Posted on June 28, 2016
By Robert McCabe, The Virginian-Pilot
A year ago, the Port of Virginia took a big step toward securing the title “deepest water on the East Coast.”
The Army Corps of Engineers and port officials signed a pair of agreements last June setting in motion the first phase of two dredging projects that have been pursued for a decade and could take another decade to complete.
The most important one would take the port’s main shipping channels, now 50 feet, to 55 feet, the deepest on the East Coast, offering greater access to the world’s biggest container ships.
Ocean carriers are building vessels with twice the capacity of the largest ships calling on East Coast ports now.
While bigger ships have already begun to arrive via the Suez Canal, the opening of the expanded Panama Canal today will give shippers another option for moving larger vessels, carrying more cargo, directly from Asia to the East Coast.
The consensus of local officials is that the project is a must if the port – a vital economic engine for the region – is to stay competitive.
“When I say that it is the key to our future, I am not kidding,” said Art Moye, executive vice president of the Virginia Maritime Association. “You have to start now. If this funding is not made available, it’s going to put us severely behind. And we all know what that means when it comes to competition and where these large ships may go.”
Yet some port watchers nationwide argue that dredging to 55 feet might be unnecessary.
Container ships generally draw less water than they appear to need on paper, these critics say, and often don’t come anywhere near ports’ maximum channel depths.
Also, because ocean carriers generally don’t deploy a ship across an ocean to call at a single port, but to a series of ports known as a “rotation,” they wonder why Hampton Roads would need 55 feet of water if no other East Coast ports were that deep.
Further, they say, the money for dredging – the Virginia projects will cost the feds and state about $300 million – might be better be spent on landside improvements.
Early last year, the port was brought to its knees when a spike in cargo left the terminals gridlocked. The state responded, funding a $350 million investment to boost capacity at Norfolk International Terminals. It is also backing a $320 million expansion at Virginia International Gateway financed upfront by the private owners, who will be reimbursed with higher rent.
The cost for the deeper channels and just those two infrastructure improvements – around $1 billion – is about half of the projected $2 billion that port officials say they’ll need over the next decade to keep Hampton Roads in the game.
The significant investment for the 55-foot project prompts the question:
Is the additional 5 feet of depth really worth it?
For decades, 50 feet was the king of channel depths.
Hampton Roads dredged a 50-foot outbound channel in 1989, primarily for loaded coal ships leaving the port, and finished dredging an inbound 50-foot channel in 2007.
The port has had congressional authorization to dredge to 55 feet since 1986. The Army Corps is reviewing the project again, however, to determine optimum depths and widths based on current traffic.
Baltimore has had a single 50-foot channel since 1990.
Other East Coast ports have been pursuing projects for years. They were given new urgency once the Panama Canal expansion came into view.
Miami joined the 50-foot club last year, and New York/New Jersey will this summer.
Savannah moved 1.2 million more TEUs – a container measurement, meaning 20-foot equivalent units – than Hampton Roads last year, even though its channels are 8 feet shallower. While Savannah, the second-largest East Coast port after New York/New Jersey, can’t dredge to 50 feet, it’s already in the process of going to 47 feet from 42 feet, still allowing it, with the help of the tides, to handle the majority of ships expected to call on East Coast ports.
Even Boston and Philadelphia are in on the trend. Now at 40 feet, Boston got the feds’ blessing to go to 47 feet in its Inner Harbor channels. The completion of Philadelphia’s dredging project next year will give it 45 feet of water, enough to handle plenty of the container ships plying the East Coast: Beginning Monday, the maximum draft through the expanded Panama Canal will be 43 feet.
It’s Charleston, S.C., that seems to have Virginia port officials most concerned. Within three years, that port could have 52 feet of water in its inner harbor and 54 feet at its entrance, allowing it to claim “deepest port on the East Coast” honors.
While getting its channels down to 55 feet would put Hampton Roads back in front of the pack, at least on the East Coast, port officials say it’s not a game of one-upmanship.
“If we think about the urgency – not that we want bragging rights – but what we will do to accelerate this deepening will help improve the competitive position of the Port of Virginia for decades and decades to come,” John Reinhart, executive director and CEO of the Virginia Port Authority, told maritime stakeholders at a dredging summit last fall.
He predicted a wave of consolidation that is sweeping the ocean-carrier industry. It’s resulting in a reconfiguration of the big carriers’ alliances, through which they share space on huge ships that none of the lines could fill on their own.
