When Charleston, S.C., Mayor Joe Riley got a few precious moments in front of President Obama at a U.S. Conference of Mayors meeting in Washington last month, he was ready with the most important issue on his mind: dredging the Port of Charleston harbor to 50 feet.
Harbor deepening doesn’t usually come up in brief meetings with the president of the United States, but the mayor’s moment was one stark sign that the battle between ports for limited federal dollars for improvements is getting more heated as ports along the East Coast prepare to compete for the larger ships, and greater container shipping volume, they expect with the opening of a larger Panama Canal in 2014.
Nowhere is that competition more fierce than it is on the short stretch of the East Coast that separates Charleston and the larger Port of Savannah, barely more than 100 miles south. It’s a rivalry with tens of millions of dollars in federal funds at stake, along with the prospects for a critical place in North American supply chains in the balance. The rivalry also could end up hurting both ports and both states if the intensive fight for funds delays projects and sends ships and shippers elsewhere.
Side Bar: Southern Roots.
That’s because Savannah and Charleston are competing on similar projects just as almost all major East Coast ports press ahead with harbor deepening and other expansion projects aimed at attracting the larger container ships that could tilt long, international supply chains toward the East. Efforts such as the Port Authority of New York and New Jersey’s work to raise the Bayonne Bridge are growing more urgent as the Panama Canal expansion gets closer to completion, and the effort is especially pressing at South Atlantic ports.
Miami, Port Everglades and Jacksonville in Florida are seeking approval and funding for deepening their channels and harbors to the 48- to 50-foot range.
The Georgia Ports Authority and the South Carolina State Ports Authority, which operate the two biggest container ports in the Southeast, are mobilizing political and business support in their state capitals and Washington, D.C., to get approval and raise funds to pay for the dredging projects they both crave. The chiefs of both state ports authorities downplay the rivalry in public, but politicians are touting their respective ports’ advantages.
“You’ve got two good ports 115 miles apart, and we each compete on our positive attributes,” said Jim Newsome, the SCSPA’s president and CEO, scoffing at comparisons some make to the passions of Southeastern Conference college football. “There’s nothing that rivals the Auburn-Alabama rivalry. As a Tennessee grad, I can assure you of that.”
The site of the strongest competition right now is along the winding path of the Savannah River, the border between Georgia and South Carolina, which carries container ships from the Atlantic Ocean into the Port of Savannah, the nation’s fourth-largest container port.
The GPA has been working for 11 years on what it calls SHEP — the Savannah Harbor Expansion Project — and expects permits for the U.S. Army Corps of Engineers to deepen the river from 42 feet to 48 feet along 35 miles of river from the ocean to the port by the end of this year.
Georgia’s new Republican Gov. Nathan Deal, a strong supporter of SHEP, is asking the state Legislature for $32 million of what will ultimately be more than $200 million in state funds for a project with a $600 million price tag. But the future of SHEP depends on permits from the Army Corps of Engineers and congressional appropriations.
“Savannah is the shallowest of the major global ports,” Curtis Foltz, the GPA’s executive director, told the recent annual Georgia Foreign Trade Conference. “Without approval for SHEP, our ports are out of play.”
But because the states share the river, Georgia faces the unusual prospect of needing a nod from the other side of the river to get the project moving. The states have cooperated in the past, but that amity looked more fragile in November when Republican Gov. Nikki Haley took office and declared, “You now have a governor who does not like to lose. Georgia has had their way with us for way too long, and I don’t have the patience to let it happen anymore.”
She was voicing the resentment many in South Carolina’s port community share over the spectacular rise in Savannah’s container volume that has lifted it into second place among East Coast ports after New York-New Jersey, while Charleston dropped from second to fourth on the East Coast behind the Virginia Port Authority.
The Georgia ports had nearly double the container volume of the South Carolina ports in the first 11 months of 2010, according to data from PIERS, a sister company of The Journal of Commerce, with just short of 2 million 20-foot container equivalents during the period, up 14.7 percent over the year before. The port has built its business by attracting retailer business that now includes huge distribution centers for Lowe’s, Target, Home Depot, IKEA and two for Wal-Mart.
South Carolina’s container trade grew 12.5 percent in the first 11 months of 2010, according to PIERS.
Last month, the Savannah River Maritime Commission, formed to represent South Carolina’s interests in navigational issues on the Savannah River, withdrew its support of a joint resolution calling for the expansion of the Savannah and Charleston harbors and supported the South Carolina Department of Natural Resources’ suggestion to deepen the river only to 44 or 45 feet.
The commission was responding to the draft Environmental Impact Statement the Army Corps of Engineers issued for comment through Jan. 25. South Carolina’s Department of Health and Environmental Control, which had earlier proposed denying the permit required for SHEP to go forward, said it needed more time to review the 3,000 pages of documents in the EIS, and that it would complete the review by Nov. 15, but did not say whether it would grant the water quality certification.
