Consumers are making more retail purchases online as the COVID-19 pandemic has shoppers wary of brick-and-mortar stores, and that’s highlighting the need for new e-commerce distribution hubs.

A case in point is a development the State Ports Authority is building near Ridgeville, some 30 miles from its core waterfront business of loading and off-loading cargo ships.

“The pandemic has accelerated the retail evolution,” according to a report by Prologis, one of the world’s largest developers of retail-focused distribution centers.

The report shows e-commerce accounted for more than 25 percent of all U.S. retail sales in April, up from 15 percent at the end of 2019. While traditional retail stores might regain some of that share if the pandemic is eventually controlled, the online sales trend will continue to rise and is currently years ahead of pre-pandemic forecasts.

That growth, combined with a coming population surge and demand from online retailers for bigger warehouses to accommodate a wider range of goods than brick-and-mortar stores, means adequate industrial space is in short supply. And developers see a need to quickly fill the void.

“Absolutely it does, and we’ll be talking about that shortly,” Jim Newsome, president and CEO of the State Ports Authority, said in an interview last week.

The SPA plans to build the Ridgeville Commerce Park — a dozen distribution warehouses with rail and interstate access — to cater to merchants that will be bringing goods through the Port of Charleston.

The commercial real estate firm CBRE Inc. says e-commerce represented 20 percent of all industrial leases in the Southeast during the first few months of 2020, and the region is poised to outpace the rest of the nation.



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Jim Newsome, CEO of the State Ports Authority, sees e-commerce cargo as a way to diversify South Carolina’s maritime cargo base. File/Provided


The Charleston, Savannah and Greenville markets offer “significant logistics capacity, available land for industrial and manufacturing development, lower asking rents, and access to the largest population concentration in the country,” James Breeze, CBRE’s global head of industrial and logistics research, said in a statement.

The Southeast also offers the country’s biggest consumer base, with a population of 85.5 million that’s expected to swell by nearly 5 percent over the next five years, according to CBRE.

“In-migration to the Southeast is going to be significant, and that drives retail distribution,” Newsome said.



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Online retailers, like Amazon, are building new distribution centers to bring goods to customers. The State Ports Authority hopes to attract e-commerce firms to its industrial campus near Ridgeville. File/Staff


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When it comes to e-commerce, distribution centers need to be as close to customers as possible. E-commerce giant Amazon has more than 110 U.S. warehouses — what it calls fulfillment centers — and dozens more planned, with a focus on Southern states, according to logistics consultant MWPVL International. Amazon said this year it will build a distribution center near the Port of Savannah, after operating out of a nearby temporary tent warehouse since 2018. The online retailer has operated out of a similar temporary structure in Charleston County since 2018.

Traditional retailers like Walmart and Target are using their stores as de facto distribution centers, sending products to a customer’s closest retail location for pickups or last-mile deliveries.



The Port of Charleston once ignored retailers. Now it's embracing them.

Global manufacturing trends are also playing a role in making Charleston and the Southeast a key hub for e-commerce retail distribution. Trade tensions with China have forced some retailers to shift at least some of their supply chains to other southeast Asia countries, such as Vietnam. Anderson power tool maker Techtronic Industries, for example, said last month it will invest $650 million in a new Vietnamese plant.

While it’s unlikely the highly efficient supply chains built over recent decades will ever abandon China entirely, the shift of some manufacturing to southeast Asia gives Charleston’s port an advantage because the route from those countries to the U.S. East Coast is quicker than to West Coast ports.



Charleston ports agency starts design work on retail distribution hub

South Carolina had two of the Southeast’s fastest-growing industrial markets — Charleston and Greenville — during the first quarter of this year, along with Savannah, CBRE reported. Greenville’s growth has been driven in large part by a nearby SPA-run inland port that provides a cargo link between the Upstate and the Charleston waterfront. Such inland connections also provide retailers with quicker access to customers throughout the region than cargo entering the West Coast.

“You want your dog’s chewy treats in three hours, not in four days,” Newsome said of the time advantage e-commerce firms are aiming to provide.

The state maritime agency has not yet announced any tenants for its Ridgeville site, which is on the eastbound side of Interstate 26. Newsome told The Post and Courier he expects to have an announcement soon.

In the meantime, the SPA has filed plans with the Army Corps of Engineers that show 5.5 million square feet of space in a dozen warehouses as well as a 40-acre site to store the trailers that truckers need to haul containers.

The authority bought the 950-acre site for $16.2 million in 2018 with an eye toward diversifying Charleston’s cargo base — which has been dependent on manufacturing — with more retail goods.

The authority’s board of directors last month approved spending $1 million on site work for the project, which is expected to see its first tenants during the first half of 2021.

Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_