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Home » Damn the expanded Panama Canal: bigger containerships ahead!
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Damn the expanded Panama Canal: bigger containerships ahead!

September 14, 2010
Mark B. Solomon
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The $5.2 billion project to widen and deepen the Panama Canal won't be completed for four years. But the big containerships that would then be able to traverse the expanded canal aren't waiting for its completion. The Port of Charleston (S.C.), for example, said it has received 18 calls in the past six months by vessels larger than 8,000 20-foot equivalent units, or TEUs. The vessels, the largest that now serve the U.S. East and Gulf Coasts, are calling on Charleston via the North Atlantic trades, as well as linking with Asia through the Suez Canal.

Through June, more than 80 ships drawing between 40 and 48 feet of water—the levels required to accommodate larger vessels often carrying heavy and dense commodities—sailed through Charleston. During all of 2009, Charleston handled 52 vessels requiring that depth of draft. Meanwhile, the Port of Savannah (Ga.), Charleston's port rival to the south, reported that an 8,500-TEU vessel, the largest ever to call at the port, docked there in late August. The vessel, MV Le Figaro, is owned by French liner shipping company CMA CGM Group.

In recent weeks, both ports have been busy communicating the status of their harbor deepening projects, moves that reflect a jockeying for competitive position ahead of the expanded canal's 2014 opening. The Panama Canal Authority, which runs the canal, expects that the big ships transiting the expanded canal will call on either one of the two Southeast ports, but not equally at both.

The stakes are huge for East and Gulf Coast ports. The expanded canal is expected to siphon Asia-originating traffic bound for U.S. interior points from West Coast ports to East and Gulf Coast ports as shippers and retailers seek lower-cost all-water routes and closer proximity to large distribution centers in the south and moving north toward the nation's heartland. Currently, goods from Asia entering West Coast ports are put on trucks or trains for long-distance deliveries to inland destinations. Port of Charleston officials estimate that the 1 million containers per year now entering the United States via West Coast ports will be subject to diversion once the expanded canal opens. While 70 percent of the country's population is east of the Mississippi, only 30 percent of all cargoes are discharged there, according to Charleston officials. Today, the canal can handle containerships with a maximum of 5,100 TEUs. About three-quarters of all containership capacity on order is on ships too big to transit the existing canal.

An expanded canal will be able to accommodate container vessels as big as 12,600 TEUs, though ships in the 8,000- to 10,000-TEU range will likely dominate the liner activity.

Backed by $105 million in state funding, Savannah plans to deepen the Savannah River channel from 42 feet to 48 feet; the Georgia Ports Authority has agreed to kick in $20.4 million for the project.

Charleston already touts itself as having the deepest channels in the Southeast, with 47 feet at low tide in the entrance channel and 45 feet at the inner harbor. Discussions are under way with the U.S. Army Corps of Engineers to deepen the Charleston Inner harbor beyond 45 feet.

In the world of mega-containerships, each additional foot of ship draft matters. Every extra foot translates to an additional 100 containers on board, according to Jim Newsome, president and CEO of the South Carolina State Ports Authority (SCSPA). "A five-foot draft advantage in Charleston provides a huge competitive edge for ocean carriers, importers, and exporters in this port," Newsome said.

Charleston said its container volume through July is up 18 percent from the same period a year ago. At the same time, portside development activity appears to be picking up. Last October, TBC Corp., a large marketer of automotive replacement tires, said it will occupy a 1.1 million-square-foot distribution center built adjacent to the port. Located at a 400-acre industrial park, the DC is a joint venture between the Rockefeller Group Development Corp. and a unit of Mead Westvaco Corp. Byron Miller, marketing director for SCSPA, said construction is expected to be finished later this year with actual occupancy slated for early 2011. Miller said this is the largest DC project in the region currently under construction.

John R. Carver, an executive vice president at real estate services giant Jones Lang LaSalle, said Savannah overbuilt its industrial property base during the last up-cycle and still has a decent-sized capacity overhang. However, Carver added that its volumes are "coming back faster than many expected, and this space should get absorbed to the point that new construction will soon follow."

The initial occupants will be those companies needing a more specialized facility than can be produced from existing inventory, Carver said. Some level of speculative development activity may follow, he said. At this point, there is virtually no "spec" building under way in the United States.

The trend toward recovery will likely first emerge at Savannah and Charleston because they remain, both geographically and demographically, the preferred ports of entry for much of today's all-water traffic, according to Carver.

Transportation Maritime & Ocean
KEYWORDS Port of Savannah - Georgia Ports Authority
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Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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