I’ve read a lot and written some over the last couple of years about the likely impacts on commerce of the Panama Canal expansion and the vast infrastructure spending in the U.S. to expand ports.
And I’m pretty cynical about the whole picture that’s emerging.
From the first, the Corps of Engineers’ study here in Savannah predicted that the amount of cargo handled at the Georgia ports would increase at the same rate over the next 20 years whether we dredged the river more deeply or did not. The logic is pretty simple, if not intuitive: If we dredge, we’ll see fewer but larger ships; if we don’t dredge, we will see more but smaller ships.
The Corps’ economic study said that the Savannah Harbor Expansion Project (SHEP) would be worth the massive expenditure of tax money because the deeper harbor and larger ships would make shipping companies more efficient. The attendant private savings would then appear elsewhere in the economy.
Side note: so ironic to see opponents of the 2009 stimulus and opponents of infrastructure spending by local governments support this massive federal infrastructure project.
Another side note: there are significant environmental risks here, and all the risk is being assumed at the local level. Will the benefits be local? According to the Corps’ economic study, there’s no way to answer that question. Since the savings will directly accrue to the shipping companies, the benefits could appear at any point in the supply chain.
Another side note: even dredged to 47′, the Savannah River will still be more shallow than several other key East Coast ports.
Of course, Savannah isn’t the only port likely to some massive spending for expansion, dredging, etc.
As more shipping experts and economists have considered all the impacts of the Panama Canal expansion, the more questions they seem to be raising about the likely impacts.
There is a growing number of voices who think that we won’t see a major redrawing of commerce. West Coast ports, according to this reasoning, will probably remain the first option for Asian shippers.
From an interesting report yesterday on NPR, Eastern Ports Spend Billions, But Will New Ships Come? by Greg Allen:
ALLEN: Economically speaking, there’s little question that modernizing ports and improving infrastructure is a good investment. But there are some in the cargo and logistics industry who now question whether the Panama Canal expansion will be the game changer that [Fla. Governor Rick] Scott, other public officials and port executives say it is.
ED SANDS: The fact is, they didn’t build it big enough.
ALLEN: Ed Sands is with Procurian. He spent decades in the logistics business, essentially helping companies move goods from point A to point B. The global recession brought big changes to the shipping industry. Sands says carriers are moving to a new class of mega-cargo ship – ships too large to go through the expanded Panama Canal.
SANDS: Technology and the developments in ship design and the massive chase for efficiency on behalf of the ocean carriers has rendered the canal expansion – I wouldn’t want to say it’s sort of a dud, but it’s not nearly as valuable had it been enlarged another 30 or 40 percent.
There are obviously more optimistic voices in the piece, but all have skin in the game, of one sort or another. Worth a listen: