By Dennis Smith
The expansion of the Panama Canal is big news for a lot of reasons. The ACP wins with higher toll revenues and improved service. The Panamanian government wins by getting more money and improved employment figures. Most of all the shipping industry wins since they can transit their Super Post-Panamax ships (SPP) more cheaply, quickly and easily than before. But where do the ships go to unload and reload once they reach the United States? That’s where the port war starts. And all involved are taking the issue very seriously. It must first be clarified that port improvements are being concentrated mainly on channel dredging and facility expansion. Most of the activity is along the southern and eastern coasts in the US since west coast ports generally are deeper and can handle the big ships. The westerners also prefer to transit cargo overland by train to their eastern and southern neighbors. As of now which ports are the frontrunners in the SPP frenzy and what are they doing to win the war? On the east coast, Norfolk is in the lead since it already has the depth required for the SPP, and so far is the only port that does. The ports of New York and New Jersey meet the depth requirements but access to the container facilities on Newark Bay are limited by the Bayonne Bridge. The bridge is going up 64 feet, at a cost of $1 billion (5 years completion date). Baltimore has finished 50-foot channel dredging at the cost of $105 million. The port also has purchased four cranes that can service SPPs. Further south, Jacksonville is expected to change channel depth by 50 feet by 2018. Miami is waiting on federal approval for a $180 million depth change. In South Carolina, $300 million has been allocated to dredging. Savannah is taking the lead in promoting SPP expansion but is the furthest behind with a channel depth of only 40 feet. As a result, Savannah is pushing for $569 for a comprehensive overall harbor expansion. Houston is also looking for SPP traffic but no numbers have been released as we go to print. Now we should look at the battle within the port war, the federal versus state governments. First the feds. In the 2010 State of the Union address, President Obama declared
that doubling the nation’s exports by 2015 was a top priority. And the administration is loudly trumpeting how port expansions will improve economic growth and employment numbers. Everyone in the know, however, agrees that this goal is unreachable without ports that can service the SPPs. Big words aside, the federal government is doing very little to help the states meet the SPP deadline. There is a federal trust fund paid by shipping companies for harbor maintenance and dredging across the States. The trust is expected to have a balance of $8.1 billion by the end of next year. It has been proven though, that around 10% of this money will actually make it to the ports it is supposed to serve. Now the redtape factor. Port-deepening projects generally are proposed by states, but approval has to come from higher up to get a go ahead. Getting that approval requires a sign off from the secretaries of Commerce and the Interior, the US Army Corps of Engineers, and the administrator of the Environmental Protection Agency, who generally don’t cross communicate and or cooperate well. These feasibility studies easily take 10 to 15 years to complete and cost multi millions of dollars. Even with the go ahead, there is no guarantee that Congress will approve funding since Obama assurances or not, ports are not perceived as a high-priority sector. Some good news is that the Corps recently used the Charleston expansion as a test model for its“3x3x3” rule: Feasibility studies have to be completed in three years or less, cannot cost over $3 million and results have to fit in a 3-inch binder. Other ports are hoping to get the same treatment. The port States are firing back at federal inefficiency as well. States are looking for ways to squeeze their budgets to aid port expansion. Some have even gone into partnerships with private funding sources to
get the job done. The theory here is even though the states cannot move ahead without Uncle Sam’s ‘Yes’, they can speed up the process by showing they have the money required in hand. Finally, what does the Ports War mean to you, the shipping industry? Two things immediately stand out, lower prices and more efficient logistics capability. Factor in a third category, that shipping companies will be dealing with clients that have proven that they want to do business with them. In total this makes a very attractive package.
This post is also available in: Spanish