Malcolm McLean, a Tar Heel with a vision that changed the world, grew up in the small town of Maxton, North Carolina. A truck driver turned business owner, McLean was poised to revolutionize shipping with a deceptively simple idea: The world’s goods should be shipped in standardized containers.
In 1965, he visited the Port of Wilmington, which sits 100 miles southeast of his hometown, to pitch the concept and ask officials to install the necessary crane and dock area facilities. The port director dallied. So McLean went to Charleston, where the port director said yes, and Charleston became the first container port in the Southeast—and a leading front in a global shipping revolution.
So continued the Port of Wilmington’s history of being a step behind.
Since 1865, when its closure as the last remaining Confederate port helped precipitate the end of the Civil War, the Port of Wilmington has been playing catch-up. The 285-acre port on the Cape Fear River, and its smaller sister port in Morehead City, are the state’s entry and exit points for seafaring cargo.
To the north and south, major ports in Norfolk, Charleston, and Savannah consistently outperform their peers in North Carolina. But in an age of interstate highways and porous borders, how much does it matter?
Has the country’s ninth-largest state suffered because its ports lag behind or does a finite state budget and the unique limitations of the state’s geography mean North Carolina is better off opting out of the ongoing international maritime arms race for bigger and better ports?
For 10 years, Erik Stromberg had been CEO of the American Association of Port Authorities, the trade association representing 130 port authorities in the Western Hemisphere. In 1995, he was approached with an offer to come to North Carolina and become CEO of the North Carolina State Ports Authority.
Stromberg consulted with two port-industry veterans: Robert “Bobby” Bray, then-executive director of the Virginia Port Authority, and Don Welch, then-executive director of the South Carolina Ports Authority. Both men are credited with building their states’ principal ports, in Norfolk and Charleston, into major global container ports.
In separate conversations, each leader told Stromberg the same thing: Don’t do it.
Their reasoning was similar. Bray and Welch had already split up North Carolina. “Each said that their port controlled half of North Carolina’s market,” Stromberg recalled. “Bobby drew the line north [to] south, so he got the northern half of the state and Don got the southern half. Don drew the line east [to] west, so he got the western half of the state and Bobby got the eastern half.”
“And I thought somewhere in that confusion about how to divvy up North Carolina, we could be a player,” Stromberg said. “We weren’t just there to be taken for granted.”
Through conversations with political leaders, former and current port officials, and outside analysts, it’s clear that complacency has had a lingering impact, particularly in regions of the state that are not well-connected to out-of-state ports like Charleston.
Scott Lincicome, a Raleigh-based senior fellow in economic studies at the libertarian Cato Institute, says that port inadequacy has likely contributed to the state’s inability to lure major manufacturing plants.
Big manufacturers often come to the South, in many cases for the region’s right-to-work laws, which weaken labor unions’ ability to organize workers. North Carolina often competes for these new investments—including new tire, automobile, and aircraft plants—but port access has been a limiting factor.
“It has not [been] the deciding factor, but it’s a factor,” Lincicome said. “When you are looking at site selection, you have a checklist of 20 things, and a deep-water port is part of the calculus.” For North Carolina, he said, “multinational manufacturers, particularly of large products like cars and aircraft, need big ports, so it’s a missed opportunity.”
BMW selected Spartanburg, South Carolina, for a plant in 1992, and by 2019, the auto manufacturer exported 195,000 cars a year—nearly 80 percent of its production—through the Port of Charleston.
In the past two decades, the world’s two principal aircraft manufacturers, Boeing and Airbus, have selected southeastern port cities for plants that manufacture large passenger aircraft. (The world has only about a half-dozen such plants.) In 2009, Boeing selected North Charleston as the location for a 787 Dreamliner final assembly and delivery line. In 2020, Boeing said it would close its 787 assembly plant in Seattle and move all the work to North Charleston.
As for Airbus, it opened an aircraft assembly plant in Mobile, Alabama, in 2015. “The proximity of our Brookley Field site to the Port of Mobile was certainly one factor that played a role in the selection of our final assembly line location,” Airbus spokesperson James Darcy told The Assembly. “In fact, all of our major component assemblies come into Mobile via the port.”
North Carolina did not compete intensely for the aircraft plants, but in 2017, the state went all in on a Mazda-Toyota assembly plant, putting together a $1.6 billion incentive package and offering a site near Greensboro. The automaker eventually selected Huntsville, Alabama. Port access does not appear to have been a major factor, although Lincicome notes, “these foreign automakers import a ton of parts; they are very much dependent on seagoing trade.”