The upshot? Bigger ships for every port those alliances call on.
To date, the biggest ships that Hampton Roads handles can carry about 9,600 TEUs. Reinhart has said the port needs to be ready to make a quantum leap from 9,600 to 14,000 tomorrow – not several years from now.
The Army Corps, which is overseeing the port’s dredging initiatives, is likely to use a 14,000-TEU vessel – the MSC Daniela – in design work for the 55-foot-channel study.
Bill Cofer, a Port Authority commissioner and president of the Virginia Pilot Association, whose members guide big ships in and out of the port, said he believes the model vessel should be an 18,000-TEU ship, like the gargantuan CMA CGM Benjamin Franklin. In fact, he said, he’s already received a phone call from a shipping line asking about the possibility of bringing a ship that big to Hampton Roads.
It’s the ability to handle ships that big, along with something called “squat” – the way large vessels can lose buoyancy as they move through a body of water –that drives the case for dredging to 55 feet.
The Thimble Shoal Channel is one of three channels that port leaders want to dredge to 55 feet. It’s the main entrance for container ships headed for Hampton Roads ports, straddling the first tunnel that northbound motorists pass through on the Chesapeake Bay Bridge-Tunnel.
The second is the Norfolk Harbor Channel, which crosses the Hampton Roads Bridge-Tunnel and leads to Norfolk Naval Station, the container terminals in Norfolk and Portsmouth, and the coal-export complex in Norfolk.
The third is the Newport News Channel, which crosses the Monitor-Merrimac Memorial Bridge-Tunnel and leads to the coal-export facilities in Newport News.
The second dredging project would also get portions of the Southern Branch of the Elizabeth River down to 40 and 45 feet, allowing vessels to carry more commodities to and from terminals in Chesapeake and Portsmouth.
The Chesapeake Bay, Hampton Roads and Monitor-Merrimac bridge-tunnels are all at least 63 feet deep, according to the Army Corps of Engineers.
But depth isn’t the only issue: Channel width is key, too, Cofer points out. Most of the Thimble Shoal and Norfolk Harbor channels are 1,000 feet wide, big enough to enable most two-way traffic, allowing ships to enter and leave the port.
As ships get bigger, however, so does the need to ensure adequate width, especially in the Thimble Shoal Channel, which needs to be 1,400 feet wide, Cofer said.
Winds from a nor’easter or similar storm can push vessels off course by as much as 10 degrees, meaning a 150-foot-wide ship needs twice the room to operate safely.
The upshot, Cofer said: “We’ve got to get wider.”
Reinhart argues that with 55-foot channels, Hampton Roads could carve out a niche as a “first-in, last-out” destination, a port with water deep enough to make it a first stop for import-laden vessels and the last stop for ships to bulk up on exports before heading back across the ocean.
While port officials envision the biggest ships on the ocean – even 18,000-TEU-size vessels – one day calling on Hampton Roads, none are calling on U.S. ports now.
Though the biggest ships able to move through the expanded Panama Canal will be in the 13,000-TEU range, it’s unlikely that ocean carriers will begin moving vessels that large through the canal right way, said Neil Davidson, a senior analyst with London-based Drewry Maritime Research.
The bigger ships won’t begin moving through the canal faster partly because of an air-draft restriction at the Bayonne Bridge, affecting access to most terminals at the Port of New York/New Jersey by larger ships. Port officials say that problem will be gone by the end of next year.
Late last year and early this year, with great fanfare, the massive Benjamin Franklin began calling on West Coast ports, the beginning of what was supposed to be a steady rotation of vessels that big to California.
Yet France-based CMA CGM soon reversed course.
The MSC Daniela – the 14,000-TEU ship that may be the benchmark for Hampton Roads’ 55-foot-channel project – has drawn much less water on port calls. Its design draft is 52.5 feet, according to an Army Corps of Engineers study. Records show that when it called on Los Angeles and Oakland last fall, it drew between 29 and 32 feet; late last month, entering and leaving L.A., it drew between 35 and 38 feet of water.
That does not surprise Richard Wainio, former CEO of the Port of Tampa, who spent 23 years at the Panama Canal, where he served as senior economist and director of executive planning. Big container ships, with rare exceptions, generally draw several feet, sometimes more, below their maximum design draft, he said.
When the Benjamin Franklin arrived in Los Angeles a day after Christmas – carrying about 15,000 TEUs, or a little more than 80 percent of its capacity – it was drawing 47 feet, 8 inches of water.
