Hugh K. Leatherman Terminal

A ~$1.9 Billion Public Investment, System Readiness, and Utilization Analysis

Executive Summary

South Carolina invested nearly $1.9 billion in the Hugh K. Leatherman Terminal system, yet the facility remains sharply underutilized. Internal records show port leadership warned before opening that rising labor and operating costs would undermine the terminal’s competitiveness. Those warnings proved accurate.

Instead of routing cargo to Leatherman, carriers have continued to favor older, lower-cost terminals, leaving a modern facility largely idle. Legislative oversight in 2025 confirmed that high operating costs — not rail timing — are the primary barrier to utilization.

Without transparent cost data and a credible routing plan, taxpayers continue carrying the burden of a modern terminal that isn’t being used at scale.

Key claim: Leatherman’s low utilization is a cost and routing problem, not a rail construction problem.

I. System Description: The ~$1.9B Investment

Component Estimated Public Cost
Hugh K. Leatherman Terminal — Phase 1 ~$1.0 Billion
Port Access Road (I-26 Link) ~$330 Million
Navy Base Intermodal Facility (Rail Yard) ~$550M taxpayer funds + ~$140M SCPA overrun (total now ~$690M)[8]
Total Public Investment ~$1.88–$1.9 Billion

This system must be evaluated as an integrated whole. Terminal capacity, rail access, and operating cost structure are inseparable.

II-A. The Labor Cost Inflection Point

Leatherman represented a fundamental shift from non-union or hybrid labor models to full International Longshoremen’s Association (ILA) labor. This was not a marginal change.

II. Advance Warning: Labor Cost and Operating Risk

Prior to Leatherman entering service, Ports Authority leadership explicitly warned carriers and state officials that labor uncertainty posed a material financial risk to the terminal’s viability.

“Obviously, having invested well over $1 billion in phase one of a terminal needed as a critical enhancement to South Atlantic port infrastructure which is quickly reaching its capacity limits, we cannot live with this uncertainty.” [2] — Jim Newsome, Email to Maersk (Jan. 6, 2021)

In parallel communications to the Governor’s Office and state legislators, Newsome warned that moving to all-union labor would materially increase costs and affect carrier behavior. [3]

“If the carriers truly feel that the Leatherman Terminal would be better operated by all union labor, their cost of using that terminal would be in my estimate easily another [REDACTED] per container.” [3] — Jim Newsome, Internal SCPA Correspondence (Jan. 2021)

Labor costs determine:

  • per-container operating cost,
  • carrier pricing decisions,
  • service deployment, and
  • whether volume is routed to Charleston or diverted to Savannah.

SCPA leadership acknowledged internally that this shift materially altered the terminal’s competitiveness. [2][3]

II-B. FOIA Redactions and Refusal to Disclose Labor Costs

The Ports Authority has refused to disclose the actual per-container labor cost increase associated with ILA operations. [3]

The figure was known internally at the time of the warnings above. It remains redacted from public view. [3]

With nearly $2 billion in public capital invested, redacting core operating cost data prevents taxpayers and legislators from evaluating whether underutilization stems from market conditions or a structurally higher cost base.

III. Oversight Findings (2025)

“They’ve got to take a look at their entire capital outlays — not just the cost of capital but the cost of labor.”

“The more expensive labor costs have already put Leatherman at a disadvantage.”

“It’s too costly to operate right now, much less doubling it.”

“These basic questions should have been vetted… there should have been answers before now.”

“I don’t see how you can do phase two right now.”

“Right now, they need to get a handle on the costs and get assurances from the steamship lines they’re willing to pay them and continue to send ships to Charleston. Without that, we could end up in a downward spiral.”

“The first phase of Leatherman, which opened in February 2021 at a cost of $1 billion, is the East Coast’s newest and most modern terminal but its high operating costs have steered ships to the port’s older facilities. To make it viable, Grooms said, the ILA has to make concessions ‘with how labor is applied and the cost of that labor.’” [1] — Sen. Larry Grooms, Chairman, Senate Transportation Committee (Oct. 2025), as reported by David Wren, SC Daily Gazette [1]

These statements are notable because they describe the problem as an operating-cost and carrier-commitment issue—conditions that exist independent of NBIF’s commissioning status.