Ken Eudy, a senior advisor to Gov. Roy Cooper, pushed back on the idea that North Carolina’s ports have held back the state’s economic recruitment efforts.
“We’ve been here since January 2017, I have been with every significant economic development prospect we have had, and our ports have been nothing but an advantage,” Eudy said. “I don’t recall a single one saying, ‘I wish you had better port facilities.’” Some have cited easy access to Interstate 40, which serves Wilmington, as an advantage, he noted.
Eudy pointed to geography as an explanation for the Mazda-Toyota plant. He noted both that Toyota already had a plant in Alabama and felt comfortable there, and that its supply chain “runs up and down the Mississippi, in cities adjacent to the river.”
“We had a deficiency,” Eudy stated. “We couldn’t pick up North Carolina and move it closer to the Mississippi River.”
The extent of the ports’ impact on economic recruitment efforts may be disputed, but it’s clear their facilities and overall size are significantly behind their peers.
Port size is measured primarily by the number of TEUs, which stands for twenty-foot equivalent units. Each unit is the size of a standard shipping container. In 2019, according to data from IHS Markit’s Global Trade Atlas, Savannah was the fourth-largest U.S. port with 2.4 million TEUs: about 8 percent of the U.S. total. Norfolk was eighth, with 1.3 million TEUs, and Charleston was ninth, with 1.2 million TEUs. Wilmington ranked 22nd, with 134,000 TEUs.
Brian Clark is a 25-year maritime industry veteran with past leadership roles in Port Elizabeth, New Jersey, and Mobile, Alabama. In 2017, he was named chief operating officer of North Carolina Ports. In January 2021, he took over as executive director.
“It’s not our goal to catch up to [other] ports,” he told The Assembly. “Obviously, they made investments in the past, at different points in time, and they’ve all been very successful.”
But that’s not to say North Carolina hasn’t attempted to narrow the gap.
“I was told that many times, port directors who came to North Carolina were coming to retire,” said Stromberg, the former NC Ports CEO. “So I took a more aggressive role.” One of Stromberg’s accomplishments included a public relations blitz in an effort to convince the legislature to appropriate more funds.
Stromberg’s principal accomplishment, however, was the most recent channel deepening.
Completed in 2004, the $400 million project, funded with $280 million in federal grants, took the channel depth from 38 feet to 42 feet.
“That was as deep as we could go while justifying the cost,” Stromberg said. “I was able to get everybody aligned, [including] state, federal, corps of engineers, people in Wilmington, beach communities concerned about erosion, [and] environmentalists.” Port-dredging projects inevitably raise concerns regarding wildlife and fish survival as well as the placement of the material that is dredged.
Today, Wilmington wants to deepen to 47 feet. Savannah is also engaged in a project to deepen to 47 feet. Meanwhile, Charleston is moving quickly toward 52 feet, and Hampton Roads in Virginia is at 50 feet but wants to get to 55. A port’s depth determines which ships it can accept. A port that doesn’t keep up risks being sidelined as big shipping companies plan global routes.
Other efforts to improve the Wilmington port have focused on the nuts and bolts of port infrastructure.
Gov. Pat McCrory, who was the state’s chief executive from 2013 to 2017 and is now running for U.S. Senate, argued that his efforts to improve the port were focused on what infrastructure could allow it to serve specific, targeted markets.
“People said, ‘You’ve got to become Savannah,’ but we thought that a better alternative was to build some niche markets, which would be good for the economy and the region,” McCrory said.
Construction on the Port of Wilmington Cold Storage facility, offering refrigeration for cold-food-chain exports, began in 2015. The 101,000-square-foot warehouse would be big enough to hold 400 truckloads of agricultural products and cost $17.5 million. McCrory’s first secretary of transportation, Tony Tata, told The Assembly that the protein industry (namely pork production) was the key reason for investing in refrigeration.
“This was one of the niche markets we felt we could capitalize on, and in Pat’s first month as governor, we approved a public-private partnership to build the cold storage facility,” Tata said.
At the time, Tata added, “the protein industry in North Carolina was sending the great majority of its product to Virginia and Charleston, even though the world’s largest processing plants are 60 miles from Wilmington.” Trips to out-of-state ports could be as long as 400 miles.
Whether incremental improvements—like better rail lines and storage facilities, or a wholesale redesign of the state’s port infrastructure—is the winning strategy has been a constant debate for the last two decades.
