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Fla. Ports Racing to Handle Giant Cargo Ships

Mitsui O.S.K. Lines ship
Jacksonville is building a terminal to handle Mitsui O.S.K. Lines ships. The Toyko company will provide the first direct container service between northeast Florida and Asia [Photo: MOL (America) Inc.]

On a once-sleepy strip of Dames Point overlooking the St. Johns River in northeast Jacksonville, crews are busy with the biggest contract in Jacksonville Port Authority history — the construction of a terminal for Tokyo-based Mitsui O.S.K. Lines, which will provide the first direct container ship service between northeast Florida and Asia.

On the land, the crews are laying rails 100 feet apart for hulking new cranes that can lift up to 50 tons of cargo at a time. In the water, dredges are scraping out a turning basin to make room for larger ships that will eventually triple Jaxport’s container capacity.

Another new terminal, for Seoul-based Hanjin, is also in the planning stages — along with a boatload of infrastructure projects. Those include an intermodal facility where containers will be transferred onto trains, and a deepening of Jaxport’s shipping channel to 45 feet — by itself at least a $400-million prospect. “The opportunities are lining up,” says Rick Ferrin, Jaxport’s executive director. “If we play them right, we’ll be one of the top 10 container ports in the country.”

Ferrin’s words could have come from any port director in Florida. All of the state’s major ports are scrambling to cash in on an expected doubling of waterborne trade in and out of the state within the next 20 years. Many officials believe that they could have one of the top container ports in the country, if they only had the facilities to handle the growth — bigger cranes, longer berths, deeper channels.

The seed for the potential trade boom was planted in October 2006, when the citizens of Panama voted in a national referendum to expand their nation’s canal. A $5.25-billion upsizing will double the waterway’s capacity in 2014 — exactly 100 years after the United States first opened the water passage between North and South America and the Atlantic and Pacific oceans.

The chief benefit of widening the canal involves so-called “post-Panamax” ships, monster freighters that can each carry more than 5,000 mobile-home-sized containers. At present, those post-Panamax ships can’t fit through the canal. A third set of locks will double the canal’s capacity, allowing container ships up to three times as large as those that can pass through today.

Currently, only about a third of the world’s container-ship capacity consists of post-Panamax ships. By 2011, more than half of the world’s fleet will be supersized, and just about all the jumbo vessels will be able to pass through the expanded canal.

The increased shipping capacity will shake up trade patterns throughout the Western Hemisphere, and particularly along the eastern U.S. coast. The project “will have a greater impact on international trade than the original canal had 100 years ago,” predicts Richard Wainio, Port of Tampa director and CEO, who served as an executive with the Panama Canal Authority for 23 years.

Other factors make the timing fortuitous for Florida. Today, most containers bound for the eastern seaboard enter through western U.S. ports and are loaded onto 18-wheelers or trains. But the west coast ports are severely congested and lack capacity. Meanwhile, the southern U.S. market is growing rapidly. Demographers predict Florida’s population will surpass New York’s by 2020. Also by that time, Asian cargo alone bound for eastern U.S. ports is expected to double. It’s much cheaper to ship goods by water directly to Florida than to unload them in Los Angeles and truck them cross-country. It results in less pollution and far less wear and tear on highways, too.

Panama Canal: Under Construction
The Panama Canal is undergoing the largest expansion in its 94-year history.
[Photo: AP/Arnulfo Franco]
Panama Canal
The $5.25-billion expansion will allow the Panama Canal to accommodate much larger cargo ships, called post-Panamax ships. The project is scheduled to be completed in 2014. [Photo: AP/Arnulfo Franco]

Florida port officials say the chief obstacle to cashing in on the post-Panamax boom is the fact that not a single Florida facility can berth the big ships. And so, across the state, port directors and other officials are lobbying hard to expand their facilities. In addition to $10-million-plus mega-cranes like those going in at Jaxport, port officials say they need wider spaces to allow the ships to turn around; much larger berths; and, most important, deeper channels.

But not every port can get everything it wants. Money is the limiting factor. Florida’s 14 ports compete against one another for a small, stagnant state appropriation for seaports. They’re also competing for the increasingly hard-to-tap federal pot of money that funds U.S. Water Resources Development Act projects such as channel deepening. Last November, Congress authorized a project to deepen the South Channel at Port of Miami to 50 feet as part of the Water Resources Development Act. Port of Miami’s director, Bill Johnson, is more than a little confident he’s won the jackpot. But he could soon learn what water-management district officials in his region have from Everglades restoration: Just because Congress authorizes a project doesn’t mean it will allocate money for it.

2007 U.S. Container Port Ranking
(Florida’s competitors are in red)
Los Angeles 8,355,039
Long Beach 7,316,465
New York/New Jersey 5,299,105
Savannah 2,604,312
Oakland 2,388,182
Hampton Roads, Va. 2,128,366
Seattle 1,973,504
Tacoma, Wash. 1,924,934
Houston 1,768,627
Charleston 1,754,376
Honolulu 1,125,382
Baltimore 610,466
Anchorage 504,844
Wilmington, Del. 284,352
Portland 260,128
Philadelphia 253,492
New Orleans 250,649
* 20-foot container equivalents
Sources: American Association of Port Authorities, Florida Seaport Transportation and Economic Development Council

The sheer number of Florida’s ports puts the state at a disadvantage to East Coast rivals, most of which have only one port in the entire state. As Miami, Jaxport and other Florida ports compete for channel-deepening funds, they are up against out-of-state ports that often have one powerful port authority and the state’s entire congressional delegation lobbying for just one project.