III-B. Internal Operational Signal: “First trucks in more than 18 months”

The Ports Authority’s internal communications show that Leatherman’s operational activity remained limited well after the terminal was announced as open. In an August 27, 2024 email, CEO Barbara Melvin described Leatherman gate activity as test-only — and explicitly stated that these were the first trucks in Leatherman’s system in more than 18 months. [5]

“Granted these were simply test trucks as we make sure all the systems are working properly; but these are the first trucks in the system for Leatherman in more than 18 months.” [5] — Barbara L. Melvin, President & CEO, South Carolina Ports Authority (Aug. 27, 2024)
Internal SCPA email from CEO Barbara Melvin (Aug 27, 2024) describing first trucks in Leatherman system in more than 18 months

Exhibit: Internal SCPA email (Aug. 27, 2024) describing limited gate activity at Leatherman and noting “the first trucks in the system in more than 18 months.” [5]

This matters because Leatherman was built as the system’s modern, rail-capable relief valve — yet internal messaging shows it was not behaving like an actively utilized terminal for a prolonged period.

IV. Utilization Evidence: Deferred Rail Readiness and Idle Capacity

Rail readiness is not a prerequisite for container operations. Wando itself handles the majority of its container volume by truck. Leatherman can absorb truck-handled container volume immediately using infrastructure that already exists and has already been paid for.

IV-A. Routing Imbalance (FY 2025): Wando vs. Leatherman

SC Ports’ own “Total Pier Containers” reporting shows that in FY 2025, Wando Welch Terminal handled 1,154,652 containers while Leatherman handled 75,931. That is 1,154,652 ÷ 75,931 = 15.2× more containers routed through a legacy terminal than through a modern, purpose-built terminal. [6]

The practical implication is simple: paid-for capacity at Leatherman remains lightly utilized while throughput is concentrated elsewhere.

IV-B. Documentary Record: What the Board Praised — What It Did Not Measure (2024)

The Board’s 2024 CEO performance evaluation provides a contemporaneous record of how Leatherman-related actions were described and credited in writing. [7]

EVIDENTIARY SIDEBAR
What the Board Praised — and What It Did Not Measure

Source: CEO Performance Evaluation (2024) [7]

The Board’s 2024 performance evaluation of the Chief Executive Officer explicitly credits leadership actions related to the Hugh K. Leatherman Terminal. The following statements appear verbatim in the evaluation:

“Reopened the Hugh K. Leatherman Terminal in cooperation with the International Longshoremen’s Association and the United States Maritime Alliance.” — CEO Performance Evaluation, p. 1
“Initiated studies with the U.S. Army Corps of Engineers to equalize the channel depth between the Hugh K. Leatherman Terminal and the North Charleston Terminal at fifty-two (52) feet.” — CEO Performance Evaluation, p. 1
“Coordinated with Palmetto Railways and the Class I railroads on rail infrastructure necessary to serve the North Charleston Terminal complex, including the Hugh K. Leatherman Terminal.” — CEO Performance Evaluation, p. 1
“The opening of the Hugh K. Leatherman Terminal and coordination of associated rail infrastructure represented one of the most complex operational challenges during the evaluation period.” — Board HR Committee Commentary, p. 2

What the Evaluation Does Not Measure

The evaluation does not include quantitative performance measures related to the Hugh K. Leatherman Terminal, including:

  • Annual container throughput (containers or TEUs)
  • Utilization levels (berth, yard, or rail)
  • Rail service commencement dates
  • Volume commitments or targets tied to rail integration
  • Comparative performance relative to other terminals

This sidebar reflects only what is documented in the evaluation itself.

Open the evaluation document (LG-5) → [7]

(Cross-reference: statutory requirements for annual CEO review documentation are summarized on the Law & Governance page, Case Study #2.)

V. Rail Timing and System Readiness

The Navy Base Intermodal Facility (NBIF) was intended to provide near-dock rail for Leatherman. Opening the marine terminal years before rail availability increased the risk that the broader system would remain underutilized until rail connectivity and operating conditions aligned.

Update: In Jan. 2026 testimony, SC Ports said NBIF would not open until at least 2028 and that construction had been slowed while operating agreements and demand are developed.[8]

Even if NBIF commissioning is phased, interim routing decisions still determine whether incremental container volume is absorbed by a terminal with dedicated access infrastructure or forced onto congested public corridors.

VI. Cost of Underutilized Capital

  • Total public investment (system): ~$1.9 billion
  • Illustrative annual carrying cost (5%): ~$95 million/year
  • Illustrative annual capital carrying cost per container (at current throughput): ~$1,250/container

These figures are order-of-magnitude illustrations of the cost of carrying large public capital with low throughput. They exclude operating expenses and focus only on the cost of capital.

A utilization plan is a financial plan: without it, the public carries the capital while congestion and expansion pressure persist.

VII. Oversight Questions

  • What container volume does SCPA commit to routing through Leatherman in FY 2026–FY 2028?
  • What is the all-in per-container cost differential at Leatherman versus Wando (labor, operating, and gate costs)?
  • What interim utilization plan existed for Leatherman while NBIF remained pending, and what measurable utilization targets were set for FY 2021–FY 2025?