Economy
6:13 am
Mon October 28, 2013

Eastern Ports Spend Billions, But Will New Ships Come?

Originally published on Mon October 28, 2013 8:00 am

Transcript

STEVE INSKEEP, HOST:

Just under a century ago, the opening of the Panama Canal transformed the shipping industry. It became easier for cargo ships to go from Asia to the East Coast of the United States. More recently, many cargo ships grew too large for the canal. So the canal's being expanded, prompting anticipation of a big shipping boom in East Coast ports. But this may not work out quite as expected, as NPR's Greg Allen learned on the waterfront.

GREG ALLEN, BYLINE: There are a few ports with better views than the one in Miami, surrounded by turquoise water. On one side, Miami Beach. On the other, the city of Miami and its fast-changing skyline.

(SOUNDBITE OF MACHINERY)

ALLEN: Cargo ships wait at the dock for their containers to be unloaded. Towering overhead are four new cranes, 26 stories high. Miami Port staffer Carlos Cortina says they were just set up after arriving from China.

CARLOS CORTINA: These large cranes that we're seeing in front of us right now are super post-Panamax cranes. They are the most efficient gantry cranes out in the trade in logistics industry right now.

ALLEN: That phrase super post-Panamax is something you hear a lot here and at other ports along the East Coast. Panamax is shorthand for Panama Canal Expansion. To get ready for those larger ships, nearly all the ports on the East Coast are spending billions of dollars to make improvements. In Miami, Cortina says, that includes dredging the channel to a depth of 50 feet.

CORTINA: We're hoping to have the dredging project completed by the middle of 2015, to coincide with the Panama Canal expansion.

ALLEN: Savannah and Charleston are also working to deepen their ports. In New York and New Jersey, to accommodate the larger ships, the Port Authority is spending more than a billion dollars to raise the Bayonne Bridge. In Miami, the price tag for improvements - the dredging, an improved rail link and a tunnel for trucks - is nearly $2 billion. Governor Rick Scott says for Miami and other ports in Florida, expansion of the Panama Canal is a big opportunity.

GOVERNOR RICK SCOTT: There's a significant opportunity with the expansion of the Panama Canal. There will be a significant amount of additional shipments that will come to the East Coast, rather than go to the West Coast. Now, by investing now, we have the opportunity to get companies to expand here, grow here, and that's what we're going to continue to do.

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 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.

ALLEN: And it's not just ports on the East Coast that are upgrading their facilities. On the West Coast, the port of Long Beach is spending $4 billion to modernize its operation. Noel Hacegaba is the chief operating officer there. He says with those improvements and a trend toward even larger cargo ships, the impact of the Panama Canal expansion on shipping from Asia will be minimal.

NOEL HACEGABA: We believe because of the advantages that the West Coast ports present in terms of time and in terms of costs, we believe that we will continue to maintain the lion's share of the market share.

ALLEN: The director of the port of Miami, Bill Johnson, says: I don't have a crystal ball. But he still believes a new, wider canal presents his and other East Coast operations with an unparalleled opportunity.

BILL JOHNSON: It's a game changer, but I also think that not every port inside the U.S. needs to go to 50 feet, not every port needs to be concerned about going to 50 feet.

ALLEN: For Johnson, improvements in Miami and other ports along the East Coast are not just about the Panama Canal. They're about staying competitive and ready for whatever changes are coming in the shipping industry. Greg Allen, NPR News, Miami. Transcript provided by NPR, Copyright NPR.