With the completion date for the widening of the Panama Canal getting closer (now 2015), seaports up and down the East Coast continue to prepare for what they believe will be a game changer in business as post Panamax ships steam through the Canal and call direct at their terminals.

GPA Executive Director Curtis Foltz speaks during the unveiling of the first electrified rubber-tired gantry cranes on December 12th at the Port of Savannah.

The port of Savannah is still planning for that day. But there’s big news. After long and detailed studies, the Federal government has given the Georgia Ports Authority (GPA) the green light to deepen the channel of the Savannah River leading to the seaport. The decision was precipitated on the fact that in October the Army Corps of Engineers issued a Record of Decision for the Savannah Harbor Expansion Project (SHEP).

This major milestone for SHEP completes the federal government’s review of the project’s justification, and affirms that deepening the Savannah Harbor to 47 feet is economically viable, environmentally sustainable, and in the best interests of the nation, the GPA announces.

“In addition, they clearly stated that any environment impact due to the dredging could and would be mitigated as part of the project,” said Curtis J. Foltz, GPA executive director in a telephone interview with this AJOT reporter.

The Corps has identified the total cost of the SHEP to be $652 million. Foltz indicates that Georgia’s portion of the cost will be slightly over $250 million, out of which the state has already prefunded $180 million.

“We anticipate that the Governor of Georgia will submit another very large sum in his FY2014 budget, and that this will be announced shortly,” Foltz added. “Georgia is well under way at full funding of their portion of the entire project.”

GPA officials now eagerly anticipate that the Federal Budget will provide significant money to provide the Army Corps with the green light funding they need to proceed. The Corps is currently doing all necessary advance work for the dredging, such as engineering studies and design work, property acquisition, etc.

Getting to this point, however, has been long and arduous. Foltz contended that such projects take far too long to study at the federal level.

“It’s not helping our nation’s ports in terms of our competitiveness,” he said. “We, as a nation, have to find a way to turn around both the study and the approval process of major infrastructure projects like this much more quickly. It’s the only way we are going to be able to compete in the global arena.”

Critical for the port of Savannah is the need to be ready to accommodate post Panamax ships that will transit a widened Panama Canal. Corps of Engineers studies show that Post-Panamax vessels more efficiently served by a deeper harbor will lower shipping costs for containerized trade by $174 million a year over the next 50 years, for a total economic benefit of $8.7 billion during that span. Decreased costs per container will lower the bottom line for the more than 21,000 U.S. businesses shipping via the Port of Savannah.

“Ships such as the 9,200-TEU MSC Roma already call on Savannah via the Suez Canal,” said GPA Vice Chairman Steve Green in a press release issued by GPA. “The Panama expansion is expected to increase the number of these larger ships calling on the U.S. East Coast, so it is vital that our ports prepare for this new class of vessels.”

Planning Pays Off

GPA has long had a vision to address infrastructure needs in anticipation of continued growth. That effort started in early 2005 when the GPA commenced a revolving 10-year planning cycle to help support its capital needs.

“We engaged many of our customers over the last couple of years to help us determine and design what was needed,” Foltz said.

Currently, the GPA is in the middle of expanding road and highway access. Just last year it concluded some major expansions on the terminal and rail side to support more container volumes. This year GPA will also take receipt of 20 rubber tire gantry cranes (RTGs) and four ship to shore (STS) container cranes, a major $80 million equipment upgrade.

In December, the GPA took delivering of four electrified rubber tire gantry cranes (ERTGs), thereby becoming the first port authority in North America to introduce this cleaner and more efficient method of operation. The 80-foot ERTGs span six truck lanes, and load and unload cargo containers from trucks. The container-handling yard cranes run on an electrical bus bar system, relying on diesel power only to move between container rows. The new technology reduces fuel consumption by an estimated 95 percent.

“In addition, we continue to grow our refrigerator handling infrastructure, which is on par with the explosive refrigerated commodity demand both on the import and export side that is being experienced around the globe,” Foltz added.

Twenty new refrigerated container racks were added in FY2012, for a total of 64 racks used to support poultry and other chilled produce exports. Powering more than 1,500 containers at a time, the electrified racks avoid the use of 3.4 million gallons of diesel each year.

The GPA also installed new container yard light fixtures that reduce light pollution and a lighting control system that cuts energy consumption by 30 percent.

Meanwhile, in November the GPA board approved $2 million for a total of just under $5 million dedicated recently to high density paving at the Port of Savannah’s Ocean Terminal. The project funding is to increase capacity, efficiency and flexibility in heavy machinery exports. “This project will provide greater capacity in moving oversized roll-on/roll-off cargo at Ocean Terminal,” said Foltz. “It will yield better efficiency, and lower long-term maintenance costs by providing a more durable surface for moving and staging these heavy cargos.”