When it arrived at Long Beach nearly two months later, carrying about 12,500 TEUs, it drew 45 feet, 8 inches.
Wainio questions whether the multibillion-dollar dredging derby on the East Coast is necessary.
“Every port from Boston to Brownsville has jumped on the bandwagon,” he said, “and they’re trying to justify all of their projects and funding for these projects on the basis of an expanded Panama Canal and this pot of gold that’s going to be out there for everybody to reach for.”
He says those expectations have been exaggerated.
And what about the Port of Virginia’s quest to get 55-foot channels?
“I certainly don’t see any justification for 55 feet based on the container business,” Wainio said, citing ocean carriers’ practice of deploying ships to strings of ports.
Ships calling on the East Coast will often call on the Port of New York/New Jersey first, because of the huge population center next to it, or Savannah, because of the heavy concentration of distribution centers nearby.
Afterwards, they’ll go down or up the coast to call on other ports.
“What advantage are you going to get by going to 55?” Wainio asked, citing the implausibility of ships needing that kind of water going to Hampton Roads and nowhere else on the East Coast.
Reinhart cautioned against making apples-to-apples comparison between Hampton Roads and West Coast ports on the basis of the Benjamin Franklin’s calls.
“You have a lot of very light import cargo coming from China to the Pacific, but you don’t have the export,” Reinhart said.
The port also exports agricultural and other commodities that can be heavier than container ships, he added. While local coal exports have been declining recently, deeper channels would help coal and bulk loading in larger ships.
A cargo ship, accompanied by two tug boats, heads down the Elizabeth River. Norfolk is on the left, Portsmouth, and the Portsmouth Marine Terminal, is to the right.
Hampton Roads is already a “first-in, last-out” East Coast port.
Asaf Ashar, research professor emeritus at the National Ports & Waterways Initiative at the University of New Orleans, said he gets that, with 55-foot channels, Hampton Roads could expand that role with megaships.
He doesn’t find the idea of 20,000-TEU vessels calling on the East Coast so far-fetched, stating in The Journal of Commerce earlier this year that the next round of dredging projects should push to 55 or even 60 feet, “along with channel widening, bridge raising and extensive landside improvements.”
What he doesn’t buy is the idea that the federal government should be subsidizing such projects.
“Most of the money is coming from your pocket and mine,” he said.
If the federal government is willing to pay billions for such projects, “of course, it makes sense” for ports to dredge, Ashar said: “Why not?”
But he argues that the economic benefits of those projects accrue to the regions around ports, not necessarily the rest of the country. If Virginia is able to lure away a few hundred thousand containers a year from New York/New Jersey or Savannah, what difference does that make to somebody in Chicago?
“Why should I care if my container came through New York or Norfolk if its costs the same?” Ashar asked.
He calls for a “devolution” of the channels, giving ports the right to dredge their channels to whatever depth they consider competitive – provided they stay within environmental regulations – and to charge port users to cover the costs.
“The federal government involvement in channels in the name of national benefits, although ports are regional infrastructure, is likely to result in unnecessary investments and waste of taxpayers’ money,” he wrote in an email.
Groups such as the American Association of Port Authorities, however, argue that federal money for the projects moves in such small increments, a relative trickle, that they lead to inefficient transportation and higher costs, hurting the nation’s competitiveness in the global marketplace.
The White House’s proposed budget for fiscal year 2017, which starts Oct. 1, includes $105 million for such work. At that rate, it would take about 20 years to complete the eight dredging projects approved by Congress two years ago. The need is for nearly three times that amount, an association spokesman said.
The projects don’t unfold overnight either, which lends some logic to Virginia’s getting its bid on the table.
Assuming that Hampton Roads’ 55-foot project needs no further act of Congress to move ahead, completion of the dredging would still be years away – even in a best-case scenario, maybe a decade.
The first dredging contract for Savannah’s project, awarded a little more than a year ago, followed 16 years of study. Philadelphia’s project had been shelved for 18 years.
Even with potentially rough water ahead, Cofer, the pilot association president, remains confident that all of Hampton Roads’ navigational and rail-connection assets give it a long-term edge that no other port can match: ”We’re going to be the dominant port.”
The capital improvements will have to be made, he said, to ensure “that if the cargo comes, we can move it and we can move it quickly.”
Source: The Virginian-Pilot
