East Coast ports gear up for the expected onslaught of post-Panamax ships.
By Tom Peters
The refrain is familiar: “We are big-ship ready so load ’em up and bring it on!”
Billions of dollars are being spent at North American ports in an effort to find their niche in the competition to serve the ever-growing vessel size of the world’s container fleet. As ships get bigger, port administrations, governments and the private sector dig deeper into their coffers so they can dig deeper into their harbors.
The opening of the expanded Panama Canal, allowing ships with nearly three times the previous container capacity to pass through, and the onslaught of ultra-large container ships moving through the Suez Canal have ushered in a new era for many North American ports. Where 5,000 and 6,000-TEU (twenty-foot-equivalent units) ships were once the norm, ports are now handling 8,000 and 9,000-TEU vessels on a more regular basis. And since the expanded Panama Canal can accommodate vessels up to nearly 14,000 TEUs, U.S. East Coast ports are priming for more cargo on bigger ships.
Brian Taylor, CEO of the Jacksonville Port Authority (JAXPORT), believes ships will be “upsized” from 5,000 to 8,000 and 10,000 TEUs because of the Panama expansion: “I think we will see bigger ships in the existing strings calling here and an increase in business. I have been hearing that over the next five years we will likely see about a 10 percent cargo shift from West Coast to East Coast ports, or roughly nine million TEUs.”
Asian cargo has been the fastest growing segment for JAXPORT, up 16 percent in the first six months of 2016 over last year, and Taylor anticipates more freight will be coming through the Suez as manufacturing gradually shifts to countries like India, Pakistan and Bangladesh. “The quickest way to the East Coast from those countries is through the Suez, so we will see growth from there too,” he says.
JAXPORT is in the midst of investing large amounts of capital – deepening its channel to 47 feet, building bigger docks, and adding three new post-Panamax cranes, ready in November. It just completed a $30 million railyard expansion at Dames Point, served by CSX. The port handled nearly a million TEUs last year and is served by two Class 1 railways, CSX and Norfolk Southern, and one regional line, the Florida East Coast Railway. It also has excellent access to major interstate highways.
While Brian Taylor referenced cargo shifts of up to 10 percent from West to East Coast ports, the busy Port of Long Beach sees more growth, not less. “We’ve done some analysis on the opening of the Panama Canal, and we do not expect it to have a significant impact on our business,” states Michael Gold, Long Beach’s Director of Communications & Community Relations. “While some cargo could be diverted, overall growth will continue. The Port of Long Beach expects cargo volumes to grow by about 3.5 to 4 percent per year for the next 10 years.”
Gold says that “Long Beach is still the shortest, fastest and most efficient way to get cargo from Asia to the rest of the U.S. A typical shipment from China to Chicago can take an average of 11 days less through Long Beach than going through the Panama Canal to the East Coast.”
The port has proven its ability to handle the largest ships in the world, he adds: “This year we already hosted CMA CGM’s 18,000-TEU Benjamin Franklin, and we are investing in more on-dock rail, an ultra-modern, all-electric terminal (Middle Harbor), and a new bridge that will be able to accommodate the mega-ships passing underneath. No other port in the U.S. is investing as much – $4 billion – as we are.”
The Port of Savannah is investing mega-bucks as well in its infrastructure and has already seen a shift toward larger liners with approximately a third of all ships calling on Savannah being post-Panamax, reports Jeff Neil, Manager, Commercial Communications, for the Georgia Ports Authority: “Vessels in the 10,000-TEU range are already calling on Savannah. Over the next six months to a year, we expect a higher ratio of 8,000 to 10,000-TEU containerships. Within two years, we expect market shifts to send 12,000-TEU vessels to the U.S. East Coast.”
Neil also anticipates that some services will shift back to Panama from Suez, which “will be good for Savannah as the Garden City Terminal is usually the first-in call for Panama services.” Savannah handled 3.7 million TEUs in 2015 and by 2025 expects to be handling more than five million TEUs per year. This year Savannah added four ship-to-shore cranes to its current fleet of 22 with another four to be delivered in 2018. Savannah is also increasing its rubber-tired gantry crane fleet from 136 to 169.
While offloading containers from ship to port may be less of an issue with all the investment going on, moving the cargo inland from the ports is critical. In that respect, the Port of New Orleans – which opened a $30 million dockside intermodal terminal in April – is definitely on the right track.
Port President & CEO Gary LaGrange says New Orleans is the only deep-draft port served by all six major Class 1 railways, with CN being the largest. Not only has it increased container movements by rail, but it has started a container-on-barge service from Baton Rouge to New Orleans for the export market. With a current capacity of 850,000 TEUs, the port last year handled more than 500,000 and expects 600,000 this year.
New Orleans can handle ships up to 10,000 TEUs, and that fits firmly into its strategy. “Transshipment, we think, will play a big role for quite some time,” LaGrange explains. “We will have larger ships on the Pacific or Atlantic side going to transshipment ports for distribution purposes, using feeder ships that will vary from 5,000 to 10,000 TEUs.”
Port Tampa Bay doesn’t handle a large volume of containers, but it’s looking to change that, says Wade Elliott, Vice President of Marketing & Business Development, who points out that there are approximately 240 distribution centers “in our backyard, the largest concentration of distribution centers in the area. So we have a preferred cost advantage by having those containers come through Tampa rather than through more distant ports.”
Discharging those boxes in Tampa and trucking them half an hour or within a 100-mile radius, as opposed to taking them off in Savannah or South Florida and trucking them four or five hours, means considerable savings, he adds. On average, it’s about $700 per container. The port is working with shippers and ocean carriers to attract more cargo and larger vessels to its terminals and recently took delivery of two post-Panamax cranes.
It’s also adding terminal and warehousing space and is about to break ground on a 130,000-square-foot cold storage facility. “The whole food and beverage industry here is significant,” Elliott says, citing wine and spirits distribution centers, large grocery and supermarket retailers, and a strong agricultural industry.
PortMiami has been big-ship ready for the past several months after completing a $1 billion capital infrastructure program. Miami now claims the deepest channel in the southeastern U.S. at 50 to 52 feet after a major dredge. It has added towing services; installed new, super post-Panamax cranes; constructed an on-dock intermodal rail service in partnership with the Florida East Coast Railway, and dug a new, fast-access tunnel connecting the port directly to the interstate highway system.
With the enlarged infrastructure, the port expects increased business from Panama. Port Director & CEO Juan Kuryla calls the canal expansion “a game-changer in our history.” He says there is no other port on the East Coast south of Virginia “more ready to accept post-Panamax-sized vessels.”
Miami cites its location as a great advantage. Being at the “crossroads of the Americas,” it is the first deepwater port of call in the U.S. for larger vessels transiting the canal. Miami also bills itself as an ideal transfer point for the transshipment of Asian goods destined for Latin America and the Caribbean.
Farther north in Baltimore, James White, Executive Director of the Maryland Port Administration, agrees with the “game-changer” assessment and sees his port benefitting as well: “We are in a very competitive position because, thanks to our public-private partnership with Ports America, we are one of only a few East Coast ports that has the necessary infrastructure in place to accommodate the big ships. Baltimore has a 50-foot channel, 50-foot container berth and 11 cranes, four of which are super post-Panamax.” He adds that Baltimore sits within the nation’s third largest consumer market and two-thirds of the nation’s population are within an overnight’s drive from the port. – MarEx
Maritime journalist Tom Peters is a frequent contributor to the magazine.