urbanSTL

^ 18 months for the first ship to be constructed, with the following ships emerging on a 6 month cycle after the first one. I believe I can source that to a conference the Freightway had with them a couple years ago. APH is to have their due diligence report finished this Quarter. I've heard earlier that this new shipping lane could mean companies may be able to cut their shipping costs by up to 30-40%, which is ridiculously huge and makes the STL region incredibly attractive. Should everything be favorable, then they will likely commence with construction not long after. It wouldn't surprise me if they take on an investor for the construction and deployment, perhaps an international maritime company such as Maersk (speculation here, nothing more). 

Now, if they get a green light from their due diligence report's release, I would think there would be a massive opportunity for developments related to this. On the construction angle, I'd expect to see even more activity going on at the Port of Jefferson County in Herculaneum (the northern "hub") as well as the ("spoke") ports of the City of Saint Louis and America's Central Port in Granite City. I'd think it likely to see some serious container cranes going up. 


Maybe something like this? To be determined, I suppose... I'm curious how much the City's port can expand, not just the docks but room behind it for a container yard and loading/unloading trucks (and maybe trains). Could this lead to another port being developed that can hold a container yard? Long term, maybe...  

Regional manufacturers can definitely look to what this could mean for cost savings in shipments. Especially for products that they currently send along trains to the West Coast for international shipment, this development may be a huge cost-saver (i.e. 30-40%). Decreasing shipping costs by that much would be a game changer for logistics operations in the central US and really could make STL one of the nation's largest shipping hubs, more than we already are. 

Concurrently, should this progress forward, this could be a windfall for industrial real estate developers. If STL becomes a gateway port to international waters, then we could see a massive influx of warehousing and manufacturing. If I was a speculative real estate developer, I'd be looking at building industrial parks full of warehouses along the highways. First, I'd see what would be possible near Herculaneum, although I'm not sure how much proximate developable space there is right next to the port (maybe closer to I-55). Second, we can have increased warehousing near the two local ports: North Broadway's industrial district in the City, and new developments at ACP in IL as well as up & down IL Route 3. Third, and perhaps most significantly, I'd want to be building along all I-255, from the current warehouse hubs near Edwardsville all the way down to Dupo and Columbia IL. Proximity to innerbelt highway and the ports, plus relatively cheap and open land right next to a major City that all of a sudden finds its value on the rise. 

It's not just products coming in; I see the possibility of multiple major companies having their products warehoused here, maybe even manufactured AND warehoused here, to be proximate to this shipping lane. We definitely have the market for containerized agriculture, but I'm interested in non-commodity finished goods being built here for export. Add-in that STL has 4 interstate highways and 6 national rail hubs, and the opportunity scale increases exponentially. 

Yeah, I'm kind of excited for this one. 

So, I was offline for a couple days after that big damn post I did earlier on this whole thing, and I see a bunch of good comments and questions. As best I can, here’s a couple quick thoughts…
 
1.       Estimates for Container-on-Vessel (CoV) total cost savings are 30-40%+. This will definitely drive new demand as logistics are fundamentally cost-driven. For my understanding, this is the most significant lure to this business model. BellaVilla is right to note the importance of Economies of Scale.

2.       The KC harbor plan ldai_phs wrote about looks great. We mustn’t look at this as direct competition, however, or that they’re going to take an opportunity from STL. Very much, I hope this KC project comes to fruition. This is especially if KC elects to include a container port, as this would only further the market viability for CoV. Plus, what they ship out of KC has to stop in STL before it gets sent to NOLA anyways.

3.       Geography plays an incredible amount into this opportunity. STL is effectively the geographic center of the country. Our catchment area is very strong as we will attract manufacturers who could potentially ship via this route from Chicago, Indianapolis, etc. We also have well established shipping networks here, as demonstrated by STL being the second-largest inland port system in the country (Cincinnati is first, but their defined “port” is about 200 miles long while STL’s is about 70) – and gaining ground. 

4.       Further, our intermodal logistics assets are sound and getting stronger. I note our existing infrastructure beyond the rivers to include 6 major rail yards, 2 international airports, and 4 interstate highways, all situated at the geographic center of the country. We also have strong, and growing, warehousing networks that are increasing in volume. Should CoV come to be, this industry’s development should seriously accelerate physical infrastructure and the strength of our business community.

5.       Regarding competing with Memphis… I seriously hope they can keep up with us. This whole thing must not be seen as a “winner take all” scenario. For this new venture to succeed, it will need multiple markets to thrive. The biggest winners will be STL, MEM, and NOLA as these are the hubs. There will be many spokes as well. The STL spokes will include those markets up the Missouri and Mississippi Rivers, including KC, Omaha, the Great Plains, and maybe all the way up to Minneapolis. These will all consolidate at STL. Should we include the Illinois River, we could extend this all the way up to (Peoria and) Chicago via Joliet (although Chicago may not be too fond to such competition to their freight routes and rail networks). Meanwhile, the MEM hub will include those river cities up the Ohio River, including Louisville, Cincinnati, and Pittsburgh, all of which will consolidate at the MEM yards. They have a lot more market to cover. Of these metro areas, STL is the largest hub; while we are smaller than Minneapolis and Chicago, they will hub here if they participate in this. We are larger than all the spoke metro areas on the MEM/Ohio River group. And, Memphis will likely focus on their two biggest logistics-centric businesses feeding their CoV line: Walmart (Bentonville, AR) and FedEx (through which Memphis is a true “aerotropolis” according to the academic understanding of the term). Meanwhile, STL has a much greater economic presence, not only in total goods shipped but in total major corporations that can utilize this system. Our business community is far, far beyond what MEM has, and we have more than a million more people than they do. Add-in the catchment area we have, and I have no fear of MEM eating our lunch.

6.       Addendum: Competition for STL’s potential CoV business is NOT Memphis; it’s the trains that go from Long Beach to Chicago.

7.       Dredger is spot-on right when he says we must all be patient until we hear APH has signed a shipyard contract and the keel is laid. Promises don’t matter until the check clears. I hope we hear of such news this Quarter.

8.       There’s no need to build a new rail line from NOLA to STL. The Mississippi River is our direct intermodal line between our cities. Much of this entire initiative is based on capitalizing on our rivers as a transportation network, something that this new technology in shipping can fundamentally further. Good times.

^100% agree. I've been wondering for some time where we can build a container yard along the riverfront, because I'm not sure if the Port of St. Louis has the capacity to handle such a potentially huge influx of containers. Maybe they're waiting for the thing to become more of a reality before any announcements are made? Guess we'll wait and see. Whoever can get this done could potentially make bank.