“It will certainly delay the project,” said John Martin, principal of port consultant John Martin Associates. “This is the strategy of the environmentalists. They are professional protesters. They just keep delaying it by keeping it in court.”
He said the delay is rooted in the lack of attention to port infrastructure at the national level. “We do such a poor job as an industry. Only when there is a catastrophe do people understand the importance of the port structure.”
Georgia isn’t without support across the river. The GPA and two regional economic development groups, the Savannah Economic Development Authority and South Carolina’s Lowcountry Economic Alliance, last month called for deepening the Savannah and Charleston harbors and stated their support for the proposed joint bi-state Jasper County Ocean Terminal.
What was notable about the resolution was the support from the Lowcountry Alliance, the regional economic development arm of South Carolina’s Beaufort and Jasper counties, at a time when other South Carolina interests are voicing opposition to SHEP.
The GPA’s Foltz said he isn’t that concerned about the environmental protests. “Those are the kinds of things you hear during a public comment period,” he said. “The corps received about 600 comments, of which about 500 were in support of the project.”
He said the concerns about SHEP’s impact on the environment had been addressed in the environmental mitigation plan developed by the corps and that the opposition now cropping up is “standard questions about what is a very large and complex project.”
“Their environmental mitigation sounds good,” said H. Layton Bedsole Jr., senior project manager for Dial Cordy Associates, a North Carolina environmental consulting firm, and a former director of environmental affairs at the North Carolina State Ports Authority. “They have gone out of their way to minimize the impact. It sure looks like they’ve been through the ringer.”
All of this could be considered a normal part of the environmental reviews any project this size must undergo, but South Carolina politicians are promising to mount efforts to block it. State Sen. Larry Grooms, chairman of both the Transportation Committee and the SCSPA’s Review and Oversight Commission, said he expects state agencies to sue to block SHEP.
“If Georgia and the corps don’t reverse course, you’re going to see this thing litigated in federal court for many years to come,” he said.
Grooms said deepening the Port of Charleston would be a better investment than a similar dredging in the Savannah River or in Virginia because it would be cheaper for the federal government. Grooms said deepening the Savannah River could cost $600 million. Work on the Charleston port would save the government up to $500 million, he said.
Although both states are competing for federal funds for their projects, opposition to SHEP in South Carolina hadn’t advanced to Washington, according to Rep. Jack Kingston, R-Ga. “We are not working against each other. The South Carolina delegation is OK with it.”
But he warned the U.S. House ban on earmarks would make it hard to get SHEP funding in the next budget.
The South Carolina State Ports Authority is beginning what it thinks will be a decade-long process to get the permits to deepen its Charleston harbor to 48 to 52 feet from its current depth of 45 feet at mean low water. The harbor was deepened to 45 feet from 40 feet over two years ending in 2004.
The corps has completed its reconnaissance study and is moving to a $10 million feasibility study that will take three or four years and include a cost-benefit analysis. An Environmental Impact Study would come next, along with design and engineering phase that will eventually lead to dredging.
The estimated $300 million Charleston project is unlikely to face major environmental hurdles because its harbor is close to the Atlantic and the dredging would not have the same impact as it would on the Savannah River, where a significant part of the estimated $600 million cost will come from environmental mitigation.
There is no debate, however, that U.S. importers and exporters will need a deep-water port somewhere in the Southeast to handle the increased flow of post-Panamax ships that will start calling on the region after the Panama Canal completes its new set of locks that, some believe, will trigger a dramatic shift in the flow of goods.
The new locks will be able to handle container ships with maximum capacity of 12,000 20-foot equivalent units of containers, compared to the present Panamax-sized vessels, which can handle up to 5,000 TEUs.
The workhorses of the container fleet that will carry Asian trade through the canal after 2014 are expected to be ships in the 8,000-TEU range, at least initially. In the South Atlantic, only Charleston currently can handle ships that size, and only at high tide, which brings its harbor depth up to 48 feet.
|“The objective of our project is to remove that tidal restriction,” Newsome said. “In an export-driven region like the Southeast, we need a 50-foot harbor here.”
Even amid the battling over water depth, the SCSPA and the GPA say they remain committed to talks aimed at developing a bi-state container terminal in Jasper County, on South Carolina’s north shore of the Savannah River.
Newsome said the next step is to form an agreement between the states “that gives legs to what that cooperation would look like.” He said it’s a long-term project that would only be built when the existing capacities of Charleston and Savannah are fully utilized. The Jasper terminal also depends on the outcome of SHEP, because it would need the 48- to 50-foot depth that Savannah contemplates.
“Considering the challenges, South Carolina and Georgia have the potential for synergy that could put them further ahead of the pack in containerized trade in the Southeast,” Bedsole said. “If South Carolina would support Savannah getting its money, and Georgia would support South Carolina’s feasibility and future construction money and the two could cooperate on Jasper, they could steal the show. I see an opportunity for the two states to work together.”
Contact Peter T. Leach at email@example.com.