DredgeWire Exclusive: Current Challenges with Project Delays in the U.S. Dredge Industry

By Heiko Osterchrist & Peter Bowe

DredgeWire recently surveyed dredging contractors to try and understand the reason(s) why so many critical Corps (USACE) projects seem to have been delayed in the past year and continue to be so far in 2023.

Between 70-75% of the nation’s imports and exports pass through our ports, harbors, and waterways. Without the proper maintenance of our marine infrastructure the nation would face critical supply issues and lose potential international trade opportunities. A major component of maintenance is dredging. Dredging is what allows our ports to accept the new super Panamax vessels by both deepening and widening the channels. Maintaining our rivers for commerce and flood control and restoring our beaches and marshes to preserve the environment and protect real estate are all essential outcomes from dredging. It’s hard to imagine where the economy would be without dredging.

The USACE and Congress have recognized how critical dredging is to the nation’s economic well-being by allocating monies for it every year. In fact, 2023 was the second year of a record budget allotment of $8.66 billion of which $2.32 billion came from the Harbor maintenance Trust Fund (HMTF). (Approx.$1.6 billion is allocated towards dredging.) In addition, Congress approved an additional $1.48 billion in the Disaster Relief Supplemental Appropriations Act for 2023 for the USACE to make the necessary repairs to infrastructure impacted by hurricanes and other natural disasters and to initiate beach renourishment projects. There is also the 2022 approved Water Resources Development Act which featured a $6 billion authorization for the deepening of New York and New Jersey shipping channels as well as $30 billion, yes $ 30 billion!, for the Coastal Texas Program, which is for reducing risks to vulnerable populations, environment, and infrastructure, restoring ecosystem, and advancing coastal resiliency.

With this amount of record money being allocated dredging contractors should be fully loaded if not overwhelmed with projects, and there should be a long list of dredge bids being issued by USACE. There is a myth that has hung over the industry for the past five plus years that there is not enough capacity available to handle the higher level of bids for the USCAE, plus state and private sector projects. In fact, through massive industry investments over the last few years the industry has increased the Trailing Suction Hopper Dredge (TSHD) cu.yd. capacity by 39%. In addition to increased capacity there also has been fleet renewal program done to bring modern, efficient TSHD dredges into the market. On the big Cutter Suction Dredge (CSD) market (30” + pipe size) there has been additional increase in horse power capacity of approximately 75% in the last six years, which is more than enough additional capacity to handle the promised increase in USACE work.

Yet in the last year there has been a drought of issued bids, especially for much needed beach renourishment projects, which drought continues today and which has caused multiple U.S. dredge contractors to have their dredges tied up to docks and to reduce their hourly and salaried employees’ workforce by up to 30% compared to a year ago levels.

These developments are alarming.

The Corps risks causing the contractors additional challenges if and when the project log jam opens– trying to fill positions again. The dredge industry has invested in the last five years approx $600-800 million in new capacity premised on the Corps’ promise of future larger amounts of bid work. The fear in the industry is that the release of bids will continue to be slow, and the hoppers and cutter dredges will continue to be tied up in the latter part of the year. This would create further financial duress for the dredge contractors.

It is worth noting that like all government agencies like the Corps have two buckets of funding. The first is new construction budgets, which they are allowed to roll over to the next year because many projects are multi-year. The second is O&M (operating & maintenance) budget which typically are port related and have to be used by end of the fiscal year. Ironically in 2022 the Corps did very little beach renourishment projects, and most of the projects were port related and allocated out of the O&M budget. But even those projects were delayed. The dredge deepening cycle has recently been focused on the Gulf of Mexico with multiple projects supposed to come in the past year. Examples include another phase of Corpus Christi, (which is cutter work,) several more phases of the Houston ship channel, some cutter work for Mobile, and some jobs for Sabine NechesNavigation District. All these dredge projects were supposed to be bid out last year and for a variety of reasons they have not been bid out yet.

So, What’s Going On?

DredgeWire spoke to multiple industry sources to try and determine why the Corps was delaying so many projects. From what we can determine, despite record budgets there are three major possible obstacles accounting for dredge project delays:

Here Are Some Possible Solutions to Improve Timely Release of Dredge Bids:

We asked the industry if they had an additional wish list for the Corps besides resolving the current project delay issues and here is what we heard:

The industry is complex, challenging, and capital-intensive. The Corps needs to adapt and evolve to meet current challenges. Fortunately, it has the budget and mission and talent to do so.