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- The biggest issue now is supply chain choke point.

Things can not move as easily as they could.

Ports are backed up, trucks have a shortage of truck drivers.

It is truly a hotspot in the economy and not for good.

I'm Chris William and welcome again to the most widely watched and longest running program on Carolina business policy and public affairs seen each and every week across the Carolinas for 30 years now.

Thank you for supporting this dialogue.

In a moment, we will start this week's discussion later on joining us again, the CEO of the South Carolina Ports Authority, Jim Newsome, we start now.

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On this edition of "Carolina Business Review" James McQuilla of the Orangeburg County Chamber of Commerce, Scott Hamilton from the Golden Leaf Foundation and special guest Jim Newsome, president and CEO of the South Carolina Ports Authority.

- The idea that trying to find talent or labor is gotten even more acute.

We welcome now, both Scott and James to the dialogue.

Gentlemen, welcome to the program, Scott, for better, for worse, you get the first pitch.

And it's not necessarily an easy one.

You know, Scott, we talk about trying to find talent in any industry, in any business, and that was 18 months ago.

And then COVID hit and now it has been exacerbated.

So why is that gap gotten so much bigger Scott?

Why have so many people decided to just stop looking?

And when do you think it abates?

- Well, I think some of it is a pandemic related.

Obviously, is that the uncertainty is if, a working parents' child school closes and shifts to virtual.

They don't know when that's gonna happen and being prepared.

Some have shifted to in home school.

And so you have a different family dynamic that I think is keeping folks from getting back into the workforce.

I also think that there's been a shift to entrepreneurial-ism in this, where several, you know, I think lots of people have sat back during this pandemic and thought I've always wanted to start a business and this is my opportunity.

In North Carolina, the new business startups have already exceeded all of 2019, in all of 2020.

And they are expecting record breaking numbers of new businesses being created.

We also have started to see though, the unemployment figures, where people are filing for first-time claims to go up.

That can indicate people are getting back into the labor market and we'll start looking or being counted in those unemployment numbers.

Meaning that as more and more people come back to the labor market, they register with their Unemployment security Commission.

Those numbers will go up.

So we have seen that over the past couple of weeks that those first time claims is not necessarily people being laid off.

Those could be people coming back into the workforce.

- James- - When do we- - Go ahead, I'm sorry Scott, finish you thought.

- When are we going to see this change in the labor market?

I think its long term.

A part of it is also not just the folks, not in the labor market, working age, the trend of working age folks is trending down.

And so community colleges are in universities are starting to focus on more adult learners as well.

Those that are 25 plus.

So, thinking that a college student is somebody from high school going into either a community college or a four-year college or university, that's not necessarily the case anymore.

They're targeting then that working age population of 25+, that need extra credentials; need another degree.

So the, the population trends in the Richmond fed has done some really good studies on this of; from the great recession, population trends have been trending down.

And that is a concern going to be for community colleges, universities, and four-year colleges as well.

- James, how do you characterize this?

- Well, I agree with what Scott was saying to a certain extent.

And then also I think we have to look at, the fact that we made some mistakes, I believe.

I believe that we have government subsidies that have added to the issue of labor.

We have our- - You mean, hold on.

You mean the unemployment benefits, something like that?

- Yeah, the unemployment benefits and the additional benefits that created an opportunity for folks to actually be paid more than they were, when they were working.

And I don't think we really talk about that a lot.

But I've had to deal with that.

I've sat down with people who have made a conscious decision not to go back into the labor market until all of their benefits had been used up.

So I think we've seen that there are plenty of jobs.

There are a lot of jobs that are in the service industry in particular here in South Carolina, okay.

And those jobs used to be taken at a level of $7 to $9 an hour.

Many of those same jobs that were $7 to $9 are now only being looked at once they get to 12, 13, 14, $15 an hour.

And a lot of those jobs are with small businesses.

And so a lot of those privately owned small businesses, they're seeing their revenues decline, their profits decline and both.

I mean the revenues because they're not seeing the customers that they were seeing prior to the pandemic, and then they're seeing profits decline also.

So we have to be careful about, how we distribute what is necessary during a pandemic, and then what's not absolutely necessary.

My other concern is that there was a time where working was seen as what you would do as an adult.

Okay, it's like you went to school, you either went to college or you went to the military, you went into the workforce because you knew that that was required in order to have a certain standard of living.

And right now, I'm not so sure if that model still applies because we have a standard of living in the US, regardless of whether you work or not, because we have a lot of safety nets.

