By Mimi Whitefield, The Miami Herald –
SAVANNAH, Ga. — Five mega-ships — one as long as three-and-a-half football fields — line the wharves of this bustling port as towering cranes pluck containers stuffed with products destined for the shelves of Southeast retailers.
While tourists may know Savannah for its historic homes, ancient azaleas and leisurely charm, its port based in Garden City — about a 10-minute drive from downtown — also happens to be the second-largest container port on the East Coast.
Too large to transit the Panama Canal, the ships known as post-Panamax vessels have arrived in Savannah’s river port via the Suez Canal and with the help of high tide. It helps, too, that they are not fully loaded.
“The Panama Canal has always been a speed bump for us,” said Curtis J. Foltz, executive director of the Georgia Ports Authority.
But not content to rely on the vagaries of tides and light loads, Savannah wants to dredge its 42-foot-deep channel to a depth of 47 feet — deep enough to handle the big ships that will transit the Panama Canal once its expansion is completed in 2015.
That’s 40 miles of dredging from the Atlantic to Garden City — and it doesn’t come cheap. It adds up to $652 million, with the federal government expected to chip in about 60 percent.
Savannah is hoping to win big when the canal expansion is completed, but so are ports from Houston to New York, which want to attract the big ships that can carry more than twice as many containers as the vessels that now transit the canal.
There will be winners and losers, but no one wants to be left out of the race as ports arm themselves with deeper harbors, stronger wharves, larger cranes and other improvements in hopes of snagging the big ships.
Norfolk, Va., and Baltimore already have harbors deep enough to handle the super-size ships, but Baltimore needs to overcome transportation bottlenecks once the containers reach port. The Port Authority of New York and New Jersey expects to have its harbor deepened to 50 feet by 2014, but it still must raise the deck of the Bayonne Bridge 64 feet above the roadway so the ships can reach the port’s main terminals.
“If all the ports are preparing, you’re probably going to get excess capacity,” said Daniel L. Gardner, president of Los Angeles consulting firm Trade Facilitators and a logistics expert. “There may be a few white elephants decorating the East Coast.”
There’s a limited pot of federal money for the expensive channel deepening projects and Florida reached into its own pocket to help finance the Miami dredging project when federal funds didn’t materialize.
During congressional testimony last year, Paul Anderson, chief executive of the Jacksonville Port Authority, lamented that the federal government has bestowed “stepchild” status on the nation’s ports for too long and argued that the United States needs to invest in them.
The typical American consumer, he said, “gives little thought to how products move to the shelf at their local supercenter or mega-grocery or mom-and-pop, how the item we need is ready for purchase as we dash in to grab that container of coffee or computer part. … I shudder to think of the outcry should our consumer products get stuck on the docks because we no longer have the infrastructure to move them.”
Perhaps indicating which ports it thinks should be the winners in the race for deep water, the Obama administration announced in July that expansion and modernization plans would be expedited for five ports: Savannah, New York and New Jersey, Charleston, Jacksonville and Miami. Such projects can take years to get off the ground, and a green light from the administration is important.
“Clearly the administration thinks these port projects are very important and need to be addressed,” Foltz said.
“It’s all about the post-Panamax world,” said PortMiami Director Bill Johnson. He spent years lobbying for federal funding for Miami’s $180 million “deep dredge” before Florida Gov. Rick Scott announced last year that the state would kick in the remaining $77 million “so that Florida can take another leap forward in international trade.”
But Steven M. Cernak, director at Port Everglades in Broward County, Fla., said the need for deep water goes well beyond expansion of the canal.
A new generation of post-Panamax ships is coming online, he said, and they will gradually replace older, smaller ships. “All the ports have to be ready for that day,” Cernak said. “We’re already seeing this size of vessels.”
In October, the MSC Texas, with a capacity of 8,200, 20-foot containers, became the largest ship ever to call at Port Everglades. But because of the depth limitations, it wasn’t fully loaded.
