Originally Published in the Philadelphia Inquirer on December 14, 2024

Philly’s Fresh Fruit Empire

Philadelphia imports more fresh fruit than any other U.S. port, according to S&P Global data. But with increased competition, can the city retain its market edge?

Philadelphia, PA – Most of Philadelphia’s biggest industries are highly visible: office towers in Center City announce the presence of telecom giant Comcast and an array of professional services. Educational and medical institutions’ campuses are hard to miss.

Tucked away along facilities on the Delaware River, and out of view for much of the public, is another big economic driver: the Port of Philadelphia. The seaport has long connected the region to international trade, and in the last 50 years developed a niche as the top U.S. port for imported fruit. Last year, the port accounted for 20% of all imported fruit in the country, according to S&P Global data.

Of the 22.8 billion pounds of fresh fruit brought to the U.S. last year, Philadelphia imported the most — bringing in more grapes, citrus, berries, apples, pears, and stone fruit like cherries and peaches than any other American port.

5.1 billion pounds of fresh fruit was brought to Philly on cargo ships that made 3,404 international trips in 2023. That’s equivalent to six Empire State Buildings’ worth of fruit.

Container ships brought an average of 10 million pounds of fruit each day last year. That’s equivalent to 250 Humpback whales.

Over 75% of our imported fruit comes from Central and South America with the majority coming from three countries: Costa Rica, Panama, and Guatemala.

Imports of grapes from Chile and Panama and citrus from Costa Rica have long distinguished Philadelphia as a top port for perishable products, supporting thousands of local jobs from dockworkers to distributors.

In the last decade, ports in Georgia, North Carolina, and Florida have tried to make inroads in the perishable cargo trade, as the federal government relaxed regulations that previously required fruit from South America be imported at cooler Northern U.S. ports to prevent fruit fly infestations.

Despite that increased competition, Philadelphia has retained its edge in the fruit market — which maritime industry professionals attribute to the region’s vast cold storage infrastructure, close access to tens of millions of consumers, as well as state and private investment in port facilities.

The port imported 5.1 billion pounds of fruit in 2023 — worth a total of $3.1 billion — and trade data show southern ports have a long way to go to challenge Philadelphia. Major local competitors like New York and Wilmington, which imported 937 million and 3.86 billion pounds respectively, also lag behind.

Now, the Philadelphia Regional Port Authority (PhilaPort) is seeking capital funding from Harrisburg and Washington to invest in projects it says will expand the port’s capacity to handle fruit and other commodities such as meats, paper, automobiles, cocoa beans, and steel.

PhilaPort, an independent state agency, in October unveiled a 15-year plan it says will guide its future. The report said Philadelphia’s recent growth in container cargo — it handled 743,000 container units last year, up 80% from 2016 — was driven in part by an increase in perishable products. Those products account for more than 30% of imports that were shipped in containers, the report said.

While the plan highlighted potential new markets it could explore — such as liquefied natural gas storage — it made clear that fruit imports will continue to be a staple of its strategy.

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“There is Chilean fruit, Peruvian fruit, that is going into some of the Southern Atlantic ports. But the volumes are minimal. They don’t compare with what Philadelphia is,” said John Antonucci, vice president of business development at customs broker and freight forwarder 721 Logistics. “All those southern ports — they are trying to replicate Philadelphia’s model.”

The port authority’s push for more state funding comes as a number of factors have focused the public’s attention on supply chains: pandemic-era shortages of goods, the brief labor strike this fall that shuttered commerce at East and Gulf Coast ports, and President-elect Donald Trump’s pledge to implement sweeping new tariffs on imports.

Trade ties with Chile

While it’s now known mostly as a niche port, Philadelphia was once a major hub of international trade back when the U.S. was a manufacturing powerhouse.

It was slow to embrace container shipping in the mid- to late-20th century — when ocean carriers started transporting cargo in big metal boxes, a change that revolutionized global trade — and fell behind other East Coast ports.

Around the 1970s, Philadelphia started importing fruit from Chile and other Southern Hemisphere countries, focusing on cargoes that were not transported in containers. Over the years, Pennsylvania political leaders have made trade missions to Chile to maintain close ties, though there have been dustups at times, as when traces of cyanide were found in grapes shipped here in 1989.

In addition to developing those trade ties, Philadelphia and other northern U.S. ports for decades benefited from a U.S. Agriculture Department rule that prohibited imports of fruit south of the 39th parallel — which passes through Maryland and Delaware on the East Coast — from countries with known invasive pests. The idea was that cooler temperatures would help prevent contamination.

And Philadelphia built the infrastructure to support this trade, such as inspection and fumigation facilities, temperature-controlled warehouses, as well as ample power supply on site of the port’s terminals to ensure refrigerated containers stay cool. What’s more, truckers from across the country bring food to the Philadelphia area to access the big population center — 47 million people live within a four-hour drive of the port’s main container terminal — and know that they’ll have freight for their return trips.

Another selling point: Philadelphia is known for its efficient operations on the terminal. A World Bank analysis released this year found that Philadelphia was the top container port in North America for operational efficiency, based on the amount of time container ships spend in a port.

