s terminal
"There is a lot of interest and realization that more facilities are needed to ship from places other than the Gulf Coast," Paul Heard, Frontier’s vice president, told Petrochemical Update.
New facilities there will help the trans-load plastic of pellets for export through Charleston. CSX and Norfolk Southern will bring them from chemical hubs elsewhere where production is growing fast.
Companies now look into alternatives to ship “not just from Charleston and Savannah but from places including New York, Pittsburgh and even Canada," said Heard, who is based in the Houston area.
U.S. producers have added 6.5 million tonnes of polyethylene production capacity since 2017. They are expected to add over 12 million tonnes of polyethylene before 2022. Much of it is in the Gulf Coast area.
Every one million tonnes of new resin may demand up to 40,000 forty-foot containers, A&R said two years ago when it first moved to star resin exports from Savannah.
"If there is overproduction, some brokers, producers will have to cut their prices," Heard said. Options to store pellets particularly in the Gulf Coast will be limited.
Much of the industry there largely relies on keeping railcars a few days for storage, as opposed to building silos for storage, he said.
Savannah, Charleston plan to expand
Savannah and Charleston have in past years promoted themselves as shipping alternatives particularly to places like Europe and South America. Both have expansion plans.
The Savannah port has already announced plans to work to double capacity from the current 5.5 million twenty-foot equivalent (TEUs) per year.
The South Carolina Ports Authority is expanding Charleston. Within two years, S.C. Ports will handle four 14,000-TEU ships simultaneously and have the deepest East Coast harbor.
S.C. Ports handled 2.4 million twenty-foot equivalent container units (TEUs) in its most recent fiscal year, compared with 4.5 million TEUs for Georgia ports.
Adding resin exports is important for ports like Charleston to diversify cargo in a “current climate of global trade uncertainty,” said Liz Crumley, S.C. Ports corporate communications manager.
East Coast region also attracting plants
Shell Polymers is building a 380-acre facility to include an ethane cracker 30 miles northwest of Pittsburgh on the Ohio river. The company stresses that the plant will be “in close proximity to less-congested East Coast ports.”
The plant, which will tap shale gas from the Marcellus and Utica basins, will feed a 1.6-million-tonnes annual capacity polyethylene plant there to be completed early next decade. Total investment there is estimated at $6 billion.
The Pittsburgh Business Times reported in mid-October that agents representing ExxonMobil were searching for land in the area to build a cracker.
Industry can well cover transportation costs
U.S. chemical producers in the Gulf Coast should also be able to compete globally even if they have to cover transportation costs to ports in other areas, Heard said.
"Because of proximity to Permian Basin, the U.S. Gulf Coast enjoy the best sourcing prices for feedstock for polyethylene in the world and this is also in the Marcellus area in Pennsylvania and New York,” he added.
Yet there may also be vulnerabilities for shipping in the Gulf Coast area that go beyond potential future tightness in port availability.
One is that the U.S. resin production and shipping model around the Gulf Coast was not designed to allow much storage.
Rather than silos, mostly railcars are used to store for a few days. If there is eventually a large stock of unsold product, this could tie up railcars, Heard said.
In the meantime, Port Houston is considering actions that could quickly help reduce possible future shipping congestion.
These include the possibility of allowing trucks to carry more tonnage within a perimeter area or extending the port hours, Heard said.
By Renzo Pipoli