A central question related to the proposed deepening of the Savannah Harbor is to be addressed Tuesday by the CEO of the authority that oversees the Panama Canal.
The question involves how much additional cargo the Savannah port can expect to handle once much-bigger ships from Asia are able to reach the east coast through the canal.
A corollary question involves the amount of Asian cargo expected to stick with the nation’s two largest ports – Los Angeles and Long Beach. Those ports are hurrying to respond to the direct challenge the canal presents to their import/export business, and to their labor markets and local economies.
Zubieta administered the United States’ Panama Canal Commission from 1996 through 1999, when the canal transitioned to Panamanian control, and has headed his country’s canal authority ever since.
“The expansion of the Panama Canal is certain to change global freight movement and open up new opportunities, but precisely how is yet to be determined.
“By allowing much bigger container ships and other cargo vessels to easily reach the eastern United States, it will alter patterns of trade and is already providing incentives to east and gulf coast ports to deepen harbors and expand cargo-handling facilities.
Gov. Nathan Deal, Atlanta Mayor Kasim Reed, and the state’s two senators are betting that Georgia’s state-owned port in Savannah will garner a significant share of this anticipated new trade.
The canal now can accommodate ships that handle about 5,000 containers, and when it’s expanded the canal will be able to handle freighters laden with 12,000 or more containers. A container is generally defined as holding the equivalent of a container measuring 20 feet long, 8 feet wide, and about 8 feet high.
Reed routinely links the economy of Atlanta with the viability of the Savannah port. Reed has employed his relations with the Obama administration to help keep the proposed deepening on the federal agenda.
Reed also touts the economic impact of Atlanta’s international airport. Reed contends that foreign businesses want to do business near the airport where they land from their home country – not in a city that requires another flight after touching down in Atlanta.
On Monday, the airport reported that international passenger traffic rose by almost 8 percent from year-end comparisons of 2010 and 2011. The number of international passengers rose to 9.86 million passengers from 9.14 million passengers, the airport reported.
In Deal’s proposed FY 2013 budget, the governor recommended the state borrow $46.7 million to continue deepening the Savannah Harbor, in anticipation of handling the bigger ships.
Deal also proposed to amend the current year’s budget to provide an additional $171,423 to maintain the navigability of the Atlantic Intercoastal Waterway and the state’s two deep water ports by providing land for upland disposal areas for dredge materials, and to maintain dykes in upland disposal areas.
“The Economist” magazine published an interesting look at the competition among east coast and west coast seaports in its Jan. 28 edition. Click here to read the story.
To respond to the diversion of ships from west coast ports to the Panama Canal, the story says the California ports are considering extending rail directly into the ports. That would hasten the movement of cargo containers from ships to trains, which haul cargo to its destination. Currently, cargo is hauled by truck from the ports to train yards.
The Savannah port already has extensive rail service within the port. And the service was converted to private ownership in 1998 – suggesting that its prices are highly competitive with other markets.
The Savannah Port Terminus Railroad initially opened in 1952 with 10 miles of track under the ownership of the Georgia Ports Authority. The railroad was acquired in 1998 by Genesee & Wyoming and expanded to an 18-mile short line freight railroad.
The SAPT now transports cargo from ships to CSX Transportation and Norfolk Southern. Commodities handled by the railroad include chemicals, food products, intermodal containers, and pulp and paper, according to Genesee& Wyoming.
The Corps of Engineers’ economic analysis has laid out a pretty clear scenario: There will certainly be more cargo coming through the canal, but the Georgia Ports will see the same increased pace of business whether the Savannah Harbor is deepened or not. With deepening, there will be increased efficiencies that will save money on shipping; without deepening, the amount of cargo will be the same but it will be handled less efficiently. Either way, the port of Savannah will max out its landside capacity in about 20 years, according to the Corps.
You raise a good point about infrastructure. Zubieta did reference it, and his comments on the subject will be in the story that will post later today.