Charleston parked its $1 billion terminal. Here's the math

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On Aug. 1, the South Carolina Ports Authority idled the Hugh K. Leatherman Terminal in North Charleston, a roughly $1 billion facility that opened in 2021. There is no restart date.

The numbers behind it: in the first 11 months of the fiscal year, Leatherman handled about 75,455 containers, under 10% of its capacity. Wando Welch, the port's other big container terminal, moved more than 1 million. For the full fiscal year that ended June 30, containers across the port fell 4.6% and revenue came in around $401 million, about 5% under budget.

It was supposed to be the future. Leatherman opened in March 2021, billed as the first big new container terminal in the country in more than a decade. Weeks later the International Longshoremen's Association sued the port over control of the terminal and its jobs, major carriers stayed away, and the place sat effectively closed for 21 months. Operations resumed in September 2024, per The Maritime Executive.

The cost problem never went away. The terminal is staffed entirely by union workers and costs more to run than the port's other container terminals, which mix union and state employees, and the SC Daily Gazette reports many container lines have refused to call there. State Sen. Larry Grooms, who chairs the transportation committee, called it "too costly to operate right now," as relayed by The Maritime Executive.

The port's answer was to cut costs. Operating expenses landed at $378.7 million, down 5.3% from the year before and 10% under budget, through early retirement offers, renegotiated contracts, delayed hiring and tighter overtime monitoring. CEO Micah Mallace says the authority "really focused on cost," with the aim of lowering rates enough to win back market share.

Why the volume is soft depends on who you ask. Tariffs, the Iran war and general economic nerves are weighing on trade at ports nationwide. Charleston leans heavily on manufacturing and auto cargo, which leaves it exposed compared with Southeast ports that handle more consumer goods, and Mallace says its container rates have been out of line with regional rivals.

It seems the Port's struggles haven't come from a lack of investment. There's the Leatherman terminal itself, and a harbor deepened to the deepest on the East Coast. So is it a matter of good marketing? I don't know, but with this many attributes, we shouldn't be losing out to Savannah.

The newest stretch is rougher. The Post & Courier reports July and August volumes of about 224,000 containers, down 8% from a year earlier and the 10th and 11th straight monthly declines, with revenue down nearly 20% to about $61 million. It also says holiday-season imports are routing mostly to the West Coast this year.

Who has to move. Leatherman's main tenant, MSC, has to relocate, and one of its five routes through the terminal is being suspended. The rest shift to the North Charleston and Wando Welch terminals, which the port says have room. Leatherman handled only about 5% of port volume, per a June report from Supply Chain Dive, and going from three terminals to two is where the savings come from. The port says a restart depends on returning volumes, capacity needs and how cost-competitive it can get.

Loose ends. Work on Leatherman's second berth is expected to finish next year. The Navy Base Intermodal rail yard next door still has no opening date, and outlets disagree on its budget: $550 million in the Gazette's account, $690 million in The Maritime Executive's.

What to watch: the holiday-season numbers, a rail yard opening date, and Mallace's State of the Port address on Oct. 27, per the Post & Courier.

Sources: SC Daily Gazette (fiscal-year figures, costs, causes), The Maritime Executive (Leatherman history, volumes, tenant), Supply Chain Dive (share of volume, reopening conditions) and the Post & Courier (July and August figures, holiday imports, Oct. 27 address)