From the Panama Canal Authority CEO’s perspective, ports in Georgia and South Carolina shouldn’t spar over funds from the federal government to deepen their harbors.
Savannah and Charleston, competitors both for container traffic and federal dollars, are both needed to handle greater trade volumes that will come after the canal is expanded in 2014, said Alberto Aleman Zubieta.
“I don’t think it’s a competition one against the other. I think they need to understand that both ports will benefit. It’s not that one is going to sacrifice another,” Mr. Aleman said on the sidelines of the Modex conference in Atlanta on Feb. 7.
Mr. Aleman heads up the public body responsible for the $5.25 billion expansion of the nearly century-old Central American waterway. The project is on schedule, despite strikes that halted work briefly in January, he said.
Improvements are to include a new set of locks that can accommodate ships carrying up to three times as many containers as the “panamax” vessels that currently navigate the canal.
East Coast ports are scrambling to prepare their facilities to snag some of the anticipated increase in business.
Savannah already has the infrastructure to handle these super ships, but their drafts are too deep to navigate the Savannah River when fully loaded.
To achieve the maximum scale and cost reductions the larger ships provide, Savannah’s channel must be deepened from 42 to 48 feet,Georgia Ports Authority officials have said.
Port leaders and politicians from Gov. Nathan Deal to Atlanta Mayor Kasim Reed have been lobbying for approvals and funding for the Savannah deepening project, which was first studied in 1996. The U.S. Army Corps of Engineers is expected to issue final approval for the project this year.
In his 2013 budget, President Barack Obama on Feb. 13 proposed allocating $2.8 million to the Savannah deepening, a move welcomed by Mr. Deal and other Georgia stakeholders, though they had sought a more robust $105 million.
In all, the Savannah project is projected to cost more than $600 million. More than $40 million has already been spent on feasibility and environmental studies.
Charleston has recently begun looking at the impact of deepening its approach channel beyond the current 45 feet. The president’s budget proposed $3.5 million to continue work on a $20 million study after the fiscal year begins on Oct. 1.
Savannah is the fastest growing port in the U.S and the fourth largest in the country. Charleston has trailed Savannah’s rapid growth over the last decade, much to the chagrin of South Carolina leaders.
Mr. Aleman believes there is room for both ports, as long as they’re run well.
“When you look at the size of Georgia, Georgia is bigger than many countries. When you look at South Carolina, same thing,” he said. “You have trade that you’re going to continue, and as long as both ports are efficient, it will benefit the people of South Carolina and it will benefit the people of Georgia.”
He added that their proximity doesn’t make them redundant.
“Even though they look like the same market, they are actually going to different areas, and I think all of that will improve,” he said.
Georgia and South Carolina have also agreed to develop a joint port on the Savannah River in South Carolina’s Jasper County.
Instead of rivalries among ports, Mr. Aleman seemed more concerned that important conversations about infrastructure spending in the U.S. are taking so long to bear fruit. He noted that the Savannah project has seen its projected costs rise as a result of indecision.
“If the canal was built in 10 years, from 1904 to 1914 – and it’s a magnificent piece of infrastructure, one of the wonders of the world with many, many issues in much more difficult times – today with the technology, I wonder why do we take so much time to make decisions?” he said.
That said, he didn’t advocate rash investment but instead argued that each port should closely evaluate its needs in light of the canal’s coming expansion. That should take into account not only port facilities, but the infrastructure around them, like distribution facilities, highways and more, he said.
The canal won’t lose business if ports like Savannah aren’t ready in 2014, but ports will face pressure from shipping lines and companies that want to get their products to market more quickly and cheaply, Mr. Aleman said.
West Coast ports oppose the expansion, reasoning that some ships that would’ve offloaded their containers in California and trucked cargo across the country will instead take all-water routes to the East Coast.
“I don’t see that as a direct competition really. I think every port, and I mean it, every port needs to improve in order to be competitive. That’s actually what should be looked at,” Mr. Aleman said.
The canal expansion is about creating options, he said, noting that it will benefit shipping routes from the West Coast to Europe, which also make use of the canal. He also welcomed the development of new ports across the Americas.
The Pendleton Group is the presenting sponsor of Global Atlanta's Economic Development Channel. Subscribe here for monthly Economic Development newsletters.
