New MARAD Study Sets Course for U.S. Port Expansions

Source: MARAD Panama Canal Expansion Study November 2013 p. 48.

In November 2013 the U.S. Department of Transportation’s Maritime Administration (MARAD) released a study that detailed the impacts on U.S. ports once the Panama Canal expansion is complete with the greatest impacts on the East and Gulf Coast and inland states east of the Mississippi River.

Overall the Panama Canal Expansion Study Phase I Report: Developments in Trade and National and Global Economies examines the anticipated economic and infrastructure impacts on the U.S. ports and port-related transportation infrastructure and how new traffic will likely shift commodity flows. The study was commissioned in four phases. The first report covers Phase I and the second report will cover Phases II through IV.

The first report notes that larger vessels transiting the Panama Canal and more of them overall will affect the size of vessels calling at some U.S. ports and require some changes in port and landside infrastructure. These changes the report said will also likely affect shipping patterns and the routing of cargo for major U.S. trade lanes.

U.S. Ports

With larger container vessels with deeper drafts trans-ocean shipping costs could be reduced particularly for those trade routes that provide East-West services between the Far East and the U. S. East and Gulf Coast ports.

The larger vessels and an increased volume of containers will likely lead to fewer and more concentrated ship calls at larger ports and greater use of marine highway services to move containers between larger and smaller U.S. ports.

The ports that will receive the largest of these ships must have channels and water depths alongside berths that are 50 feet deep to accommodate the largest Post-Panamax vessels which fully laden require 47.6 feet of draft without tidal restrictions. See the chart on this page.

All the major West Coast container ports (Los Angeles Long Beach Oakland Seattle Tacoma Vancouver and Prince Rupert) already have sufficient water depth to accommodate these vessels and four major ports on the East Coast can handle such large ships already (Baltimore Maryland and Norfolk Virginia) or will be able to do so by the time the expanded Panama Canal opens (Miami Florida and New York/New Jersey). Other East Coast ports are making preparations for dredging to channel depths of 45 feet or more depths that can accommodate many of the post-Panamax ships.

The Port of New York and New Jersey also has 50-foot depths in portions of its harbor. A series of Corps of Engineers dredging contracts will deepen three of the port’s major container terminals to 50 feet. The harbor deepening project for the Port of New York and New Jersey includes 17 dredging contracts 11 of which have already been completed. The 50-foot access to the Newark Bay and Global Marine terminals was completed in December 2012 and deepening the Arthur Kill Channel leading to the New York Container Terminal is ongoing and expected to be completed in spring 2014.

The deepening of the Port of Miami’s channel from 42 feet to 50 feet is scheduled to be completed by 2014 making it the fourth East Coast port able to accommodate the largest post-Panamax ships.

Savannah is the second-largest gateway on the East Coast for Asian imports. The Georgia Port Authority’s proposed deepening project (expected to cost $652 million) for the Savannah River has recently been designated for a fast track permit review.

Among the other East Coast ports Charleston requires the least amount of dredging to deepen its channel. (See related article on pg. 6.) Several other ports such as Philadelphia Wilmington (North Carolina) Boston and Jacksonville each would need extensive dredging costing at least $250 million per port. Studies for the deepening of the Jacksonville harbor from its existing authorized depth of 40 feet to a navigable channel of up to 50 feet and accompanying reviews and approvals of a new intermodal container facility at the Port of Jacksonville are now under expedited review.

Inland Waterways

The U.S. has approximately 12000 miles of inland and intracoastal waterways that are used for commercial transportation of goods and maintained by the Corps of Engineers. These inland waterways serve 38 states and carry up to 10 percent (depending on distance of the move) of the volume of freight moved between U.S. states and cities.

In terms of imports and exports the inland waterways primarily service three U.S. coastal port areas. These include the port complex from Baton Rouge to the Gulf in South Louisiana the port of Mobile Alabama and the port of Portland Oregon.

Impacts of the Panama Canal expansion are important for the ports in Louisiana and Mobile Bay for two reasons. First they handle large volumes of bulk commodities such as grain some of which are transported through the Panama Canal. With the expansion shifts among ports that handle bulk exports and an overall increase in bulk export volumes could occur.

Second more use of America’s Marine Highway system could provide a cost-effective alternative to both trucks and intermodal rail for container transport in some cases.

Not limited by highway weight restrictions or rail clearance limitations the inland waterways can be more cost-efficient than other modes for moving cargo (especially heavy or hazardous materials) depending on the route.

Expansion of the Panama Canal will change the cost of trans-ocean shipping again particularly East-West trade routes between Far East ports iand the U.S. East and Gulf Coast ports.

Projects and Funding

Through the 2007 Energy Independence and >Security Act Congress directed the U.S. Department of Transportation (DOT) to implement the America’s Marine Highway (AMH) Program. By shifting freight and passenger services to underutilized waterways the program looks to reduce congestion and greenhouse gas emissions and to improve safety and national defense. The Secretary of Transportation designated 18 marine highway corridors throughout the U.S. 11 major waterways four connectors and three crossings.

The maintenance program for coastal and Great Lakes ports funded by a 0.125 percent ad valorem Harbor Maintenance Tax (HMT) assessed on most imported and domestic cargo pays 100 percent of the costs of maintaining channel depth for navigation channels up to 45 feet in depth and 50 percent for channels more than 45 feet in depth.

The Corps of Engineers also funds a specific percentage of port projects constructing a deeper harbor and provides federal money ranging from 40 percent to 80 percent for eligible projects based on channel depth.

The Acting Maritime Administrator Paul “Chip” Jaenichen said some ports are already preparing deepening their harbors and improving their intermodal connections. He said many of these changes came with the help from the TIGER (Transportation Investment Generating Economic Recovery) Grant program.

Economic Recovery) Grant program. Since 2009 the Obama Administration has directly invested more than $400 million in infrastructure projects at 33 U.S. ports in 22 different states through the TIGER program.

As part of the Obama Administration’s “We Can’t Wait” economic initiative which expedites the permitting and review process for regionally significant infrastructure projects the Administration has expedited seven infrastructure projects to help modernize and expand five major U.S. ports including the Port of Jacksonville the Port of Miami the Port of Savannah the Port of New York and New Jersey and the Port of Charleston.