GarPANAMA CITY, Panama — From this vantage point, atop Coco Li Hill west of the Panama Canal's Miraflores Locks, it appears that the long-running argument over deepening the channels to the Ports of Philadelphia may be decided by events far outside of the Delaware Valley. The widening of the Panama Canal — actually an entirely new set of locks and channels from this Pacific-side entrance to the Culebra Cut through the Continental Divide, and another new lock-and-channel construction next to the Gatun Locks on the East Coast — will bring larger, deeper-draft ships to the Northeastern United States, and every port has to be ready to take them.
Daniel Crocker, a senior commercial officer interviewed at the U.S. Embassy here, explained that the Panama Canal Authority — PanCanal here — was forced to widen and deepen the Canal to stay competitive in today's multi-polar world economy. Only seven to eight percent of the vessels moving to and from U.S. ports travels through the Canal, Crocker said.
SUB: Big Ships Go Around
Most of the large-capacity container ships, ore carriers and very large and ultra-large crude carriers coming to the U.S. from Western Pacific and Indian Ocean ports dock at Long Beach, Calif., Crocker said, because they are too large to fit into the Canal's lock chambers and too deep-draft for its channels. Cargoes meant for the Midwest or the East Coast then go overland on railroad trains. Other ships, bound for ports on the East Coast of South America, Western Europe and the East Coast of Africa, simply head south, either sailing around Cape Horn or around Africa's Cape Hope.
The largest cargo vessel ever to transit the Panama Canal was the San Juan Prospector, since renamed the Marco Prospector, an ore and bulk-oil carrier that is 973 feet long, with a beam (width) of 106 feet, sitting 39.5 feet deep in the Canal's 40-foot channel. The U.S. Navy's four Iowa-class battleships, the USS Iowa, the New Jersey, the Missouri and the Wisconsin, were wider — 109 feet — with less than six inches to spare between the ships' hulls and the concrete walls of the Canal's locks.
SUB: Planning a ‘Post-Panamax’ Future
Panamanians call those big ships "Panamax" vessels, but today's "Post-Panamax" ships, built to far bigger standards than those established with the Canal's opening in 1914, carry so much of the world's commerce that Panama was missing out. Canal transits are the underpinnings of the Panamanian economy: Each ship transiting the Canal pays fees according to its cargo tonnage — a large cargo vessel pays $200,000 or more for a one-way passage, and today's large cruise ships pay as much as $300,000 apiece — and the Canal produces a hefty $8 million to $9 million a day in transit fees.
When the new "Third Set of Locks" open up beside the Miraflores Locks and Pedro Miguel Locks here in 2014, and the similar "Third Set" open beside the Gatun Locks near Colon, on the East Coast, Crocker said, the number of ship transits will rise, boosting both the number of transits and the percentage of vessels moving to and from U.S. ports.
SUB: PanCanal a Big Winner
"PanCanal knows they are not competing with Long Beach," Crocker said, "but PanCanal is run like a smart company; they know they are going to be winners anyway."
That's because, even with the new locks, with their 1,400-foot length, 60-foot depth and 180-foot width, and a new "Post-Panamax" ship standard of 1,200-foot length, 160.7-foot beam and 49.9-foot draft, The Culebra Cut, also called the Gaillard Cut, after the engineer who constructed it, is still a one-way bottleneck. The thirty-odd ships a day passing through the Canal will rise, maybe as much as 50 a day, because of the efficiency of the new locks' "rolling gates" and the addition of new, deeper channels to and from the Cut, to be sure. But the Culebra Cut, passing through a mountain range in the middle of the Isthmus, is all hard rock — basalt — and widening it further would be daunting.
And to be sure, the job of putting in wider and deeper locks and channels is a huge undertaking itself. As Marc Antony Villareal, an engineer with PanCanal's Expansion Program Administration, describes it, the $5.2-billion expansion program is dredging out millions of cubic yards of rock and dirt — including the rock Americans used to build up two artificial islands in Gatun Lake 100 years ago — re-cycling the excavated basalt through huge rock-crushing plants and re-using it as "composite" to stiffen the concrete walls of the new locks, and blasting and dredging the Culebra Cut to greater depths.