After Stromberg left in 2004, port policy took a turn as his successor, Tom Eager, sought to build a new $1 billion port in Southport, 20 miles east of Wilmington.
Both Stromberg and McCrory said it represented a distraction. “They had a lot of consultants who said this would allow us to surpass Charleston and Norfolk, but that didn’t make sense to me,” Stromberg said. “It was closer to the ocean, but it was a greenfield site,” which, Stromberg explained, would have required a costly rail extension.
Geography has long been the enemy of Wilmington’s port.
“We got a lot done,” said McCrory of the port’s improvements. “But we still had the dilemma that it takes so long to get in and out of the port. It’s 26 miles; that’s not going to change.”
Wilmington’s port sits 26 miles from the open sea on the Cape Fear River, which can be shallow and insufficiently wide. “It’s tough to turn around boats in there,” added McCrory. “It’s really a river—there’s not a lot of space in there.”
Wilmington is not the only port in North Carolina. Eighty miles up the coast, in the Bogue Sound, is Morehead City.
“They were rivals,” Stromberg said. “When Wilmington got a crane, they also wanted one in Morehead City.” Meanwhile, Georgia, South Carolina, and Virginia had chosen to focus on single terminals. In the 1970s Virginia had five competing terminals.
Clark, the current NC Ports executive director, rejects that framing. “The two ports work in concert,” Clark said. “I don’t subscribe to the notion that there is conflict between the two.”
He argued instead that the two ports balance each other—and balance other regional ports—because the state’s port cargo is split equally between containers and general, non-containerized cargo.
“It’s a very healthy balance,“ Clark said. “Compared to our three peers, we handle more general cargo tonnage.” Morehead City generally handles “bulk” cargo and “breakbulk,” or non-containerized, cargo, including grain and pig iron to support a Nucor Corporation steel plant in Hertford County.
Morehead City continues to grow and is planning for more expansion. In 2019, the port added its first new crane in 40 years. Wilmington, meanwhile, has seven container cranes and three general cargo cranes.
But even taken together, the ports pale in comparison to their regional peers. In key areas of the state, the focus for shippers remains Charleston and Norfolk.
McCrory, the former governor, noted that for Charlotte businesses, the Port of Charleston “is closer and easier to get to.”
“You have to recognize that state boundaries don’t mean a damn thing when it comes to a port,” McCrory said.
Wilmington sits about 200 miles from Charlotte, a path that has long included state highways and stoplights. Charleston is also 200 miles from Charlotte, and it’s a straight shot on interstate highways.
For Clark, his focus is on the present. “I can’t rewrite the history, whatever that history might be,” he said. “The port [of Wilmington] is positioned where it’s positioned. It’s a 26-mile transit. Other ports have [similar] characteristics.
“I joined the ports in June 2017,” Clark continued. “My view of the ports and of what we provide are from that point looking forward. In the last several years, a lot of great things have taken place.”
In 2017, intermodal rail service between the Port of Wilmington and Charlotte was reinstated after a lapse of three decades. In March, the CSX-operated rail service moved a record-breaking 989 containers.
In January, NC Ports announced it will partner with Scoular, an Omaha-based grain and food company, to develop a new facility to receive truckloads of crops, primarily soybeans, and transfer them to containers for ocean transport. North Carolina is the East Coast’s top soybean-growing state, with most production east of Interstate 95. But without the grain elevators, like those that Scoular plans, large quantities of those soybeans have not moved through the Port of Wilmington.
In June, shipping giant Sealand, a division of Maersk, began a weekly Port of Wilmington call for its Central America and Caribbean service, which includes several ports with refrigerated cargo, like fresh produce. Expansion of Wilmington’s refrigerated container capacity is continuing, with a second phase set to open in late 2022.
Clark said he has not been involved in any discussions regarding auto manufacturing coming to North Carolina. But he made clear he sees it as within the port’s remit.
“One of our goals is to make sure we’re in a position to support manufacturing,” he said, noting that incoming cargos include imported aircraft components, as well as rubber and steel for auto plants in other states. “As we expand the capabilities, we hope to be in a position to support future economic development projects,” Clark said.
Just as McCrory and past governors have used their authority to assemble and oversee NC Ports’ board of directors, Cooper has appointed six of the ten members. The administration wants to let “good corporate citizens sit on the board [and] provide the financial oversight,” said Eudy. He added that the Governor wants to let the port director run the operation without political considerations.
