Panama Canal CEO to address why Savannah port should expect to handle more cargo

By David Pendered

A central question related to the proposed deepening of the Savannah Harbor is to be addressed Tuesday by the CEO of the authority that oversees the Panama Canal.

The question involves how much additional cargo the Savannah port can expect to handle once much-bigger ships from Asia are able to reach the east coast through the canal.

A corollary question involves the amount of Asian cargo expected to stick with the nation’s two largest ports – Los Angeles and Long Beach. Those ports are hurrying to respond to the direct challenge the canal presents to their import/export business, and to their labor markets and local economies.

Alberto Aleman Zubieta

Alberto Aleman Zubieta

The CEO of the Panama Canal Authority, Alberto Aleman Zubieta, today is slated to present his unique insights into these trade questions. Zubieta has overseen the canal’s push this century to become what it calls the “cornerstone of the global transportation system.”

Zubieta administered the United States’ Panama Canal Commission from 1996 through 1999, when the canal transitioned to Panamanian control, and has headed his country’s canal authority ever since.

According to a preview of a keynote speech Zubieta is to deliver today at MODEX 2012, a conference for the materials handling and logistics industry:

“The expansion of the Panama Canal is certain to change global freight movement and open up new opportunities, but precisely how is yet to be determined.

“By allowing much bigger container ships and other cargo vessels to easily reach the eastern United States, it will alter patterns of trade and is already providing incentives to east and gulf coast ports to deepen harbors and expand cargo-handling facilities.

“The end result should be faster and cheaper shipping of some goods between the United States and Asia.”

Culebra cut, 1910

The Culebra cut, during construction in 1910. Credit: Alamy

Gov. Nathan Deal, Atlanta Mayor Kasim Reed, and the state’s two senators are betting that Georgia’s state-owned port in Savannah will garner a significant share of this anticipated new trade.

The canal now can accommodate ships that handle about 5,000 containers, and when it’s expanded the canal will be able to handle freighters laden with 12,000 or more containers. A container is generally defined as holding the equivalent of a container measuring 20 feet long, 8 feet wide, and about 8 feet high.

Reed routinely links the economy of Atlanta with the viability of the Savannah port. Reed has employed his relations with the Obama administration to help keep the proposed deepening on the federal agenda.

Reed also touts the economic impact of Atlanta’s international airport. Reed contends that foreign businesses want to do business near the airport where they land from their home country – not in a city that requires another flight after touching down in Atlanta.

On Monday, the airport reported that international passenger traffic rose by almost 8 percent from year-end comparisons of 2010 and 2011. The number of international passengers rose to 9.86 million passengers from 9.14 million passengers, the airport reported.

Culebra cut, 2009

The Culebra cut, during construction in 2009. Credit: Alamy

In Deal’s proposed FY 2013 budget, the governor recommended the state borrow $46.7 million to continue deepening the Savannah Harbor, in anticipation of handling the bigger ships.

Deal also proposed to amend the current year’s budget to provide an additional $171,423 to maintain the navigability of the Atlantic Intercoastal Waterway and the state’s two deep water ports by providing land for upland disposal areas for dredge materials, and to maintain dykes in upland disposal areas.

Georgia Senators Johnny Isakson and Saxby Chambliss have joined South Carolina Sen. Lindsey Graham (all Republicans) to work for federal funds to deepen the harbors of both Savannah and Charleston. The trio issued a joint statement in December that reads:

Savannah Harbor

A tanker passes Savannah. Credit: Georgia Department of Transportation

“We must work together to ensure our states and region are not left behind after expansion of the Panama Canal.”

“The Economist” magazine published an interesting look at the competition among east coast and west coast seaports in its Jan. 28 edition. Click here to read the story.

To respond to the diversion of ships from west coast ports to the Panama Canal, the story says the California ports are considering extending rail directly into the ports. That would hasten the movement of cargo containers from ships to trains, which haul cargo to its destination. Currently, cargo is hauled by truck from the ports to train yards.

The Savannah port already has extensive rail service within the port. And the service was converted to private ownership in 1998 – suggesting that its prices are highly competitive with other markets.

The Savannah Port Terminus Railroad initially opened in 1952 with 10 miles of track under the ownership of the Georgia Ports Authority. The railroad was acquired in 1998 by Genesee & Wyoming and expanded to an 18-mile short line freight railroad.

The SAPT now transports cargo from ships to CSX Transportation and Norfolk Southern. Commodities handled by the railroad include chemicals, food products, intermodal containers, and pulp and paper, according to Genesee& Wyoming.

For more information on Zubieta and the MODEX conference go to www.modexshow.com

Cargo ship at Savannah Harbor

Cargo ships much larger than this one will pass through the Panama Canal and dock at Savannah if the Savannah Harbor is deepened. Credit: Georgia Tech Research Institute

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

2 replies
  1. Bill Dawers says:

    The Corps of Engineers’ economic analysis has laid out a pretty clear scenario: There will certainly be more cargo coming through the canal, but the Georgia Ports will see the same increased pace of business whether the Savannah Harbor is deepened or not. With deepening, there will be increased efficiencies that will save money on shipping; without deepening, the amount of cargo will be the same but it will be handled less efficiently. Either way, the port of Savannah will max out its landside capacity in about 20 years, according to the Corps.

    It will be interesting to hear if Zubieta contradicts or confirms or simply avoids talking about this projection. — Bill DawersReport

    Reply
  2. dwpendered
    dwpendered says:

    Bill,

    You raise a good point about infrastructure. Zubieta did reference it, and his comments on the subject will be in the story that will post later today.

    Thanks for your thoughts,

    DavidReport

    Reply

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