Posted on May 3, 2016
By David Bauerlein & Sebastian Kitchen, jacksonville.com
Three times a week, ocean-crossing cargo ships with names like Maestro, Empire and Marvel steam up the St. Johns River, pass under the Dames Point bridge and dock at the TraPac terminal. There towering cargo cranes and a swarm of longshoremen unload steel boxes packed with consumer items bound for shelves in hundreds of stores.
The big ships calling on TraPac’s terminal heralded a new chapter for Jacksonville’s port. TraPac linked it to the fast-growing trade routes of Asia, forging a connection that port officials called a game-changer for the city.
“Our partnership is indeed the beginning of a great enterprise,” a top executive for TraPac’s parent company said at the 2005 groundbreaking at which his company gave a Japanese kabuki doll to the port as a gesture of the alliance with the Tokyo-based company.
A decade later, the pomp of that day has been replaced by the hard reality that TraPac’s terminal, which opened in early 2009, is operating at a fourth of its capacity.
TraPac might not even stay at that site. The company is negotiating with the Jacksonville Port Authority about possibly leaving the 158-acre terminal and moving to a different authority-owned location. The high-stakes talks have created behind-the scenes tension as one board member wrote an email branding the agency’s initial approach to the negotiation as “unorganized, reactive and non-strategic.”
Ultimately, TraPac’s future in Jacksonville hinges on JaxPort’s quest to deepen the ship channel from its current 40 feet deep to 47. The $684 million project to do that would be the most expensive public works project in Jacksonville history.
TraPac has said for years that in order to stay long term in Jacksonville, it must have deeper water for the much larger cargo-container ships now in operation. But there is no firm timetable for when the first underwater scoop would occur, much less how to pay for it. Nothing can happen until a legal challenge to environmental permits gets resolved.
While Jacksonville faces all those obstacles, other Southeast ports are pursuing deeper water, too.
“They’re in a very competitive world and have been for some time,” said Stan Payne, who worked as an executive at port authorities in Florida and Virginia and now owns Summit Strategic Partners, a consulting business.
He said for every advance Jacksonville makes to realize the port’s potential, a challenge seems to arise that holds the port back.
“I guess it boils down to this: Have they ever really been able to develop momentum toward realizing that potential?” Payne said. “Every time it looks like they are gaining that momentum, there is another roadblock.”
MIAMI ALREADY BOASTS DEEP WATER
“Big ships welcome now,” the Miami-Dade County website proclaims about the 50-foot deep channel in its port.
In September, the Port of Miami was the first in the Southeast to deepen its port to be fully ready when massive ships begin using the expanded Panama Canal expected to open this year.
Savannah is on the way to become the second Southeast hub with deep water. Dredging for a 47-foot channel started last year. The state of Georgia is committing $266 million. The federal government has put forward $69 million with another $42.7 million proposed for fiscal 2017.
That puts Jacksonville in a race with Charleston, S.C., and Port Everglades in Fort Lauderdale to be the next port to break ground on their river bottoms.
“If we don’t get deep water — and I can’t emphasize this enough — we won’t be in the game to be an international port,” said Jacksonville Port Authority board member Jim Citrano.
The South Carolina General Assembly set aside $300 million in an interest-bearing account for Charleston’s dredging, giving it strong support from the state capital.
Charleston expects to complete at least part of the deepening by the end of the decade, which at 52 feet would make it the deepest port on the East Coast, said Erin Dhand, spokeswoman for the South Carolina Ports Authority.
Port Everglades is pursuing a 48-foot channel at a cost of $374 million, which is considerably less expensive than the $684 million cost for Jacksonville.
All the Southeast ports are looking to Washington for financial help. But they cannot count on it because over the years, the federal government has been scaling back how much it bankrolls for such projects, Payne said.
“You’re simply going to see states and local sponsors having to make some tough financial decisions and reach into their own wallets,” Payne said.
He said he has no doubt Georgia and South Carolina are ready to do just that.
‘WE REQUIRE A MATCH’
Florida Gov. Rick Scott has made ports a centerpiece of his economic agenda by steering $1 billion to them. But Florida has 15 deepwater ports, so there is no single facility that gets the lion’s share of attention.
The state is willing to partner financially with Jacksonville and Port Everglades to help pay for dredging, but only on a 50-50 basis for the non-federal portion of the cost, according to the state Department of Transportation.
“It’s incumbent on the port to contribute,” department spokesman Dick Kane said. “We must have participation from state and local sources. We require a match.”
If Jacksonville wants to start dredging before securing federal funding, the department would discuss that scenario based on the port’s overall plan.
In a best-case scenario, deepening would take seven years and could be finished by the end of 2023, assuming the funding falls into place over that time. That may be complicated by the retirement of U.S. Rep. Ander Crenshaw and the uncertain political future of U.S. Rep. Corrine Brown, two influential champions of the project.
But nothing can start while the St. Johns Riverkeeper is challenging the state’s issuance of permits for the dredging. JAX Chamber spokesman Matt Galnor said after challenge is resolved, funding will become critical.
“We remain bullish on the project and think it is an important economic driver for our community,” Galnor said.
JaxPort’s goal is to begin work by next year on the first of four segments at a cost of $45 million. So far, the state has committed about $21 million for dredging. JaxPort CEO Brian Taylor said getting started would show the port is committed to obtaining deeper water, which would assure TraPac and others in international shipping that Jacksonville can compete in that arena.
“The longer this project doesn’t start, the more challenging it becomes,” Taylor said. “We need to do everything we possibly can do to keep this project on schedule. If you get the project started, I think you’ve shown it’s real.”
OTHER PROJECTS ‘MOVING ALONG’
Even as questions loom about paying for dredging, Taylor said, other long-awaited projects are coming to fruition.
A $30 million Intermodal Container Transfer Facility for transferring cargo containers between ships and trains will open this year. Construction will wrap up on the $43.5 million Mile Point project, removing a navigation obstacle to big cargo container ships, and on a $21 million project at Interstate 295 and Heckscher Drive that will make it easier for trucks to get to and from port terminals.
“It’s fantastic that these projects are moving along,” Taylor said, adding that “every one of these things is what we said is needed to position the port for the future.”
In addition to TraPac’s terminal at Dames Point, the port also is gaining more Asian-based cargo business on Blount Island with carriers including Maersk, the biggest shipping line in the world.
JaxPort has been in discussions with TraPac since spring 2015 about the company possibly relocating to Blount Island, which would reduce the cost of dredging because that would shave 2 miles off the length of the deepening.
Board member John Falconetti criticized the direction of those negotiations earlier this year in emails he sent to Taylor, but Falconetti said last week he thinks the port is taking the right approach and will ensure the port’s long-term interests aren’t sacrificed to make a deal with TraPac.
Payne said if TraPac ends up leaving Jacksonville, it would deal a hard blow to the port. Jacksonville shook up the shipping world when TraPac and Hanjin inked deals to operate huge cargo terminals at Dames Point. Then Hanjin bailed without ever breaking ground.
“It goes back to the unrealized potential, and at some point in time, you have to realize that potential,” Payne said. “It’s tough on any port when you lose any amount of business, and when you lose a highly visible business, it’s that much tougher.”
