SMITH BRAIN TRUST -- Port operators in Savannah, Ga. are racing to upgrade their facilities for the rising generation of big ships, which will have a new lane from Asia when the Panama Canal completes a 10-year widening project in 2016. Rivals are eyeing the same big ships in Charleston, S.C. And in Boston, Houston, Miami and many other ports along the Gulf and East Coasts — like the reality television series where many bachelors vie for the attention of the same bachelorette.
“It’s almost like an overbuilding situation,” says Thomas M. Corsi, the Michelle E. Smith Professor of Logistics and co-director of the Supply Chain Management Center at the University of Maryland’s Robert H. Smith School of Business. “The amount of building going on, in my opinion, exceeds the amount of traffic that will be diverted from the West Coast.”
One reason for the frenzy is the way U.S. ports compete among themselves. Savannah, for example, worries most about keeping ahead of Charleston to the north and Jacksonville to the south — not Canada and Mexico. “Each individual port and state can make its own investments,” Corsi says. “There’s no coordination across the different ports and regions.”
Ports jostling for position must consider channel depth, crane capacity, inland rail connections and impediments from bridges and tunnels. Midsized cargo ships built to Panamax specifications — the maximum size allowed through the Panama Canal since its 1914 debut — cannot exceed 41 feet in depth. Larger ships in the post-Panamax era will carry more than double the cargo and can reach depths of nearly 50 feet.
Only four Gulf and East Coast ports will have 50-foot-deep channels when the widening project is finished, but others ports are progressing toward this mark. Ideally, ports would need to reach depths of 55 feet to handle the post-Panamax ships in all conditions. And the ports would need newer, larger post-Panamax cranes.
“What’s critical in a port situation is the ability to get the ship unloaded and reloaded again as quickly as possible,” Corsi says. “Ship owners want their ships in transit. They don’t want them sitting in ports waiting to be unloaded.”
Corsi says shippers and receivers consider three main factors when choosing a port. “You’ve got seaside access, port operations and landside issues,” he says. “You’ve got to put all those things together because movement is from origin to destination — not just across the ocean.”
Raising capital is one challenge. Ports looking to expand and modernize must also respond to environmental concerns, which have delayed projects in Miami and elsewhere.
So where does all this leave the Port of Baltimore, which operates one mile from the Smith School’s part-time MBA program at UMD BioPark? Some factors remain beyond Baltimore’s control, such as the extra day required for large ships to navigate the Chesapeake Bay. Corsi says other factors work in the port’s favor compared to its biggest rival in Norfolk, Va.
First the good news. Recent dredging projects have deepened the middle of the Chesapeake Bay to 50 feet, which puts Baltimore in good company with Norfolk, Miami and New York-New Jersey as the only East Coast ports capable of receiving the largest post-Panamax ships.
Baltimore also provides closer access to major markets than Norfolk. “Baltimore has a strategic advantage because it’s in closer proximity to greater population centers,” Corsi says.
On the downside, Baltimore’s shipping channels are deep but narrow. “When you look at Baltimore, it’s not right on the ocean,” Corsi says. “You have to hire a tug to make sure you stay in the shipping lane and don’t run aground.”
Corsi says Baltimore also is hampered by outdated inland infrastructure, including some train tunnels that date to the Civil War era. “You’ve got old tunnels that restrict double-stacked trains,” Corsi says. “That’s a significant detriment that Baltimore has to deal with.” Norfolk, by comparison, has new rail links under construction that will streamline inland delivery from Chicago to Atlanta.
Corsi says every Gulf and East Coast port has advantages and disadvantages as they compete for post-Panamax traffic. “They are all thinking that their region is going to be the latest and greatest,” he says.
Smith Brain Trust graphic (PDF): Survey of Gulf and East Coast container port expansion projects planned or under construction in August 2015.
Top 50 World Container Ports: New 2014 ranking released Aug. 20, 2015, from the Journal of Commerce (JOC). Which three U.S. container ports made the list?