And I made this point before that, if you look at Dubai 85% of the people that work in Dubai are not from Dubai.

Because there are government subsidies for people who are from Dubai and that that's hurting them because there's no need for them to work.

I'm not saying that we have folks who don't believe that work is necessary, but I think we're making some poor decisions around the idea that work is important.

- Okay let me take this idea and come back to you, Scott, with the idea that is a golden leaf now, how do you pivot to address not just some of the things that James just said, but how do you think differently about what your role in leading communities around development, personal and corporate and economic?

- Our role as a Economic Development Foundation is really to provide opportunities in workforce and talent development and working with the businesses that need that workforce.

And so a lot with community colleges in looking at what are the new types of talent and training that they're doing to assure safety in the workplace and that's health in the workplace.

I think some of the shortages in the service sector is a concern of health safety.

As being out in the public and working in a lot of folks are saying that they just don't want to be in that environment.

And therefore, I think that is also some of the issues of finding labor in service sector jobs.

But I also think it is some of the issues in other employment basis that where there are lots of people are working together in bigger open areas such as manufacturing.

And so how do we help industry through community colleges, through communities shift into a different dynamic of how do you keep your employees healthy, so that they are confident to come to work and willing to come to work.

- James, just very quickly about 30 seconds while bring our guest in.

Is this what Scott just described, this level of anxiety and fear around personal health and safety.

Does that drive a lot and again about 30 seconds?

- Well, again, for me, what I've seen is I think initially that was the case.

And then there was the vaccine, and then there were opportunities for everyone who was a pretty much of working age to get a vaccine.

And so now I think it's actually related to other areas.

Safety may be one of them, but I just think the safety is fine.

I think training's fine.

I think education is fine.

I think we need to look at other things.

- Our guest is not a stranger to this program or business and industry in the Carolinas, or turns out internationally.

He was recently nominated to and will be installed as one of five into the International Maritime Hall of Fame.

He is the president and CEO of the South Carolina Ports Authority.

We welcome again, Jim Newsome, Jim, congratulations and thanks for joining us again.

- Thanks Chris.

And thanks for having me today.

- We could spend the rest of the program talking about what you've been able to get done in South Carolina.

One of those things that have bubbled up, Jim is, are the pictures at least out on the West Coast regarding ships that are in a holding pattern on their way into the LA port.

I'm assuming that's been an issue also in Charleston and on their way into the South Carolina Port, Jim supply chain, top of everyone's list, a big issue.

Describe the supply chain bottleneck as it is now.

And when do you think that lightens up?

- It's not an issue in Charleston.

We were very fluid.

We've built proper infrastructure, so we don't have waiting time.

But, if you compare current volumes to 2019, so you take the pandemic out of the equation.

And if you just measure import volumes, import volumes are up between 15 and 20%.

So we're buying record volumes as a country due to inventory restocking and due to the fact that people have disposable income from stimulus and other sources.

And what we've learned is that the supply chain is, you know, the import supply chain, The US Global Supply Chain is pretty rigid capacity-wise.

So, supply chain doesn't have the capacity to handle the volume that's being bought.

And particularly when 60% of the import cargo is moving through three gateways, it's moving through LA, Long Beach, New York and Savannah, so.

We could have probably predicted this.

And I think it's with us for awhile, you know, certainly through Chinese new year of next year, and in potentially beyond depending on demand.

And there are some structural issues that just have to be fixed, if we're going to have a more robust supply chain going forward.

- Not to be selfish but is that an opportunity for the South Carolina Port, as you just talked about Savannah, New York and LA Long Beach.

Does that give you an end?

- Absolutely gives us an end.

I mean, I would describe that we have built the best infrastructure in the U S port industry, and it's not how probably as far as my saying that.

We built the only new container terminal here since 2009.

The next new Greenfield Container Terminal will not be built until the earliest 2030.

So we've got an extra 2.4 men to use of capacity coming online over the next 10 years.

So we're really prepared for growth.

And I believe the big shippers are figuring out they've got to diversify their gateways and we're in a good situation there.

I think you've seen that with some of the economic development announcements Walmart, doing business here in the import distribution center and others.

So, yes, it's a great opportunity for us.

- I wanna open this up for questions, Scott.

- Sure, I appreciate it, Jim.

Good afternoon or hello and also to you, congratulations.

One question that I had is, with Charleston being the largest deep water port on the East Coast.

How does that benefit the Eastern U S and in particular from my selfish point of view North Carolina?

- Well, it had benefits in a number of ways.

I mean, we have worked on concept of just in time supply chain and that sort of morphing into a little more tolerance of longer transit times.

