Ports in the Southeast and along the Gulf Coast are brimming with optimism about the growth they expect after the Panama Canal expansion is completed in 2014 and larger vessels start moving through the waterway.
All are engaged in some form of expansion activities themselves. Many of their plans, however, largely depend on federal funding for dredging projects, which is highly problematic in today’s tight budget climate. Ports have always complained about insufficient federal investment, but the prospects are more dismal now than at any time in recent memory.
Asked if he expected the government to provide the necessary funding, port consultant John Martin responded with a one-word answer: “No.”
Anticipating the difficulties in obtaining funding, Florida Gov. Rick Scott announced earlier this month the state will provide $75 million to cover the federal share of the cost for a 50-foot deepening project in Miami. The state already had committed $37.5 million toward the project, and Miami-Dade County is ponying up another $37.5 million.
Sidebar: Shallow Draft, Lighter Loads.
Scott’s decision is aimed at catapulting Miami, the farthest port in the southeastern corner of the country from the U.S. interior, into the front ranks of contenders for increased Asian traffic.
“Miami will be in a great position to win back the state for Asian containers,” said Kevin Lynskey, the port’s assistant director for business initiatives.
He points to a study by Martin, head of the consulting firm John Martin and Associates that found 60 percent of Florida’s container traffic from East Asia enters through California ports or Savannah, Ga. After the dredging is completed, “we believe most of those containers will be coming through the Port of Miami,” Lynskey said.
The dredging is slated for completion in late 2014, as are two other infrastructure projects aimed at making the port more competitive.
One is a rail freight access corridor to the Florida East Coast Railway. The $50 million project will give the port a direct connection along 351 miles of track to Jacksonville, Fla., where trains can interchange with CSX and Norfolk Southern. The corridor also will provide a direct link to a 300-acre FEC inland facility 12 miles from the port.
“That will be our inland port,” Lynskey said.
The third project is a tunnel from Interstate 95 into the port’s cargo area. Officials broke ground last June, and tunnel boring will begin this fall.
Beyond looking at the potential for Miami to attract Florida cargo, the Martin study suggested the dredging project would allow Miami to compete with Savannah for cargo into Atlanta. “We can be there the same day and at the same price,” Lynskey said. “It’s about a day-and-a-half by rail,” he said.
Although the rail transit time is longer than from Savannah, it takes a day longer for a vessel to reach Savannah from Asia than Miami, he said.
Savannah vaulted into fourth place in the nation’s container port rankings during the last decade because of its success in attracting distribution centers and carrier services from Asia. It could lose some of its competitiveness after the Panama Canal expansion is completed, however, because Miami and other ports with deeper draft, such as Charleston, will be better able to accommodate the larger vessels.
The draft and dredging issue has become a divisive political issue up and down the East Coast as states vie for limited federal dollars.
Savannah’s main channel on the Savannah River border with South Carolina has a 42-foot draft. The Georgia Ports Authority has been working for 15 years on the Savannah Harbor Expansion Project, which would deepen the river to 48 feet along a 35-mile stretch from the ocean to the port.
The project, however, would carry a $600 million price tag. The state has approved $102 million, and Gov. Nathan Deal has asked the Legislature to approve another $32 million. But that would require more than $450 million from the federal government, and a study by the Army Corps of Engineers casts doubt on the benefits of channel deepening compared to the cost.
The GPA asked President Obama to include $105 million in his budget for the 2012 fiscal year for the project, but all it got was $600,000. Moreover, the project is encountering opposition from the South Carolina State Ports Authority, which is important because the Savannah River borders the two states.
Even if Savannah doesn’t get the funding for the 48-foot dredging, it will remain a powerful force for years because of all the distribution centers there. Although the port may not be deep enough to accommodate the biggest of the new ships when fully laden, it could accommodate them after some cargo has been unloaded elsewhere, such as transshipment hubs in Panama or Miami.
Sidebar: Gaining in the Gulf.