SUB: Americans Kicked it Off
Americans actually started widening the Canal back in 1939, Villareal said. "The Americans started build these new, third set of locks because they needed to transit their bigger warships through the existing locks and they don't fit. That's why they were trying to build new locks. They stopped all work because they got into the Second World War, so I think they used all the money that they had because they needed it for the war. And after that, once the war ended, they had strategic positions in the entire world, like Japan, Germany, so they had presence on-site, instead of trying to get in a short period of time to the area."
The current Expansion Project is run by Grupo Unidos Por El Canal, Villareal said, "a consortium formed by a Spanish company, another name is Acierdo Hermoso. The other company is an Italian company, Impregilio, they are associated with another company in the Netherlands, Jan Denool, that is a big dredging company in the world, and also there is a small partner from Panama, CUSA, that is participating. They are responsible to build the new locks, both on the Pacific side and the Atlantic side."
SUB: Carefully Re-Using Old Digs
The Expansion Project will re-use the Americans' ditches, Villareal said, on the eastern, Gatun-Locks side by widening and deepening the cuts to accommodate the new gates, and on the western, Miraflores side by turning the old 1939 trenches into water-saving basins, essentially recycling lock water rather than simply letting it wash down to the oceans. Gatun Lake, once the world's largest man-made lake, is used for hydroelectric power as well as for drinking water in Panama, and the Canal Authority is sensitive to its environmental impact.
The existing Canal locks, 100 years old, will still be working when the new locks begin operation, Villareal said. "The idea of having a new set of locks is just to make it more flexible to give proper maintenance to the existing locks. Because right now, those structures need deep maintenance and more attention. Right now, we are getting proper maintenance, to the gates. But the thing is, each time we4 program maintenance to any of these existing locks, we have a backlog of vessels, really large, increasing, wow!"
"To travel more cargo, because we charge actually, per cargo ... per tons. So the idea is to drive more cargo and more tons through the Canal in an efficient way."
SUB: U.S. Ports Respond to Panama
The response of American ports, up and down the East Coast, has been to deepen their harbors and make new investments in cargo-handling capacity.
In but one example, Miami — the closest U.S. port to the Panama Canal and Florida's largest container port — has signed a Memorandum of Understanding with PanCanal to deepen its port to 50 feet, widen it to open the way for larger, "Post-Panamax" vessels and to expand its own cargo-handling facilities. Miami agreed to install a new access tunnel to permit quicker highway access, and put in a new railway access to Miami's port facilities, all timed to coincide with the opening of the expanded Canal system in 2014.
Miami Port Director Bill Johnson visited Panama last fall and said in a press release, "The expanded Panama Canal will be a game-changer to container trade when it opens in August 2014. As the closest U.S. port to the Panama Canal, PortMiami will be the first port of call for fully laden Post-Panamax vessels. To capitalize on bigger ships and shifts in trade, the Port is putting in place over $2 billion in infrastructure improvements."
Miami, the world's busiest cruise-ship terminal, also is a container port with a $17-billion yearly economic impact on its region, providing or indirectly supporting some 180,000 jobs. Its new, $1-billion roadway tunnel will permit direct connection from the port to the Interstate Highway system, and other projects will directly connect Miami's port to the national rail network to put 70 percent of the U.S. population within one to four days' travel from Miami.
Norfolk, Va., also is deepening its port channel and berthing areas to a 50-foot depth, and Baltimore is deepening the channel to its Seagirt Terminal to 50 feet as well. The Port of New York, whose channel depth already is at 45 feet, is widening and deepening its access to 50 feet.
SUB: Dissent Hampers Philadelphia Project
That said, the question must be asked whether Philadelphia's projected depth of 45 feet will be enough to keep up with its East Coast, especially Northeast, competitors. Pertinent also is the question of whether political obstacles will prevent going any deeper.
Recent news reports suggest that the project to dredge the 102-mile length of the Delaware River channel to Philadelphia has been hampered by dissent over the economic impact and possibly bad environmental consequences of deepening the channel. A report by the Philadelphia Inquirer pointed out that debate has dragged on for nearly three decades, and that deepening the river is opposed by the State of New Jersey.