Today, the Philadelphia market — including South Jersey and northern Delaware — has 19.6 million square feet of cold storage warehouses, second among top U.S. container ports behind only the Los Angeles market, according to data from real estate firm Colliers. That’s equivalent to almost half the square footage of Center City’s total office space.

Demand is on the upswing, as more than 13% of Philadelphia’s existing cold storage inventory has been added in just the last five years, according to Colliers. The region’s population density and strong customer base for imported produce, prepared foods, and beverages — which accounted for 75% of Philadelphia’s cargo last year — help “explain the expanding cold storage market for cold 3PLs, wholesalers and food service distributors here,” said Marc Isdaner, vice chair at Colliers’ South Jersey office.

Leo Holt is president of Holt Logistics Corp., a family-owned company that’s been a major player in Delaware River commerce for decades and which operates terminals in Philadelphia and South Jersey.

“You build the infrastructure in the hinterland to do that,” he said, referring to the region’s capacity to handle perishable goods. “It’s what’s happening all over South Jersey and in the Pennsylvania hinterland. You’ve seen some major developments of new perishable distribution facilities. So that, you know, I’ll call the ‘Amazon effect’ of building out these facilities continues apace.”

About a decade ago, though, the federal government started a pilot program allowing southern U.S. ports to receive imports of South American fruits. Since then, ports in Savannah, Ga.; Charleston, S.C.; the Everglades; Wilmington, N.C.; and elsewhere have imported blueberries, grapes, apples, and other fruits — and attracted public and private investment in cold storage facilities needed to handle the produce.

But they aren’t importing nearly as much fruit as Philadelphia. Savannah, for example, imported 242 million pounds in 2023 — about 5% of Philly’s haul.

“Southern ports send their salesmen trying to figure out what the so-called special sauce is,” said Sean Mahoney, PhilaPort’s marketing director. “There’s no special sauce. We just have the infrastructure. …It’s tough to just replicate that all of a sudden at another port.”

Holt added: “One of the things, with all due respect to the folks in places like South Carolina and North Carolina, Georgia is they have very productive port facilities, very seasoned professionals, but they don’t have 140 million people within an eight-hour drive. And places like Philadelphia do.”

Public investment

A key component of that infrastructure is the PhilaPort-owned Philadelphia Wholesale Produce Market, featuring 17 fruit and vegetable merchants who sell domestic and imported produce.

Located on the Schuylkill near the airport, the 686,000-square-foot facility — about half the size of the Comcast Center — is “the world’s largest fully enclosed, fully refrigerated wholesale produce terminal,” according to PhilaPort.

John Vena’s company, John Vena Inc., was established in 1919 by his grandfather. It sells primarily specialty products like avocados from Mexico and Colombia. Vena has a ripening room on-site — “you change the humidity and the temperature, and you introduce ethylene gas, and that’s it,” he said — as well as a repacking facility.

Avocados may arrive at the port in a case, but retailers such as grocery stores may want to sell them in a bag of six.

“We started that some years ago for the food service business, doing herbs,” Vena said. “So we did four-ounce, eight-ounce, one-pound units for fresh herbs.”

Antonucci, the customs broker, said that’s the kind of service that adds value to customers and helps Philadelphia retain its edge in the produce business. He also pointed to the deepening of the Delaware River’s main channel from 40 to 45 feet, as well as hundreds of millions of dollars in public and private investment in port facilities in recent years.

Holt Logistics, operator of the Packer Avenue Marine Terminal in South Philadelphia, has added several hundred “reefer plugs” — outlets that provide power to refrigerated containers — on the terminal, Antonucci said.

“That’s led to increased productivity on the logistics side, which helps increase the … velocity of the truckers being able to turn the fruit and turn the containers out of the port and into the market at a much higher rate than anywhere else in the country,” he said.

Public investment under former Gov. Tom Wolf led to construction of a recently completed 202,000-square-foot warehouse a mile from the Packer Avenue Marine Terminal. An adjacent 165,000-square-foot refrigerated warehouse is scheduled to be completed in 2026.

Until then, fruit unloaded from ships at Packer Avenue will continue to be stored at an on-dock refrigerated warehouse. From there, trucks take the produce to the wholesale produce market or directly to retailers like Walmart.

The warehouse will eventually be torn down to make more space for containers on the terminal, officials say.

PhilaPort officials say that while the port has had success in the produce trade to date, it will face more competition as shippers increasingly turn to containers — rather than more labor-intensive non-containerized pallets — to transport those goods.

To that end, the port needs more space to stack containers both on and near its terminals — which is why officials are pushing for state funds to buy more land in South Philly. And in the longer term, the port authority wants federal approval to deepen the Delaware River again, this time to 50 feet, to stay competitive with other ports as ships get bigger and bigger.

“As world fleets increase and as technology increases, the push is to get away from break-bulk ships,” Mahoney said. “And eventually, I think over the next 10 years, most of the cargo will find its way off of the break-bulk ships and onto the containers. So we have to be able to hold on to what we have built here for the past 30 years.”

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Originally Published in the Philadelphia Inquirer
By Lizzie Mulvey and Andrew Seidman
Published Dec 14, 2024

Artwork credits: The Philadelphia Inquirer