70% of the population is east of the Mississippi river.

And people want their cargo on ships as close to where it's needed basically.

So it gives us an opportunity, to grow above the market here.

In North Carolina for, I mean, if you look at North Carolina and South Carolina together, I think if you put the two state economies together; I'm not suggesting that, what would it be like the sixth largest economy in the United States?

So North Carolina, Charleston is a major entry port for North Carolina.

And this is a critical component of our growth, have an inland port in Dillon, South Carolina, which is right on the North Carolina border that supports that.

- James - I have a question specific to South Carolina and that's, you know, aside from our agricultural products, what are some of the other major exports from South Carolina to overseas markets?

- Well, we have several exports, believe it or not.

One of them is on an automotive.

BMW has actually become export dominant in the sense that they're sending a lot of semi knocked down and completely knocked down vehicles and containers to export markets.

We also export plastics and forest products and chemicals and AG products.

So it's really... Our country either exports based commodities for subsequent manufacturing or really high end stuff like automotive or Boeing airplanes.

And obviously we don't ship Boeing airplanes through the port.

So it's really kind of a dichotomy of both ends, but it's a rich mix of cargo.

Exports, unfortunately are not as big as imports, but I think that will change over time.

And a lot of that's depending on emerging market economies such as China and India.

- Jim I know you've heard this analogy before that a chain is only as strong as its weakest link.

So you've got the idea that you've built this infrastructure in South Carolina and the ports, and as you talked about the inland ports as well.

How does that connect to surface roads and DOT and infrastructure, and where are you with where DOT is in South Carolina, because that is your front door and your back door as well.

- Well, while we're learning maybe the hard way is the supply chain is all interrelated.

So an issue in one part has affects elsewhere.

- [Chris] Sure.

- We're very fortunate with the South Carolina DOT.

Christy Hall is doing a great job, you know, implementing, spending on the incremental gas tax dollars that we've collected.

And she's really on top of her game right now.

And they're doing some essential things to improve the road infrastructure.

We've tried to augment that with an inland port network, meaning that, I think we've got the best in the port network of any state in the country, really where, you know, we've gotten say 250,000 containers off the roads and onto short haul rail.

But they're all related and if we're going to grow, we need to grow a truck capacity.

We need to grow chassis capacity.

There are a number of things strategically that have to be done.

There are no short-term fixes to what we're going through right now.

And I think that's some of the misleading information that we're getting.

People are saying, well, you open the ports 24 hours a day, and this is all gonna go away overnight.

No truck drivers drive in 24 hours a day.

So the solutions have to be more robust and long lasting.

- What about the talent at the port?

Do you have a shortage of talent?

- Well, so like many companies going into the pandemic, we really didn't know what to expect.

My forecast was that we would lose about 10% of our volume.

So we didn't hire last year.

So, and we needed to hire it turned out we were handling much more volume.

So fast forward to today, we're just adding 150 jobs.

In the port, We had a job fair, we had over 500 people show up.

Our jobs are extremely skilled and very well paid.

So we don't have a shortage of workforce here fortunately.

And the people we're able to hire are really just our rock stars, 'cause young people are good at joystick technology, and that's what it takes to operate our equipment today.

- [Chris] Scott, question?

- You talked a bit about the capacity that you have in the future and that adjustment for you of being in a good luck and in a good position to accept more cargo.

But how has the pandemic shifted your strategic plan of looking into the future?

You've talked a little bit about this.

The transportation and the integration of just getting product from port out to the consumer.

So how has the pandemic shifted some of those strategies that you've been looking at to continue to make the port productive?

- Well, we're a long cycle infrastructure business.

So what happens from month to month really doesn't affect our investment thesis, we build 50 year assets.

So that didn't really change.

I think what has changed, is the definite trend toward more E-commerce less bricks and mortar distribution.

It's pretty clear that that bricks and mortar distribution capability doesn't necessarily support the growth of E-commerce.

So this provides an opportunity for us to really get up on the retail distribution curve.

We've not been a strong retail distribution board.

Historically, we've been very focused on manufacturing.

So it gives us an opportunity to catch up, given that we've built the infrastructure in the right time.

We invested 2 billion in infrastructure since 2015, and that's going to pay off for us, in both the near term and the long term.

- James - I wanted to kind of piggyback off of the inland port information that you were talking about, and this is a little selfish.

Is there any potential that another inland port like what we have in Dillon and in Greer, is there any chance that there would be another inland port perhaps even in a place like Orangeburg?