Environmental groups, including the Delaware Riverkeeper Network, say the river-dredging project risks damaging sensitive ecosystems, including oyster beds and habitat for horseshoe crabs, as well as the breeding areas for Atlantic Salmon.
Other observers such as Taxpayers for Common Sense question whether the economic argument for deepening the river still holds up as oil refineries close on the Delaware, since petroleum and petroleum-product shipping has been such a mainstay of port traffic. Citing the Philadelphia Regional Port Authority's own reports of new ship traffic coming in, the Taxpayers group argues that deepening the port would return a cost-benefit ration of, at most $1.10 for every dollar spent, while adversely affecting the livelihood of communities that depend on the river for food, recreation, storm protection and drinking water, the Inquirer said.
SUB: Growth Heralded at Philly Port
Indeed, the Philadelphia Regional Port Authority can claim some big recent successes in the port-to-port competition along the Eastern Seaboard.
Among other good news, the Port Authority recently signed a historic Memorandum of Understanding with the Republic of Lithuania that "promises to pen Philadelphia ports to the European and Asian shipping trade via the ice-free port of Klaipeda," on the eastern coast of the Baltic Sea.
Klaipeda is the third-largest city in Lithuania and the principal ice-free port on the Baltic's eastern coast, the Regional Port Authority says, and its deep-water port connects sea, land and rail routes from east to west in that region, serving as the main connector to shipping lines to the ports of Western Europe and even Southeast Asia. This agreement, coming after establishment of a federally mandated partnership between the Commonwealth of Pennsylvania and the Republic of Lithuania, marks what the Port Authority called a "historic step in strengthening those ties."
The Port Authority's January 18 report showed that, with nearly 4 million metric tons of cargo handled in 2011 compared to slightly more than 3.6 million tons handled in 2010, the Port of Philadelphia saw a "solid 10-percent increase in cargo." Gains in both containerized cargoes and several non-computerized cargoes contributed to the rise in traffic. Combined with the 17-percent increase in cargo in 2010 over 2009, the Port Authority said, Philadelphia has re-established and even surpassed pre-Recession cargo levels.
SUB: Hyundai Deal Spurs Auto Growth
Among the biggest triumphs was the growth in automobile shipping, after a big win stealing the contract to handle Hyundai and Kia cars from the Port of Baltimore. With 127,347 Hyundai and Kia automobiles arriving at the Port of Philadelphia in 2011 compared to the already sizable movement of 68,876 autos arriving in 2010, Philadelphia's port saw a dramatic 85-percent growth in auto cargoes, the authority said. In tonnage instead of units, that's nearly 175,000 tons of automobile shipments in 2011, compared to 2010's 77,350 tons, a 126-percent gain.
The port's cocoa-handling center at Pier 84, a dedicated facility not duplicated at other ports, handled a record cargo of cocoa beans -- 19,328 metric tons -- in January for shipment to cocoa processors in Pennsylvania and elsewhere.
Philadelphia's port also contains specialized forest and paper-products handling facilities, at the Tioga Marine Terminal and at piers further south along the river.
And finally, with 740,890 metric tons of liquid bulk cargoes handled in 2011 compared to 677,553 tons handled in 2010, liquid bulk cargoes demonstrated a substantial gain of more than 9 percent, the Port Authority said in its statement.
Thus, a U.S. Army Corps of Engineers analysis of port growth that argues that deepening the Delaware River would have not a $1.10 return for every dollar spent, but $1.64 return may hold up even after three refineries shut down at Marcus Hook, South Philadelphia, and in New Jersey. For its part, the Port Authority points out that not only will bigger ships come to Philadelphia, attracted to the deeper channel and berthing areas at Tioga, at the Packer Marine Terminal and the planned Southport Terminal, 100-200 acres on the grounds of the former Naval Yard, but also because deeper channels mean heavier loading of the ships that do come. Packer Avenue and the new Southport Terminal are south of the Walt Whitman bridge, which means its height restrictions will not apply.
All this presupposes that the Port of Philadelphia can continue to compete at the top of its game against ports like Norfolk, Baltimore and New York, all of which are taking their channels to a 50-foot depth to match the draft of the biggest Post-Panamax ships.
Only time will tell the story on that.