Moreover, it already accommodates ships capable of carrying 8,000 20-foot equivalent container units, according to John Wheeler, the port’s director of trade development.
NS and CSX have intermodal container terminals at the port, which handled 2.8 million TEUs last year, with export containers, including empties, accounting for 52 percent of the total. Loaded TEUs total 2.2 million. Savannah has the capacity to handle up to 6.5 million TEUs on its existing footprint when fully built out, port spokesman Robert Morris said.
Meanwhile, the Georgia Department of Transportation is planning the completion of a major artery that would connect truck traffic to the port. The $120 million project was approved by the governor and state Legislature last year.
To the north, Charleston already has a 45-foot draft and could be poised to take a larger share of South Atlantic traffic after the canal expansion is completed. A reconnaissance study last year found it would be the cheapest port in the region to get to 50 feet, according to port spokesman Byron Miller. The port is seeking an additional $400,000 in federal funds for a feasibility study.
The South Carolina State Ports Authority recently realigned its public terminals by shifting container traffic from its Columbus Street terminal to its North Charleston terminal. Its other container facility is the Wando Welch terminal.
Meanwhile, preparatory work for the new Charleston Navy Base Terminal is continuing. But completion of the terminal is still a long way off — Miller said the port anticipates that the first phase will open in 2018, with initial capacity of 500,000 to 700,000 TEUs. Capacity at full build-out would be 1.4 million TEUs. No federal funding is involved in the terminal construction.
Like many southeastern ports, Charleston’s exports and imports are almost balanced. “That helps control inland costs. If you’re an importer, and there’s a healthy base of exports back to the port, you can get creative and reduce expenses. You don’t pay for a roundtrip,” Miller said.
In the first seven months of the fiscal year that began July 1, Charleston handled 391,000 loaded export TEUs and 338,000 loaded import TEUs. Cargo volume in calendar 2010 totaled 1.4 million TEUs, up 16 percent over 2009.
Miami isn’t the only Florida port with ambitious expansion plans. Port Everglades, just to the north, stands to benefit from another infrastructure development project funded by the state, which has awarded a contract for the elevation of the primary entrance road to the port. “That will allow us to bring rail service directly into the port,” Port Director Phil Allen said.
Construction will begin this summer and should be completed next year, he said. Meanwhile, the port plans to develop a potential public-private partnership with Florida East Coast Railway to build an intermodal yard. That would put it in better position to compete for north-south traffic.
Carlos Buqueras, the port’s director of business development, said Port Everglades is the No.1 trading partner with Brazil, handling $1.5 billion worth of containerized exports to Brazil and $500 million in imports in the most recent fiscal year.
The port has an operating depth of 42 feet, and is working with the Army Corps of Engineers on a study that would deepen it to 50 feet. But as at many other ports, that may be a case of wishful thinking. Allen said he expects the corps to issue environmental impact and feasibility studies this fall.
While Miami and Port Everglades are pinning some of their hopes on improved rail service to Jacksonville, the north Florida port already has direct links with the CSX and Norfolk Southern. That helps explain why it has the most container traffic of any Florida port.
“When you come from the Panama Canal or South America, you can bring cargo to Jacksonville and can get it to Chicago before the ship gets to Norfolk,” said Roy Schleicher, executive vice president of the Jacksonville Port Authority.
CSX offers less-than-two-day service to Chicago, and cargo can be in Miami overnight on the Florida East Coast Railway, Schleicher said. “You can be in Savannah in two-and-a-half hours by truck and in Charleston in four to five hours,” he said.
The port scored a breakthrough several years ago when Japanese carrier MOL launched the first Asian service to the port and its sister company, TraPac, opened a container terminal there. Today, seven Asian carriers call at TraPac, including Hanjin. The Korean carrier planned to build its own terminal in Jacksonville, but has postponed those plans because of the port’s 40-foot draft.
Contact William Armbruster at email@example.com.