Environmental and other regulatory issues also come into play. The U.S. Army Corps of Engineers, which has begun a feasibility study on Jaxport’s proposal for a deeper channel, has been working on a similar study for Port Everglades for no less than 10 years. “It has been one review after another review after another, and the consequence is that we’re going to lose business to those ports that are ready, from Texas to New Orleans to Savannah to Charleston,” says Port Everglades Director Phillip C. Allen.

While they wait for the Corps, Broward County commissioners, who operate Port Everglades, are moving forward with a $100-million plan to expand berths and a turning area that will destroy nine acres of mangroves. The acreage is part of a tract the county promised to protect forever as part of a deal with the state to allow construction of freight yards and docks in 1987. State environmental regulators have asked why Florida needs Port Everglades and Port of Miami, given their proximity, to both accommodate post-Panamax ships.

One answer is that “everybody wants it all,” says Wainio. Realistically, he and others say, that’s not possible. It also may not be necessary. Wainio says while investments in waterside infrastructure, land, storage, equipment and security are important, most of Florida’s ports will benefit from the coming container boom without having to dredge to 45 or 50 feet or buy post-Panamax cranes. As larger ships come into play, he says, existing, smaller vessels will be redeployed, creating growth opportunities for ports that choose not to dredge or can’t afford to.

Richard Wainio
Increased shipping capacity from an expanded Panama Canal will shake up trade patterns, particularly along the Eastern Seaboard, says Port of Tampa CEO Richard Wainio. [Photo: Andy Forbes/Tampa Port Authority]

Big and Bigger
Sizing up the newer generation of cargo ships

Panamax vs. Post-Panamax
5,000 containers 12,000 containers
965 feet 1,200 feet
106 feet 180 feet
41 feet 50 feet
[illustration: Jeff Papa]

Florida Port Priorities

Priorities were ranked by the Florida Seaport Transportation and Economic Development Council and submitted to the Legislature for state matching funds this year. Of $183 million requested for the $372 million in projects, none was granted.

» Port Canaveral: Petroleum berth improvements; King George Boulevard expansion

» Port Everglades: Two cruise terminal expansions; midport cranes; Northport bypass road

» Port of Fernandina: Warehouse project

» Port of Jacksonville: Dames Point improvements

» Port Manatee: Berth 12 construction and improvements; intermodal container terminal facility

» Port of Miami: Cruise terminal, wharf, cargo terminal improvements; purchase of cranes

» Port of Palm Beach: Slip 3 redevelopment

» Port Panama City: Bulkhead replacement, mobile harbor crane

» Port of Pensacola: Freezer warehouse

» Port of Tampa: Port Redwing improvements; Eastport development improvements; Hookers Point terminal improvements; Petroleum and liquid berth improvements

John Rood, a Jacksonville real estate developer who served as U.S. ambassador to the Bahamas and worked closely with Freeport Container Port, says he thinks the global market — rather than port authority or Army Corps officials — ultimately will decide how Florida’s ports expand. Rood sees opportunities for public-private partnerships (so-called P-3s) between ports and private companies to help ports grow. He cites Freeport, a transshipment hub where large carriers divvy cargo onto smaller ships bound for secondary ports. The operation is a public-private partnership between the port authority and Hutchison Port Holdings of Hong Kong, one of the world’s largest port operators. “The government of Bahamas never would have had the investment power or technical skill that Hutchison brought,” Rood says.

Some efforts at public-private collaboration are already under way at Florida ports. Mitsui O.S.K. Lines is paying for $211 million of its $230 million terminal at Jaxport, and Ferrin is pitching creative financing for several other infrastructure projects.

The challenges don’t end at the docks, however. Crucial for Jaxport is a $40-million intermodal container facility to handle the cargo that Mitsui O.S.K. Lines, Hanjin and other shippers will bring. At least 30% of all cargo will need to come or go by rail, and Jacksonville’s CSX-owned intermodal terminals are on the opposite side of the city from the port.

Indeed, when it comes to the projected cargo increase, highway and rail congestion and connection problems are an even bigger issue for Florida than on-port infrastructure. “We’re only as strong as our weakest link,” says Wainio, whether that be lack of rail in central Florida or tractor-trailer congestion in downtown Miami. “You have to look at this from a strategic and statewide perspective.”

Officials with the Florida Ports Council, who work to coordinate and lobby on behalf of all 14 ports, agree on the need for more intermodal capacity. “To think about global logistics is big-picture for Florida, but this controls everything,” says Nancy J. Leikauf, the council’s executive vice president. “From the cost of our lumber to the trucks on our highways to the jobs — are port jobs going to be created here or in Savannah? We need to look at the global picture and take these funds that are so precious and expand capacity where it is most needed.”

Post-Panamax Ship
Post-Panamax ship [Photo: Nordcapital]