The $5 billion Panama Canal expansion project is now expected to be completed in April 2015 instead of October 2014, according to the Panama Canal Authority. The expansion will nearly triple the canal’s capacity and is expected to divert some ships from West Coast ports to the Gulf Coast and East Coast.
In 2007, when Panamanian citizens approved the Panama Canal Extension project, it sent a shockwave through every seaport in the United States, especially East Coast ports that were designed specifically to adhere to “Panamax” regulations. The Panama Canal expansion is a microcosm for the entire U.S. seaport system because the ports that will stay competitive in global trade markets are the same ports that must modernize their sea terminals to accommodate the larger megaships that will be traveling through the Panama Canal once the extension is complete.
In a recent interview, Kurt J. Nagle, president of the American Association of Port Authorities said “I don’t think it’s over-hyped to say it’s a game Panamax” where the maximum size of a ship that can pass is 1,200 feet long by 160 feet wide, opposed to the current standard of 956 feet long by 106 feet wide. The container capacity of ships will swell to 12,000 TEU from 5,000. TEU or twenty-foot-equivalent describes the volume of the total intermodal containers that are being transported. The maximum draft of vessels travelling to and from the U.S. East Coast will increase to as much as 50 feet from 39.5 feet.
Seaports are economic lifelines that strengthen local and national economies and grow international trade. With the Panama Canal now positioned to begin accepting larger ships in 2015, the burden of upgrading port infrastructure has shifted to the East Coast. Even with the 6 month delay in completion, ports weren’t given much time to complete massive infrastructure projects, so most have already started dredging deeper ports to make way for the supersized ships. The first Port Authority to prove its port can meet the New Panamax requirements will have a substantial advantage over competitors. From an economic standpoint, the potential is limitless as the favored port could become the epicenter for U.S. international trade in the New Panamax Era.
Currently the largest ships that can pass through the Panama Canal can only carry about 4,000 containers, the metal boxes full of consumer goods that can be transferred from ship to train and then to truck. The new vessels, known as post-Panamax ships, will carry double or triple that volume, but because the ships are bigger and heavier, they also require deeper water depths approaching 50 feet.
The ports of Norfolk, Va.; Baltimore; and New York and New Jersey have that depth now or will soon. Farther south, the ports in Charleston, S.C.; Savannah, Ga.; and Miami, FL don’t want to see the larger ships pass them by.
Proponents of harbor-deepening projects say they are vital for local and state economies will create thousands of jobs in a country that is still reeling from the deepest economic downturn since the Great Depression.
Here’s an update on where eastern seaboard projects currently stand as they prepare for the Post-Panamax Megaships:
- The Port of New York/New Jersey, the busiest port on the eastern seaboard and second only to the Port of Los Angeles, already has a $2.3 billion project under way to deepen its harbor to 50 feet. However, the Bayonne Bridge spanning the shipping channel is too low for the megaships, and port officials say at least $1.3 billion more is needed to raise that span. The Port Authority of New York and New Jersey must complete their $1 billion project to raise the Bayonne Bridge by 65 feet before the megaships can pass underneath.
- The Port of Baltimore is nearly two years ahead of the Panama Canal expansion completion deadline as workers are set to complete a $105 million project before the end of 2012. Baltimore’s Seagirt Marine Terminal will have the additional required 50-foot container berth to accommodate supersize vessels within a new 200-acre terminal. It is a part of a greater infrastructure project totaling $1.3 billion in the Baltimore-area.
- The South Carolina Ports Authority, chief executive, Jim Newsome, said “It’s the biggest strategic issue for South Carolina today.” South Carolina needs $300 million to deepen the 45-foot harbor in Charleston to 50 feet by 2020. “Businesses locate near ports; that’s the bottom line,” Newsome said. Newsome is banking on Charleston’s strategic position in a growing Southeast market, and he says the port could feed the region’s bigger population centers such as Charlotte, N.C., and Atlanta. “We think we’re the only harbor in the Southeast where it makes sense to go 50 feet or deeper,” he said. South Carolina Republican Gov. Nikki Haley has lobbied President Obama for $120 million for the Charleston harbor, but received only enough to complete a study of the project. The state Legislature is considering a bond issue to pay for the federal portion in case the funds don’t come through.
- The Port of Savannah sought $105 million from Obama’s infrastructure budget to begin dredging a deeper shipping terminal, but was rewarded with only $600,000. The Georgia Ports Authority has made the argument that a deeper port in Savannah, the second-busiest port on the East Coast, was necessary to meet Obama’s goal of doubling U.S. imports. Georgia isn’t waiting. Republican Gov. Nathan Deal’s budget now includes about $180 million in state funds for the port of Savannah. He said the state would pay for all of it if necessary, then seek a reimbursement from Washington. In addition to trans-Pacific eastbound cargo growth, the Global Services Regional Manager of AIT’s Atlanta Global Service Center is expecting the US to Europe and US to Asia export LCL (less than container load) consolidation markets to grow as a result of the increased capacity. “The cost benefits associated with larger volume ships will help us provide better carrier choice and service reliability,” he says. “Our ability to articulate our partnerships with the vendors embracing eco-friendly trends in global shipping and logistics will pay good long-term dividends.”
- The Port of Miami, the closest to the Panama Canal, expects to be the most desired destination for the post-Panamax ships. The Port of Miami already has permission to dredge and is asking for $75 million to start the project’s first phase. Miami’s project is less expensive than Savannah’s or Charleston’s, and it is estimated to complete by the end of 2014, and a $1 billion road tunnel to reach the harbor will be finished soon. The port’s Deep Dredge project aims to deepen Biscayne Bay to 50 feet from 42 feet. Additionally, the Port of Miami Tunnel Project will offer trucks a more direct route to and from the port with a bypass of downtown Miami and a 4.4 mile rail link between the port and Hialeah intermodal rail yard is under consideration. Jaime Cabrera, AIT’s Director of Latin American Development, says new trade agreements with Latin America have sparked expansion interest. He adds, “The growth in Latin American and Caribbean markets combined with port expansion will help to increase transshipping through Florida in the coming decades.” Studies are also under way to deepen two other Florida ports in Ft. Lauderdale and Jacksonville. Kevin Lynskey, assistant director for seaport business initiatives at the Port of Miami, said “I don’t know too many ports that have gambled on shallow water that have stayed in the game, and if we didn’t dredge and other people did, we certainly would lose more containers.”
- Port Manatee, on Florida’s west coast, is nearing the end of a decade-long, $200 million expansion and has dredged to accommodate ships that have passed through the Panama Canal.