Lack of dredging strategy leads call for privatization.
By Eric Kulisch
The dearth of federal funding means the U.S. government should target where scarce federal resources are directed so that they have the most impact on the economy, according to a handful of port directors.
'The current deepening process for harbors doesn't provide for prioritization of projects based on merit,' said James Newsome, president and chief executive officer of the South Carolina State Ports Authority, in late March at a National Industrial Transportation League forum near Washington.
Ocean carriers with new 8,000-TEU ships will pick ports that have 50-foot channel depths where their assets can fully operate without weight restriction, Newsome said.
Noting that New York, Baltimore, Md., and Norfolk, Va., have 50-foot channels, or are in the process of getting there, and Miami recently received authorization to dredge to that depth, Newsome told American Shipper afterwards that, 'the biggest exporting region of the country is the Southeast, so there needs to be a 50-foot harbor in the Southeast.'
A preliminary study by the Army Corps of Engineers last summer indicated Charleston would probably be the cheapest of the Southeast ports to dredge to 50 feet.
The Port of Charleston is the nation's 10th-largest container port and has a 45-foot channel. The depth goes to 50 feet at high tide, when it can handle larger ships with a 48-foot draft during a two-hour window.
U.S. House Republicans' ban on earmarks, which have traditionally been the way money has been appropriated for harbor deepening projects, means port authorities will have to get their requests fully included in the president's budget from the outset of the appropriations process instead of relying on earmarks to make up the difference, Newsome told American Shipper after his presentation.
To better its chances of securing funds, the port is proposing to jump phases in the dredging process, which normally starts with determining local need, followed by a feasibility study, pre-engineering decisions and construction.
Under cost-sharing requirements, the local sponsor for dredging to 50 feet must pay 60 percent of the expense. Hugh Leatherman, head of the state's Senate Finance Committee, recently told Jo-Ellen Darcy, assistant secretary of civil works for the Corps of Engineers, that South Carolina was willing to pay its share.
In January, Charleston Mayor Joseph Riley Jr. visited the White House along with a delegation from the U.S. Conference of Mayors and appealed to President Obama to support the dredging project. That effort was preceded in December by a letter to the president from 100 mayors in South Carolina expressing the importance to the economy of being able to handle big ships and heavier export loads.
A study the U.S. Maritime Administration is conducting on the potential impact of the Panama Canal widening could lay the groundwork for federal officials to rank ports that deserve funding.
Richard Steinke and Richard Wainio, port directors for Long Beach, Calif., and Tampa, Fla., respectively, are among a few who have been outspoken about targeting infrastructure funds to key national and regional gateways.
The Department of Transportation, of which MarAd is a part, needs to improve relations with the Corps of Engineers so that its dredging work is in line with any forthcoming strategy to focus infrastructure investments on high-priority freight corridors, much the way it is working with the Commerce Department to align trade policy with transportation policy, Tony Furst, a Federal Highway Administration official, said at a major transportation conference in Washington early this year.
Stymied by government inaction, many ports may turn to private investors to finance and complete needed dredging, surmised transportation economist John Martin.
'I think that we're eventually going to see more private sector involvement in dredging projects. I really think that's going to be a possibility, especially in areas where we're talking about $75 million, $100 million, $120 million investments,' he said Feb. 1 at an American Association of Port Authorities' seminar in Tampa.
Port authorities should start building consensus from beneficial cargo owners in those port regions about contributing to any projects, he said, and state and local governments should think about offering tax credits or other incentives to obtain the upfront financing.
And they need to develop extensive dredge plans instead of simply relying on feasibility studies by the Army Corps of Engineers so they can proceed on their own if the government turns down a harbor maintenance project, Martin said.
Private sector dredging, while still maintaining environmental standards, hopefully would eliminate some of the bureaucratic steps that bog down dredging work, he said in a follow-up interview.
Under existing rules, a company that wants to dredge the navigation channel would need to work through the local sponsor ' typically a port authority ' and obtain the necessary environmental permits on its own without using the Corps' clearances.
Meanwhile, the American Association of Port Authorities is asking the federal government to change the cost-sharing formula for navigation improvement projects so that the 60 percent contribution for local ports kicks in at 53 feet instead of 45 feet to reflect the growing size of cargo vessels.
The Water Resources Development Act also mandates a 35 percent local cost share for channel construction projects with depths of 45 feet or less. As for maintenance dredging, local governments pay half the cost for expenses to keep depth above 45 feet and nothing to maintain depths at 45 feet or less.
Ports could then reinvest the funds saved in needed port infrastructure, the trade association said.