Which ports on the East Coast or in the Gulf would it be most cost-effective to deepen in anticipation of larger ships coming through the Panama Canal in 2014?
What’s the best way to fund those dredging projects?
Those questions are not answered in a new report by the Corps of Engineers, which was mandated 6 months ago by Congress to study the issue.
From Dan Chapman at the AJC, Federal study: Southern ports need money to deepen:
Savannah and other southern ports have “the most critical” need for money to deepen harbors for super-sized cargo ships expected to ply the world’s oceans by late 2014, according to a federal maritime agency report released Thursday.
But the study, done for Congress by the research arm of the Army Corps of Engineers, doesn’t conclude which ports deserve federal dollars to handle the huge container ships. Nor did the Institute of Water Resources say where the money should come from — the federal government, states, port authorities or shipping lines.[. . .]
U.S. Sen. Lindsey Graham (R-S.C.) asked the Corps six months ago to help determine which ports should get federal deepening dollars. [. . .]
Graham’s request followed Congress’ public disavowal of earmarks, the legislative practice of financing pet projects outside the full appropriations process. Graham, who couldn’t be reached Thursday, enlisted the Corps to help lay the groundwork for a national port strategy that would pick winners and losers.
As I noted in a recent post, there’s another interesting issue that has gotten little attention, although it figures quite prominent in the full Corps study released yesterday. Some port executives are expecting a significant increase in transshipment — the moving of cargo from larger vessels to smaller ones — after the Panama Canal is widened.
From that new study, eight — yes, eight — significantly different scenarios:
Scenario One – Under this scenario significant traffic is diverted from the West Coast ports and the intermodal land bridge to the East Coast ports. Transshipments are high, either at postPanamax ready U.S. ports or Caribbean ports. The impact on agricultural exports is also high resulting in more grain being exported through U.S. Gulf ports.
Scenario Two – Under this scenario significant traffic is diverted from the West Coast ports andthe intermodal land bridge to the East Coast ports. Transshipments are high, either at postPanamax ready U.S. ports or Caribbean ports. The impact on agricultural exports is low with little impact on grain being exported through U.S. Gulf ports.
Scenario Three – Under this scenario significant traffic is diverted from the West Coast ports and the intermodal land bridge to the East Coast ports. Transshipments are low, large vessels use post-Panamax ready U.S. ports but other ports are served by smaller vessels. The impact on agricultural exports is also high resulting in more grain being exported through U.S. Gulf ports.
Scenario Four – Under this scenario significant traffic is diverted from the West Coast ports and the intermodal land bridge to the East Coast ports. Transshipments are low, large vessels use post-Panamax ready U.S. ports but other ports are served by smaller vessels. The impact on agricultural exports is low with little impact on grain being exported through U.S. Gulf ports.
Scenario Five – Under this scenario little traffic is diverted from the West Coast ports and the intermodal land bridge to the East Coast ports. Transshipments are high, either at postPanamax ready U.S. ports or Caribbean ports. The impact on agricultural exports is also high resulting in more grain being exported through U.S. Gulf ports.
Scenario Six – Under this scenario little traffic is diverted from the West Coast ports and the intermodal land bridge to the East Coast ports. Transshipments are low, large vessels use postPanamax ready U.S. ports but other ports are served by smaller vessels. The impact on agricultural exports is also high resulting in more grain being exported through U.S. Gulf ports.
Scenario Seven – Under this scenario little traffic is diverted from the West Coast ports and the intermodal land bridge to the East Coast ports. Transshipments are low, large vessels use postPanamax ready U.S. ports but other ports are served by smaller vessels. The impact on agricultural exports is low with little impact on grain being exported through U.S. Gulf ports.
Scenario Eight – Under this scenario little traffic is diverted from the West Coast ports and the intermodal land bridge to the East Coast ports. Transshipments are high, either at postPanamax ready U.S. ports or Caribbean ports. The impact on agricultural exports is low with little impact on grain being exported through U.S. Gulf ports.
And if you’re still with me, here are two absolutely vital paragraphs, with emphasis added:
Over time the uncertainties with the market response to the Panama Canal improvements will be reduced as experience replaces expectation. IWR does not consider transshipment hubs likely to serve as the primary avenue of foreign imports or exports. As shown in Figure 33, the all-water route to the East Coast already adds 8 to 12 days to delivery. The Panama Canal toll will take a part of the transportation cost savings. A transshipment hub would add more cost and further increase delivery time. As noted in Chapter 2, the railroads are investing heavily, which will help maintain their competitiveness. These factors seem to weigh against the development of any substantial transshipment hub. In the absence of transshipment centers, post-Panamax vessels will call at the ports that are able to accommodate them, and the number of times that they call at each of these ports, their sailing drafts and other dimensions will become known.
However, this kind of a hub and spoke model has reduced airline passenger costs and air freight costs, so the option may be deserving of more analysis. Overall, it could be more economical for some routes and would involve less Federal spending and fewer adverse environmental impacts. The potential barriers include the cost to alter port facilities to accommodate transshipment, additional cargo handling costs, higher shipping costs due to cabotage, and the harbor maintenance tax.