Of course, every port in the world is trying to grow: The port business requires constant upgrades in order to accommodate bigger ships. Bigger ships require ever newer infrastructure: deeper channels, sufficient cranes, adequate warehouse and distribution facilities. To attract landside cargo, you must have ships call. The global shipping industry has come to rely on increasingly enormous vessels. If ships do not find the infrastructure they require at one port, they sail to another.
The problem for North Carolina is that Wilmington got behind, and now handles about one-tenth or less of the volume of the neighboring ports in Charleston, Norfolk, and Savannah. The Port of Wilmington is growing. But Charleston, Norfolk, and Savannah are growing too, and they moved ahead long ago.
Lincicome, the analyst, applauds ongoing efforts to strengthen the Port of Wilmington and notes that it will strengthen the state’s hand in luring new investments.
“There is a desperate need in the U.S. for additional deep-water port capacity,” he said. “North Carolina has been chasing an automaker forever. It sure does seem that the lack of deep-water port capacity is an impediment.”
The state’s port was busy in Colonial times, even though the depth was only between 15 feet and 20 feet, said historian Chris E. Fonvielle, Jr., a professor emeritus at UNC Wilmington. But the roads between Wilmington and the Piedmont never provided an easy route, and the port’s impact further inland was limited by that infrastructure.
During the Civil War, the port shot to prominence. By late 1864, Wilmington was the Confederacy’s principal port. Union soldiers had captured or blockaded all of the others—including Charleston, Norfolk, and Savannah in 1862, as well as Mobile and New Orleans in 1864.
“Wilmington was not only the main seaport, but also the most important city of the Confederacy by late 1864,” said Fonvielle. At one point, Robert E. Lee, commander of the Confederate army, declared, “If Wilmington falls, I cannot maintain my army.”
The factors that helped keep Wilmington open then are the same ones that complicate its success today. Blockade runners from Europe and the Caribbean flocked to Wilmington, Fonvielle said, because they had an 80 percent chance of getting through—far higher than anywhere else.
“At every other seaport, there was one way in and one way out, but Wilmington harbor has two inlets, separated by Baldhead Island,” Fonvielle said. “So the blockade runners had a choice of inlets and exits.”
But after the Civil War, Southern ports languished. Wilmington, with its hidden, up-river entrance, was no exception. That changed when Malcolm McLean came calling.
As a native North Carolinian, McLean preferred to stimulate growth at the Port of Wilmington. During his visit, McLean was accompanied by his colleague Ken Younger. Their company had assembled a fleet of six converted military ships. Each could carry 226 containers, a small fraction of today’s loads, as well as a small crane to lift the containers. To create space, McLean wanted the cranes to be taken off the ships and placed on land. The ports would fund those new cranes.
“We told the port director at Wilmington what we wanted, which included a crane, our own section of the port and a private entrance,” Younger said in an interview with The Charlotte Observer in 2000. “He told us he had to ask his board, and he said that, really, we should go to Morehead City. We said, ‘Morehead City isn’t big enough, and we want to go to Wilmington.’ That evening, we went to Charleston.”
In Charleston, the port director invited McLean and Younger to meet the next day. “The people in Wilmington never grasped what the future was,” McLean told The Observer.
The decision “put Wilmington on the back burner for decades,” said Stromberg.
Stromberg thinks that dynamic is permanent. “My view is that Wilmington will never surpass Charleston, Norfolk, and Savannah, where the transportation infrastructure, the distribution center, and the channels are mature.
“But there’s nothing wrong with Wilmington being a first-rate, efficiently run port that serves the region and contributes to the state’s business and industry. That necessitates really focused planning: What can we do better than these other folks? Cost? Service? Total time [in port]?
“It’s tough to catch up,” Stromberg said. “But if you focus on your strengths, and you’ve got the numbers to back it up, there’s nothing to be ashamed of in running very efficient state ports.”
In March, at the South Carolina Ports Authority meeting, port officials briefly discussed the Port of Wilmington’s plans.
“The Port of Wilmington, I haven’t heard much about them. Is anything going on there?” asked SC Ports Authority vice-chairman David Posek. “I heard that they had higher cranes or they have brought in some cranes for the larger ships.”
“They bought three cranes, and they widened the turning basin,” replied Jim Newsome, president and CEO of SC Ports Authority. “They’re in the study phase for deepening.”
Barbara Melvin, the chief operating officer for the SC Ports Authority, had the final word: “I think they’ve been in that phase for a while.”
Ted Reed has been a reporter for The Miami Herald, The Charlotte Observer, and TheStreet. He is the author of Kenny Riley and Black Union Labor Power in the Port of Charleston.