- Well, I'm always reluctant to name places because the prices just sort of, you know, go up in advance for that.

- Good point, heads up.

- I do.

So inland are special.

They require a cargo base, they acquire an overnight serve railroad, they require a willing community.

So, that's, I mean, I would probably say there's 46 counties in South Carolina that would like an inland port, but they're really very few locations that would check all those boxes.

But we always do look for opportunity.

I would say Orangeburg is just simply too short haul.

To be honest with you, it's only 50 miles from Charleston and you really need 150-200 mile rail haul to make it workable, basically.

- There may be some really good opportunities up by 95 North.

(Scott and James laughing) - I'm giving understand that case.

Some of those are in a different Carolinas.

(all laughing) - Yeah, Scott, you know, politics.

You're trying to start a fight between the two.

(all laughing) - No, no, no.

- But certainly look, I don't think there's any question that the supply chain potential for growth and infrastructure in North Carolina and South Carolina is very compelling and I believe we're going to be a central part of that.

- Yeah, Jim you referred to Walmart and you also referred to the idea that your prowess with manufacturing and distribution import export is big game, good game for you.

How do you develop?

Are you developing the idea of not just with Walmart, but recently Amazon past Walmart in largest capitalization and revenue that's meaningful.

Partners like Amazon would be important for the port, wouldn't it?

- Yeah, actually, we have a growing partnership with Amazon.

They started doing business via our port this year through one of the transit facilities here.

Walmart and Amazon are on the cutting edge of supply chain.

They provide significant opportunities everywhere and we learn a lot from them.

And the reality of life is in the pandemic is the other question that Scott ask.

I mean the 30/40 major retailers were anointed as essential businesses.

So they're growing above the market today.

And I actually believe that they're the ones that are more adept at global sourcing than the smaller mom and pop retailers.

So I think that's also popping our vibes today.

So yeah, partnerships with Walmart, Amazon are essential to our growth.

- Is that Uber competitive at the port level?

In other words, your colleagues want that same for their port.

- Well, again, it's about yes.

But I would say that what people are learning is you can't continue to put 60% of the import cargo through three gateways and not have delays.

So, I mean, this has been a long-term process of diversified gateways.

I think that's going to continue, you'll see Charleston grow.

I think you'll see Houston grow just due to geographic diversity.

Now, the Southeast is a big area and there's nothing that says that people can't do distribution via both Savannah and Charleston emits a lot of sense in doing so on, so.

- Scott, question.

- No, I agree with it.

And I think the whole dynamic is shifting with the online revenue, I'm sorry, online ordering of retail.

It's the transportation of all of that product in the log jams that it's creating throughout the supply chain is gonna, I think, is going to be here until other ports are able to start to absorb some of that capacity.

- Well, it's hard to build port capacity.

I mean, as I said, there's not another new Greenfield Terminals until the earliest 2030.

There've been expansions in existing terminals.

But some places are just pretty much landlocked and cannot grow.

So people will come to understand that and they'll make intelligent decisions because supply chain management is ultimately about risk management and reducing risks.

- James, we have less than a minute left.

Do you have a quick question you can shoe horn in there.

- Very quick question.

Maybe its a yes we no, but has the federal government play a part in the growth of our port in Charleston?

- Certainly in the Harbor deepening.

I mean, it's their federal harbors.

So, they were the driver of our Harbor deepening project.

And it remains to be seen on this infrastructure bill.

I mean, you know, the infrastructure bill is aspirational, it's certainly needed.

But the devil's in the details in terms of all the constraints in using it.

You have to buy cranes in America?

There are no cranes made in America.

So we'll have to see when that comes into place how we can take advantage of it.

- Are you optimistic that that infrastructure bill is going to mean good things for what you're trying to do?

- Yeah, Chris, that remains to be seen.

I mean, we've been talking about infrastructure since, you know, 2008, 2009 and shovel ready projects.

And our experiences is lot of it was aspirational but it didn't happen in practice.

So hopefully we'll do better this time.

- Yeah, okay.

Thank you, Jim, and thanks again.

Congratulations again and great honor of being one of five into the Maritime Hall of Fame, International Maritime Hall of Fame.

Good luck, safe travels up there.

- Thank you very much, Chris.

- Yeah, good to see you.

Scott, welcome, good to see you again.

James, good to have you on the program.

You all stay safe.

We'll see you soon.

Thank you for watching our program.

If you have any questions or comments or would like to watch programs, go to Carolinabusinessreview.org.

Until next week, I am Chris Williams, stay safe, happy Fall, and good night.

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