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American Shipper

Charleston gets Army Corps blessing for 52-foot harbor

Draft study endorses project to make port the deepest on East Coast.

   The campaign to deepen the Port of Charleston beyond 45 feet to ensure safe passage of mega-size container ships achieved a major milestone Tuesday morning when the U.S. Army Corps of Engineers released its draft feasibility study and environmental impact statement.
   For years the harbor deepening debate centered on achieving a 50-foot draft, but the federal agency said it has accepted the locally preferred option for a 52-foot navigation channel that would make Charleston the deepest port on the U.S. East Coast. The bigger project would also cost $210 million more than earlier iterations.

Newsome

   “We want to be able to handle a fully loaded in the largest exporting region in the country without tidal restriction,” South Carolina Ports Authority Chief Executive Jim Newsome said in a phone interview.
   Vessels with 8,000 TEU to 10,000 TEU of capacity are becoming the standard in the U.S. East Coast trade with Asia and Europe. The Port of Charleston already works an average of seven vessels up to 10,000 TEU each week, but they cannot enter or exit fully loaded. Vessels enjoy a 48-foot draft at high tide. Ocean carriers cannot maximize economies of scale for big ships without full utilization, and they don’t want expensive assets to idle waiting for the tide to come in.
   Newsome said the port authority wants to offer vessels a 24-hour turnaround, from the time a ship arrives at the pilot station on its way to berth to the time it drops the pilot off, and be able to lift 2,000 containers on and off the ship during that period.
   Vessels typically make multiple port calls on the East Coast and don’t unload or unload all their cargo in one port.
   The preliminary Army Corps plan calls for a 54-foot entrance channel at low tide with a 950-foot width, up from the current 47-foot depth. The entrance channel will be extended three miles farther to the ocean to achieve proper contour and allow water from the Cooper River to drain out, according to the port authority and the study.
   The main channel, up to the Wando Welch Terminal on the Wando River and a new terminal under development at a former Navy base, will be 52-feet at mean low water. Farther up the Cooper, beyond the Navy base, the channel to the North Charleston Terminal will be dredged an additional four feet to 48 feet.
   The turning basins for the Wando and new Navy terminals will be enlarged to 1,800 feet, while the North Charleston turning basin will be 1,650 feet.
   The project also involves raising dikes in the inner harbor areas to handle the new dredge disposal material and an expansion of the ocean disposal area for the outer-harbor spoils.
   The new deepening plan is estimated to cost $510 million and provides the maximum net economic benefit to the nation in terms of transportation efficiency over 50 years.
   The Army Corps’s benefit-cost analysis, however, identified 50 feet as the best option when construction and maintenance costs are factored in. A 50-foot project is priced at $437 million. Army Corps policy is to select the least-cost alternative if the economic benefits are close.
   South Carolina sought, and was granted, a waiver to go to 52 feet.
   The port authority and the state could be responsible for covering the $73 million cost of dredging an additional two feet, although Newsome said the difference is to be negotiated. Assuming the federal government accepts the normal 60/40 cost share formula for deepening, the federal contribution could be $29 million.
   One reason for the Charleston deepening project’s extra cost is the discovery that the entrance channel is harder than previously thought and will require a cutter dredge to break up the material. On the positive side, it is expected silt up less in the future, according to Newsome.
   The recently authorized dredging project for the Port of Jacksonville, by comparison, will cost $684 million to take the channel from 40 feet to 47 feet. The Army Corps there opted for a 45-foot project and local sponsors will cover the cost for the extra two feet. The Port of Savannah river deepening project from 42 feet to 47 feet is estimated to cost at least $652 million.
   The U.S. Army Corps annually spends about $13 million to $15 million in maintenance dredging. The expanded harbor will cost an additional $3.5 million to maintain. Under current law, the federal government pays for all maintenance of navigation channels up to 50 feet.
   Newsome said going to 52 feet is important because fully loaded 10,000-TEU ships have a 48-foot draft and a 52-foot harbor provides a 10-percent under-keel clearance without tidal restrictions.
   Experts eventually expect container lines to introduce 13,000-TEU to 14,000-TEU vessels to the East Coast, possibly after work to raise the Bayonne Bridge at the Port of New York-New Jersey is completed in about two years to allow clearance to inner harbor terminals.
   Vessels taking the Panama Canal or Suez Canal routes are likely to look for a Southeast port to load up with exports because of the recent manufacturing boom and large agricultural production in the region. Export containers on average are nearly twice as heavy as imports, making the extra depth crucial for fully utilizing a vessel’s capacity.
   “We want to be able to handle a fully loaded vessel in the largest exporting region in the country without tidal restriction,” Newsome said.
   Officials changed their thinking about the harbor’s desired depth, as carriers continued to place orders for larger and larger vessels, he said.
   South Carolina has placed $300 million in escrow to cover the local sponsor’s share of the project. State officials were even prepared to use any remaining funds to cover the federal portion of the project and then seek reimbursement rather than waiting for Congress to appropriate funds, which can take years. A provision in the new Water Resources Reform and Development Act gives local sponsors the flexibility to self-finance construction without further congressional authorization to keep projects on pace, but there is no guarantee of reimbursement.
   A final recommendation on the deepening project is expected to be completed by the Army Corps’ chief engineer in September 2015. Port authority officials expect to begin construction shortly thereafter by advancing the $300 million and financing the rest of the project if necessary. They express confidence that federal funding will be provided because the Charleston deepening has been put on a fast-track as part of the White House’s “We Can’t Wait” initiative to speed up permitting and reviews of critical national infrastructure projects.
   The Army Corps decision “recognizes that the Southeast needs a 50-foot-or-deeper harbor. We believe the federal government has now decided that it’s necessary to fund their share of harbors that have merit, so we believe we will qualify for significant federal reimbursement,” Newsome told American Shipper.
   Additional cost savings may be identified during the pre-construction engineering and design phase, the port authority said in a statement.
   Newsome noted that the cost for environmental mitigation is only about $35 million, or 7 percent of the total, compared to some dredging projects where the environmental component is as much as 50 percent of total cost.
   “For the cheapest cost we can get the deepest harbor in an environmentally responsible way,” he said.
   The Charleston deepening is expected to be completed in 2019, Newsome said.

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