With an environmental lawsuit behind it and the necessary approvals in place, Miami appears likely to win the race among the U.S. ports that don’t currently have water deep enough for post-Panamax traffic. It hopes to be ready for the 2015 launch of the canal expansion.
Meanwhile, Savannah, a port that handles almost as many containers as Miami, Port Everglades, and Jacksonville combined, is facing lawsuits from environmentalists who say the dredging requires a pollution certificate from South Carolina. The dredging, they contend, will stir up toxic cadmium from the Savannah River bed and deposit it on the South Carolina side of the river.
“I think anyone dealing with a project of this magnitude has lawsuits,” Foltz said.
But Savannah got good news in late October when the Army Corps of Engineers completed its review and gave final approval for the deepening project.
Regardless of the outcome of the lawsuits, Foltz said, the federal government made it clear, “it won’t let a state stand in the way of a project of national interest.” U.S. Assistant Secretary of the Army Jo-Ellen Darcy said if necessary, she would seek an exemption to the Clean Water Act “to prevent inappropriate delays to this project due to pending litigation.”
So which ports are the front-runners when the big ships begin transiting the canal?
Experts shy away from the question, but they do say it’s not simply a matter of dig a deep enough shipping channel and the big ships will come.
The port, its rail connections, trucking networks, distribution channels and the entire logistics chain needs to be analyzed and there are ripple effects all along the way. If a factory needs imported parts and supply routes for those parts are better elsewhere, it might just pick up and relocate.
Pricing, the degree of bureaucracy, security, labor peace, and the ease of getting products through customs also play into shippers’ decisions to use a particular port. So does proximity to certain products. That’s why Savannah’s main exports are forest products, kaolin clay from Central Georgia, cotton, chemicals and poultry.
“But you need to start with the port and the port has to be ready. You need to plan for what will happen in the next 20 years. We’re in a globalized world,” said Alberto Aleman, the former chief executive of the Panama Canal Authority. “These ships are not going to be waiting for anyone.”
West Coast ports such as Los Angeles and Long Beach, the two busiest container ports in the United States, have become the major gateways for U.S.-Asia trade. By using rail and truck links, they can get cargo to the East Cost faster than ships that use an all-water route to ports such as Savannah or Miami.
“We’ve never looked at the expansion of the canal as a way to move cargo faster,” said Rodolfo Sabonge, vice president of market research and analysis for the Panama Canal Authority. “It’s a way to move cargo cheaply or more reliably. The larger ships are less expensive to move per unit of cargo.”
Shipping products via the Panama Canal on a post-Panamax ship could represent a savings of 25 to 30 percent.
But experts say the West Coast ports will still be favored for high-value cargos and time-sensitive shipments, such as plasma TVs that must reach stores in time for Black Friday sales. The canal’s sweet spot will be handling lower cost shipments where margins are important but delivery times are more flexible, Sabonge said.
“The West Coast attitude is the ports aren’t ignoring (the canal expansion) but they’re much more convinced it won’t be such a big event,” Gardner said.
Foltz agrees. Most of the shift in cargo from the West Coast has already occurred, he said, and Savannah doesn’t expect to pick up much more West Coast cargo after the expansion.
But the port does expect continued growth. Currently, it handles three million, 20-foot containers annually and expects to more than double that when the port is fully built.
Even with the hefty $652 million cost of dredging, “there’s a tremendous cost/benefit ratio,” Foltz said. The Army Corps of Engineers calculates that every dollar spent on the project will return $5.50 in economic benefits to the nation. Already the port supports 352,000 full- and part-time jobs across Georgia, Foltz said.
Despite competition among U.S. ports, how the race for deep water plays itself out isn’t a major concern for Panama — as long as there are some U.S. ports that are ready.
“Five or six major ports could be plenty,” said Sabonge, of the Panama Canal Authority. “We just want to bring a new and improved canal to market. It’s just a business proposition.”
