WASHINGTON — A wider, deeper Panama Canal will open in 2014, meaning that bigger cargo ships filled with more containers of consumer goods can move directly to the population centers of the East Coast instead of stopping on the West Coast and sending the goods across the country.
States with seaports along the Atlantic are asking for hundreds of millions of federal dollars to deepen their harbors and shipping channels to accommodate the bigger ships and capture a slice of the growing traffic.
But some global supply-chain experts say the optimistic pre-recession projections of a huge shift in cargo from West Coast ports to East Coast ports no longer add up. Even the U.S. Army Corps of Engineers, which conducts feasibility studies for such projects and often does the dredging, expects little change in cargo volume at those ports.
John Lanigan, the chief marketing officer for freight rail hauler Burlington Northern Santa Fe, which runs dozens of double-stacked container trains every day from West Coast ports to the Midwest and Southeast, said he didn’t expect a major diversion of cargo to the canal.
“The opening of the canal is not going to make it any faster for freight to get to the East Coast,” he said. “The only thing that really changes is that bigger ships will be able to go through the canal.”
Even so, Republican governors in South Carolina, Georgia and Florida, who were elected on platforms of fiscal conservatism, are still hoping that the federal government will pay for some of the cost of the harbor-deepening projects. But just in case the federal funding doesn’t come through, these states have a backup plan: Spend state taxpayers’ money.
Currently the biggest ships that can fit through the Panama Canal can carry only about 4,000 containers, metal boxes full of consumer goods that can be transferred from ship to train 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 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 don’t want to see the bigger ships pass them by. “I don’t know too many ports that have gambled on shallow water that have stayed in the game,” said Kevin Lynskey, the assistant director for seaport business initiatives at the Port of Miami. “If we didn’t dredge and other people did, we certainly would lose more containers.”
Proponents of harbor-deepening projects say they’re vital for local and state economies and will create thousands of jobs in a country that’s still reeling from the deepest economic downturn since the Great Depression.
“It’s the biggest strategic issue for South Carolina today,” said Jim Newsome, the chief executive of the South Carolina Ports Authority, which 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.”
But Jean-Paul Rodrigue, a transportation scholar at Hofstra University, said it didn’t make sense for Charleston, Savannah and Miami all to have deeper harbors without more business.
“You need a lot of volume,” he said. “It’s not certain those ports can generate that level of volume.”
BACK AT HOME
For the Port of Tacoma, the opening of a larger Panama Canal is among a handful of competitive concerns the port faces over the next several years.
The potential problem is particularly worrisome because, unlike the big Pacific Coast ports of Long Beach and Los Angeles in California, Puget Sound ports don’t have a large local population with a huge appetite for imported goods. Depending on trade patterns and the economy, as much as 70 percent of Tacoma’s container traffic is destined for inland cities.
That cargo could reach those inland destinations such as Chicago, Minneapolis, Cleveland and St. Louis, by a variety of routes including through the Panama Canal to East or Gulf coast ports.
The port also is fighting growing competition from Canadian and Mexican ports such as Prince Rupert, B.C., and Lazaro Cardenas in Mexico. Those ports’ competitive advantage is that containers handled there aren’t subject to the federal port tax imposed on containers handled through U.S. ports. Ironically for West Coast ports, most of the revenues from that tax fund dredging projects on the East Coast that will make those ports better able to handle the larger ships that will move through the upgraded Panama Canal.
West Coast ports are lobbying Congress to impose the port tax on containers handled in Canada and Mexico when they enter the U.S., usually by train.
The Port of Tacoma and other West Coast ports still enjoy a speed advantage over East Coast ports handling Asian goods destined for the Midwest. Extra steaming time to reach the East Coast will add about a week to the total transit time. And for container shipping companies, the canal tolls and as much as two additional weeks on the water for each round-trip will increase operating costs and decrease productivity of their fleets.
The ports of Tacoma and Seattle are also touting the environmental benefits of using Northwest ports. A 2009 study commissioned by the ports and reviewed by outside experts concluded the container import routing through Puget Sound created the smallest carbon footprint of any of the routes serving Midwest points.Curtis Tate of McClatchy Newspapers and News Tribune staff writer John Gillie contributed to this report.