In my 2015 JOC editorial commentary, I reviewed the case of Charleston and Savannah. The two adjacent ports, serving similar ships and hinterlands, were granted different depths to their access channels because of federal policy based on an anachronistic concept of national benefits. I argued that because the ports’ access channels were regional and notnational infrastructure, the federal government should transfer the responsibility for them to regional port authorities.
It seems that my call for devolution of U.S. ports’ channel was heeded, although unofficially. The pioneer in the de-facto devolution was Florida’s enterprising governor. As part of his bid to repatriate Florida’s freight handled by out-of-state ports, hinging on the ability to handle post-Panamax ships following the pending expansion of Panama Canal, he decided to accelerate the deepening of the Port of Miami’s channel from 42 to 50 feet by forwarding the entire cost of it, including the federal share. Miami’s competitors to the north, Savannah and Charleston, as well as other ports, also used the canal-expansion argument to justify expediting the deepening of their own channels by forwarding the federal share. None of these ports had a clear idea when or, perhaps, whether they would be reimbursed.
The canal-expansion argument used by these ports is misleading, however. Post-Panamax ships, similar to those expected following the Panama Canal expansion, have already been deployed on Asia-U.S. East Coast services via the Suez Canal for several years. To cope with draft limitation, these post-Panamax ships have been using a combination of partial-loading and tide waiting. Evidently, shipping lines determined that partially loaded post-Panamax ships are more economical than fully loaded Panamax ships.
A case in point is Savannah, which has been called by post-Panamax ships despite its long and narrow 42-foot channel. Interestingly, Savannah has been growing faster than Miami with its recently completed 50-foot short channel.
As the current round of 50-foot channel-deepening projects is coming to end, the notion that there will be no federal money for future projects is sinking in. Still, ships deployed in the Asia-U.S. East Coast services via the Suez Canal are likely to continue growing beyond the 13,500-TEU new-Panamax, reaching the 18,000-TEU to 22,000-TEU range already dominating the Asia-Europe services.
To accommodate them, the next round should involve channel deepening from 50 to 55 feet, or even 60 feet, along with channel widening, bridge lifting and extensive landside improvements. Indeed, the next round is bound to be exponentially more expensive than the current one — with no prospect of federal assistance. It is unlikely that U.S. ports will undertake the huge investments involved in the next round without such assistance. In fact, they do not need to; they are at no risk of losing shipping services.
Facing constrained channels, shipping lines will have two options: resort to the current practice of partial-loading and tide waiting; and modify their service pattern, substituting direct with feeder services, using foreign hub ports to avoid the high costs of U.S.-flag ships and U.S. ports. Which option will prevail? The option that shipping lines — not the federal government — will determine to be more economical.
Asaf Ashar, Professor Research, Emeritus, National Ports & Waterways Initiative, University of New Orleans