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2006 industry report: transportation

Tar Heel ports are ready to pull out the good China

Moving thoughts

TREND: Increased international trade helped boost tonnage at Tar Heel ports by almost half in the past two fiscal years.

OUTLOOK: Continued growth in imports, which should help the ports and trucking companies.

The Chinese might be hanging many North Carolina manufacturers out to dry with hard-to-beat prices, but they’re making quite a splash at the state ports in Wilmington and Morehead City. Tom Eagar, CEO of the North Carolina State Ports Authority, says most of the ports’ 44.5% increase in tonnage during the past two fiscal years came from China.

He expects gains in 2006 to be equally large, not only because Chinese imports show no signs of abating but because North Carolina ports are ready for them. Many other U.S. ports are operating at capacity, but North Carolina’s have room to grow. The Ports Authority in September began a $265 million expansion with a $34 million purchase of four container cranes for Wilmington. In Morehead City, a warehouse is under construction and design work is under way for a $65 million terminal on Radio Island across the Newport River. It might open in 2008. Other factors helped keep the ports bustling in 2005. Hurricane Katrina forced goods bound for New Orleans to head elsewhere, including Morehead City, which briefly became the nation’s top port for raw rubber.

The import boom was good for trucking, but rising fuel prices drowned out some of the cheers. Some companies attempted to make up for rising costs by slapping on surcharges, says Charlie Diehl, president of the North Carolina Trucking Association, but many still lost money. “Prices are so volatile and changing so rapidly that there is a gap in time that doesn’t allow for a full recovery.” The industry also continued to be plagued by driver shortages. But for the largest Tar Heel trucking company, Thomasville-based Old Dominion Freight Line, the good outweighed the bad. Revenue rose 29.4% during the first nine months of 2005, compared with a year earlier, and net income increased 38.1% to $39.2 million.

Fuel costs were a challenge for airlines, too. Tempe, Ariz.-based US Airways, the largest carrier operating in the state, emerged from bankruptcy in September. But that same month, two other carriers with a substantial presence in North Carolina — Atlanta-based Delta Air Lines and Egan, Minn.-based Northwest Airlines — sought court protection from creditors. “The cost of fuel is a huge, huge obstacle with respect to profitability,” says Jerry Orr, aviation director of Charlotte/Douglas International Airport. US Airways carries more than 90% of the airport’s passengers. “Airlines are learning to operate in an environment where fuel costs twice what it did two years ago.” Not all of them learned how to do it. Dulles, Va.-based Independence Air stopped flights in early January — just two months after its parent, FLYi, filed for bankruptcy protection. The discounter had flights at all three of the state’s largest airports.

Still, passengers in Charlotte for the year through October were up 14% over the same period in 2004, but cargo was down 2%. Boardings at Raleigh-Durham International through October were up 8.6% from the same period in 2004, and cargo was up 1.2%. Jill Denning, marketing and communications manager, says the increases at RDU were aided by growth in the state economy and in personal incomes.

At Piedmont Triad Internation-al Airport, passenger traffic was down 1.6% for the year through October, and the picture probably won’t get brighter in the near future. The airport lost customers when carriers at Charlotte/Douglas and RDU started matching its discounted fares. PTIA spokeswoman Stephanie Freeman says the num-ber of travelers from Mecklenburg County, who once made up 10% of the total, dropped by half after Orlando Fla.-based AirTran Airways began offering cheap flights from Charlotte in May. Cargo traffic at PTIA was down 2.4% for the year though October. Airport officials attributed the dip to a three-month maintenance shutdown by cargo-carrier TradeWinds Airlines.

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