Should the US Government Fund Deeper Harbors?

There were no real losers among U.S. South Atlantic and Gulf ports that have ambitious expansion plans under the Obama budget released last week.

True, the budget does create another delay in the timetable for deepening Georgia’s Savannah River to 47 feet because it does not allow the Army Corps of Engineers to use the more than $265 million in funding the state of Georgia had set aside to get the project going this year.

Instead, the Savannah Harbor Expansion Project will have to await funding authorization under the final version of the Water Resources Development bill now under consideration by Congress.

“We were hoping the omnibus spending bill passed in February would allow us to start spending state money over the next year and a half, regardless of WRDA,” said Curtis Foltz, executive director of the Georgia Ports Authority. “The Administration interpreted it differently.”

The Obama budget is only a blueprint for government funding of harbor deepening projects. The administration requested some funds for further study of harbor deepening projects at the ports of Charleston, S.C.; Jacksonville, Fla.; and Port Manatee near Tampa on Florida’s Gulf Coast. Port Canaveral on Florida’s east coast is also pursuing deeper water, though it did not get a funding request under the Obama budget.

That raises the question of whether the government should fund harbor deepening projects at so many ports on the East and Gulf Coasts even when not all of them are gateway ports.

“All the East Coast ports are in a frenzied race to deepen their harbors,” said Stanley Payne, a principal at Summit Strategic Partners. “The government shouldn’t start picking the winners in that race because they are not good at doing that or they fund everyone, and they are not going to do that.”

Payne said the state governments should fund harbor deepening projects to depths below 45 feet. He thinks states should be the one to shoulder all the cost of deepening harbors beyond that depth, and also questions whether the government should be funding those projects at all when several East Coast ports, including NY-NJ and Norfolk, Va., can’t handle the volumes they are getting now.

“They’ve already seen a taste of the larger ships, and they clearly can’t handle them,” he said. “Those ports ought to be focusing on their landside infrastructure because they can’t handle the volumes with the water that they have.”

The problem is that many East Coast ports have been preparing for the arrival of deep draft ships of more than 8,000 TEUs by the end of 2015 when the Panama Canal’s new locks were originally due to open. But East Coast ports are already receiving calls by ships of up to 9,000 TEUs that started coming through the Suez Canal last year, and will get still more when the P3 and G6 alliances launch their services this spring, pending regulatory approval. Norfolk and NY-NJ can handle those ships when fully loaded, but other ports that plan to deepen their harbors can only handle ships that size that are only partly loaded.

Certainly Savannah, the largest South Atlantic port by volume and a major destination for carriers, should get funding. It had no difficulty handling the record container volumes it got last year, which were up 6 percent, and expects no trouble handing the 7 to 8 percent growth it is seeing this fiscal year. The port already has a galaxy of distribution centers around the port, one of the best developed rail and road connectors to inland points and plenty of room to expand.

The administration’s budget asked for $3.15 million to continue work by the Army Corps on the preconstruction, engineering and design phase of deepening the Jacksonville harbor. The feasibility study for the project was completed last spring, when the Army Corps recommended a depth of 47 feet, shy of the port authority’s target depth of 50 feet. The Army Corps estimated the cost of the 47-foot deepening at $733 million. The project could be completed between 2016 and 2018 if it gets authorization under the WRDA bill.

SHEP, however, will have to wait for funding authorization.

“At the end of the day, we’re still waiting for the same thing we’ve been awaiting for the last year and a half,” Foltz said in an interview with the JOC. “We fully expect the $652 million the Corps has recommended to be addressed under WRDA.”

Until then, Foltz said the Georgia Port Authority and the state are already doing everything they are allowed to do to advance SHEP, including securing riverbank properties as part of the environmental mitigation planning and paying for the advance engineering and design work for the project.

Charleston, which is already a major East Coast gateway port, should surely be the next port to get approval for its plan to deepen its harbor from 45 to 50 feet. The Army Corps’ initial 2010 Reconnaissance Study of the Charleston harbor deepening project, at an estimated $300 million, would be the “cheapest South Atlantic harbor to deepen to 50 feet.”

The Obama budget requested $1.57 million in construction funding, which begins in October of this year, depending on the final outcome of the Army Corps’ $13 million feasibility study. The budget also asked for the final $695,000 for the feasibility study, which is due for completion by September 2015 when the Army Corps issues its chief’s report. The report will determine whether to deepen the harbor to 48, 50 or 52 feet, as the South Carolina Port Authority hopes.

The next step in the project will be the release of the environmental impact study, which will come later this year.

“I think this will provide the answer to what gets authorized deepening-wise,” said SCPA President and CEO Jim Newsome. “We are hopeful that with the chief’s report, we can move fairly quickly into construction,” he told the JOC.

If the chief’s report gives the project the go-ahead, Newsome thinks the project can be completed by the end of 2018.

The state of South Carolina has placed $300 million, which would fully pay for the 50-foot project, in a bank account in Columbia, S.C., but the funds can’t be used until the Army Corps approves the project and Congress authorizes it.

The Obama administration asked for $3.15 million for the Army Corps work on preconstruction engineering and design for deepening Jacksonville’s harbor to 47 feet, but the estimated $684 million project is still very much a work in progress, because it has not yet gotten final Army Corps approval or congressional authorization.

The Army Corps, which already allocated $2.25 million for the preconstruction work, completed the feasibility study for last year but has not yet issued the chief’s report recommending the full project. Congress won’t authorize funding for the project until it sees the chief’s report, which is due at the end of April.  

Florida’s congressional delegation is working hard to get authorization into the current WRDA bill, according to Jaxport spokesperson Nancy Rubin. But the port lags behind Savannah and Charleston, which are getting their respective states’ funding, because the state of Florida has not yet provided funding for the project, as it has for other state port projects like deepening the Port of Miami.

Contact Peter Leach at pleach@joc.com and follow him on Twitter: @petertleach.

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