I’ve often noted in this blog and to some extent in my newspaper columns that the U.S. lacks a clear national strategy regarding port expansion and harbor dredging in advance of the completion of the Panama Canal expansion.
I’ve also noted repeatedly that there are widespread misconceptions about the Corps of Engineers’ economic analysis regarding the Savannah Harbor Expansion Project.
There’s a great piece in the New York Times today that takes the widest view of the commerce issues I’ve seen so far: Panama Canal’s Growth Prompts U.S. Ports to Expand
A few snippets:
This sense that the new set of locks now being built to allow giant ships through the canal will bring riches 1,000 miles or more to the north is shared by industry and government officials along the East Coast and the Gulf of Mexico, who have been promoting multimillion- — and in some cases multibillion- — dollar port projects for years. [. . .]
But some who are following the efforts have begun to express skepticism about the hope and money going into dredging mud and raising steel. With so many ports competing for a share of the bounty, experts are questioning how big that bounty will be. “Everybody is trying to go after it — there are going to be few beneficiaries, in my judgment,” said William D. Ankner, a former official of the Port Authority of New York and New Jersey and a former secretary of transportation for Louisiana.
A good reminder that landside infrastructure and capacity is a serious issue too, so we’re essentially seeing massive government-funded stimulus projects:
Baltimore, which already has a 50-foot channel, has a bottleneck on the land side: the Howard Street tunnel, through which trains have to pass to reach the port, and which is too small to accommodate the double-stacked container cars that are increasingly the standard for rail shipping. The rail line CSX has announced a workaround that could cost hundreds of millions, involving a new yard beyond the tunnel filled with containers brought by truck; the port will load the trains with a single container to get through the tunnel, and the trains can be completed at the yard.
Miami is putting $2 billion into improvements to its port; its dredging project was approved by the Army Corps of Engineers in April, and the city is building a tunnel costing an estimated $1 billion to create a crucial link between the port and the Interstate System of highways.
And this about the role of West Coast trade, the cross country rail system, and the remaining questions about additional fees — so far not announced — for ships that pass through the expanded Panama Canal:
But more fundamental questions have been raised about the real benefits of the coming trade, and especially the effects of the new canal traffic.
Moving goods by water is generally cheaper than moving them by land because of the economies of scale of moving so many containers on those big ships, said John Martin, a ports consultant in Lancaster, Pa. So that would suggest canal routes will offer lower-cost shipping to the East Coast and Midwest through the canal.
But, he said, containers loaded on the West Coast, which has built up its container yards and highway and rail infrastructure, can outrun those that travel to the East Coast by water, and that can make the difference when speed and dependability are more important than cost alone. Besides, he added, costs and fees can shift; Panama can be expected to raise rates for canal passage, and “the railroads are not going to sit idly by” and let the water route undercut their business.
Scudder Smith, a consultant with the engineering consulting firm Parsons Brinkerhoff, said that a water passage, “all things being equal, will cause cost reductions — but all things are not equal,” he added, and so “I’m not at all confident in any numbers.”
That could be why J. Christopher Lytle, executive director of the Port of Long Beach, does not sound a bit worried. “There’s just not going to be a huge movement of cargo from the West Coast to the East Coast,” he said.
Let me close by noting that the Corps of Engineers predicts increased trade no matter what: whether Savannah deepens the river or not, we’ll see more cargo until the landside capacity is maxed out in about 20 years.
A rational response to that prediction would be for Georgia and South Carolina to be moving ahead with the Jasper Port, but, as the NYT notes today, that “has all but stalled.”
The piece ends by noting the lack of a national freight policy or plan.