The Joplin Globe, Joplin, MO

Business

June 14, 2012

Ports’ arms race predicted to cost at least $46 billion in 5 years

ATLANTA — U.S. ports plan to spend more than $46 billion in the next five years in anticipation of fierce global competition for exports and imports, a report by the American Association of Port Authorities shows.

The actual amount will be considerably higher. Only 63 of the association’s 82 members responded to the query. And federal money for port-deepening projects - Savannah, Ga., alone seeks more than $400 million from Washington to carve another five feet from the Savannah River and harbor - wasn’t included.

The huge public investments highlight the uncoordinated arms race between ports for maritime supremacy. Along the Southeast coast, for instance, Savannah and Brunswick, Ga., compete with Norfolk, Va.; Charleston, S.C.; Jacksonville, Fla.; and Miami for a finite amount of cargo.

No one in Washington or anywhere else plays referee to determine which ports should handle the ever-larger cargo ships expected by 2015 to traverse the Panama Canal en route to the East Coast.

“We don’t need a half-dozen deep-water ports on the Eastern seaboard. We just need a couple to deal with the larger ships coming on line,” said Steve Ellis, vice president of Taxpayers for Common Sense, a nonpartisan budget watchdog group in Washington.

“Spending all this money is clearly in the ports’ and shippers’ interests, but it’s not in the taxpayers’ interest.”

Savannah and Charleston, for example, compete for the same ships and plan to spend almost $4 billion upgrading harbors, docks and terminals. South Carolina politicians, who have plowed billions of dollars into the port of Charleston, vow to stop Savannah from deepening its river and harbor.

A South Carolina Supreme Court judge hinted last week that an environmental permit issued last year to allow the Savannah deepening may be illegal. A decision is expected later this summer.

Meanwhile, the Army Corps of Engineers is weighing Georgia’s request to deepen the Savannah River to 47 feet at a cost to taxpayers of $652 million. Its final decision is expected this fall. The Corps, which has preliminarily approved the Savannah project, reported in April that a 38-mile long deepening project will save shipping companies, retailers like Atlanta’s Home Depot, and U.S. and foreign manufacturers $174 million in transportation costs each year.

“I believe strongly that our port system in the United States is falling behind in its competition with all major markets we trade in, primarily Europe and Asia,” said Curtis Foltz, executive director of the Georgia Ports Authority. “If we don’t invest in our ports then we will not be capable of handling more ships or larger ships (and) the cost of shipping goods will increase and consumers will pay more.”

The port association reports that the $46 billion will pay for new or rebuilt piers, wharves, warehouses, roads, cranes and dredging to maintain channels and berths. Private terminal operators will cover two-thirds of the costs. More than $18 billion will be borne by local, state and federal taxpayers.

That doesn’t include the billions of state and federal dollars sought by ports around the country to deepen rivers and harbors.

The Atlanta Journal-Constitution reported this spring that 10 competing East Coast ports plan to invest $15 billion in the next decade, with tax money covering half that amount.

“Port authorities and their private sector partners are investing significant levels of funds into ports to accommodate the increasing levels of trade and larger vessels as we, hopefully, pull out of the recession,” said Kurt Nagle, the president of the American Association of Port Authorities.

Nagle added that trade into and out of U.S. ports will likely increase 6 percent to 8 percent through 2020.

Savannah, which led the nation in double-digit growth of container traffic between 2000 and 2010, expects about 5 percent annual growth through 2022. Savannah’s growth will happen regardless of any deepening work, according to the Corps of Engineers. No additional cargo or jobs will flow from the project, the Corps says, which critics cite as reason enough not to waste taxpayer money and harm the environment.

Other ports - like Charleston, which projects spending $300 million to deepen its harbor - might be better taxpayer bets, according to the Southern Environmental Law Center. But the Corps’ analysis of Savannah’s deepening didn’t really consider if neighboring ports would better serve the nation.

“The failure to look at alternatives shows just how chaotic and haphazard the whole Corps’ deepening project is. Nobody has made the hard choices based on economic and environmental factors,” said Chris DeScherer, an attorney with the Southern Environmental Law Center, which has sued to stop the deepening. “And it highlights the need for a strong federal government agency, or a referee, to look at all alternatives.”

 

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