Ports Prepare for the Impact of the Panama Canal Expansion

I have an article this month in the Kentucky business magazine The Lane Report that looks at the role the state’s public riverports play in regional economic development for a number of Kentucky communities. Ports and the transport of cargo and freight have also been the subject of a number of recent reports and items in the news so it looks like it’s time for a roundup.

  • U.S. ports plan to spend more than $46 billion over the next five years, according to a report by the American Association of Port Authorities. A piece in The Atlanta Journal-Constitution this week calls these huge public investments—which seek to position the ports for anticipated global competition for exports and imports especially after the expansion of the Panama Canal is complete in 2014 allowing larger ships to pass through—an “uncoordinated arms race between the ports for maritime supremacy.” “We don’t need a half-dozen deep-water ports on the Eastern seaboard,” Steve Ellis of Taxpayers for Common Sense tells the newspaper. “We just need a couple to deal with the larger ships coming on line … Spending all this money is clearly in the ports’ and shippers’ interests, but it’s not in the taxpayers’ interest.”
  • The biggest container ship ever to call at the Port of Mobile, Ala. docked there earlier this month, The Journal of Commerce reported. The ship, the MSC Laura, was one of the post-Panamax-sized vessels like those that will be able to routinely pass through the expanded Panama Canal after 2014 and could call at Gulf and East Coast ports. The vessel’s call was the first in a new weekly direct service from North European ports to the Port of Mobile. “The MSC Laura call clearly removes any doubt of our capabilities in handling the larger container ships,” said Jimmy Lyons, director and CEO of the Alabama State Port Authority. The Port Authority and its partners have invested more than $340 million in the Mobile Container Terminal to allow it to handle the larger, post-Panamax-sized vessels.
  • A University of Georgia study finds that the Peach State’s deepwater ports support 352,146 full- and part-time jobs, up from 295,422 just three years ago. The ports now account for 8.3 percent of total state employment, or one out of 12 jobs.
  • The President and CEO of the Port of New Orleans, Gary LaGrange, touted the importance of expansion at the port to job creation and economic growth during a recent presentation. While the port receives some help in the form of grants, such expansions are largely self-funded. “We do not receive any taxes,” LaGrange told a luncheon hosted by the Association for Corporate Growth, according to The Times-Picayune. “We operate the port like a private business. If we don’t make it, we don’t do it.” LaGrange said a lack of support from Baton Rouge and Washington will likely force the Port to look to private investment to make expansion possible. Legislation passed a few years ago by the state legislature to put in place a $5 per ton tax credit on all imports and exports in the state which could help fund expansion has yet to be implemented. The Port of New Orleans lost a significant portion of its business to Houston-Galveston following Hurricane Katrina in 2005. Finding the funds to take care of dredging needs at the Port of New Orleans is of particular concern, LaGrange said.
  • The Texas Department of Transportation recently created a Panama Canal Stakeholder Working Group, which is expected to produce a report by the end of the year assessing the state’s readiness to maximize economic opportunities the Canal expansion might bring.
  • The Freight Stakeholders Coalition, a group made up of shippers and public and private transportation providers, recently introduced a revised list of principles it would like to see in long-delayed legislation to reauthorize federal surface transportation programs. Among them: Mandating the development of a National Multimodal Freight Strategic Plan; providing dedicated funds for freight mobility/goods movement; authorizing a state-administered freight transportation program; firewalling any new freight trust fund so that funds intended to facilitate freight could not be used for any other purpose; establishing a multi-modal freight office within the U.S. Secretary of Transportation’s office; funding multi-state freight corridor planning organizations; building on the success of existing freight programs; expanding freight planning expertise at the state and local levels; and fostering operational and environmental efficiencies in goods movement.  
  • A recent brief from the Transportation Research Board’s National Cooperative Freight Research Program looks at “Dedicated Revenue Mechanisms for Freight Transportation Investment.” The paper assesses various taxes and fees that could be used to raise revenue to support government investment in freight facilities, primarily for highway transportation.
  • Back in February, the National Association of Development Organizations Research Foundation and others came out with a report entitled “Freight Transportation and Economic Development: Planning for the Panama Canal Expansion.” Though aimed primarily at regional development organizations, the report provides a good overview of the issues ports, state officials, shippers and others are facing as they contemplate the post-expansion era.
  • My article for The Lane Report magazine is the first of a two-part series focusing on Kentucky’s public riverports, which are being used to support and attract business and industry to communities along the Ohio River like Owensboro, Henderson and Paducah. “Having a port is a very competitive business,” Chuck Knowles, Waterways Research Coordinator at the University of Kentucky, told me. “The seven public ports (in Kentucky) are financially making it … in this tough economy, but some of them don’t make a whole lot of money – just enough to pay the bills and pay their staffs. And if they have issues, I guess the local communities that set those (port) authorities up … probably have to financially support them.” Part two in the series, which comes out this time next month, will look at how even Kentucky’s inland ports are preparing for the potential impact of the Panama Canal expansion. Paducah in particular hopes to attract container-on-barge traffic expected to travel up the Mississippi River from Gulf Coast ports after 2014. Part two will also examine the needs at the public riverports and where the money might come from to make facility upgrades.