The improved surface employs Roller Compacted Concrete (RCC), which is conducive to the heavy traffic and loads endured by paved surfaces in a shipping terminal. Unlike traditional concrete, RCC is relatively dry when poured.

The additional funding will expand outdoor paved areas to improve sorting and storage of cargo handled at Ocean Terminal. The work includes expanding and improving the cargo pressure washing area, and cargo staging areas to support outside stored cargo.

These improvements follow similar infrastructure projects at GPA’s Colonel’s Island Facility in Brunswick, where roadways, bridges and staging areas were also strengthened to accommodate additional tracked and heavy equipment.

Cargo Mix Remains Diversified

Meanwhile, GPA reports flat container volumes for the first six months of FY2013. (GPA’s fiscal year runs midyear to midyear). Foltz emphasized that two issues currently are having a large impact on container volumes: the uncertainty of the International Longshoremen's Association (ILA) and United States Maritime Alliance Ltd. (USMX) contract negotiations, and the fiscal challenges facing this nation.

“As a result of the possible longshoreman strike, we have seen a fairly significant cargo diversion from many of our major Asian importers who are sending shipments to the West Coast since September,” he revealed. “Many are continuing to divert today until the contract is resolved.”

While most issues to be resolved are still local issues, Foltz maintained that he is hopeful the ILA will come to an agreement before the master contract expires on February 6., the date to which the negotiations were extended.

The Port of Savannah is a major retail import port, and therefore is feeling the effects of the labor disputes.

“Many major retailers import goods out of Asia to the East Coast of the United States,” Foltz explained. “They didn’t divert 100 percent of our cargo, but they did divert a percentage of that freight and moved it over the West Coast as a safety mitigation in case there were some supply chain disruptions.”

Foltz expects the port will continue to feel the impact until there is a contract that is agreed and ratified by the membership. Even if there is a resolution on or before Februry6, Foltz maintained that it will be a four to six weeks before the port starts seeing some semblance of normalcy because of the supply chain and notifications that need to go out.

By comparison, break bulk tonnage remains extremely strong, following an exceptional year last year. In fact, Foltz revealed that GPA is experiencing double digit growth in machinery, the import and export of automobiles, other ro/ro shipments, and iron and steel imports. In addition, forest products remain stable.

While commodities and their subsequent markets differ significantly, the lion’s share of what GPA ships is to and from the Asia theater.

“A lot of steel comes out of Japan,” he said. “We ship much of the forest products to China, and a lot of the auto trade is split between the Korean and German manufacturers. A lot of the machinery is going to support the mining and agriculture business in Australia.”

Other commodities that are enjoying stable business is dry and liquid bulk. “We are seeing a strong rebound is in the exportation of soybean meal,” he added. Large markets for this high protein additive are Asia and Latin America.

Also strong are biofuels such as wood chips and pellets, particularly as a clean burning fuel for the United Kingdom and Northern Europe.

“We benefit from our highly diversified cargo mix, whether it’s container activity – our largest line of business -- or automobiles, heavily machinery from Caterpillar, JCB or others,” he said.

Volumes are also good for general break bulk commodities such as lumber, iron and steel. “All of those products allow us to support commerce across the entire state,” he added.

Future Outlook

Going forward, Foltz contended that GPA’s Port of Savannah will continue to be the gateway for containerized commerce in the Southeast.

“As carriers look to tap into this growing demographic market in the Southeast, the Georgia ports are front and center,” he said.

While unwilling to provide any details, Foltz foresees some new services will be forthcoming this year.

“One of the fastest growing trade lanes in world over last three years, and certainly our fastest, has been Suez services,” he remarked. “We believe there will be both new and consolidated services on this route in upcoming year.” The reason: more carriers are looking to introduce Suez tonnage.

“The Panama routes are mature right now until the Canal expansion is completed,” he explained.

As for the automobile trade, Foltz sees those volumes extremely strong. “The carriers are constantly looking for new global markets to service that trade,” he said. “Stay tuned. We potentially will have more news in the future.”

Of course, much depends on the direction of the global economy. “Nobody expects Europe to change dramatically,” he said.

What remains to be seen is the outcome of the ILA contracts going to be resolved, and how is nation going to deal with fiscal challenges it is facing.

“Those two in my mind will determine what happens in U.S. economy,” he remarked. “I believe if the ILA contract can get resolved fairly quickly, and if Congress and the current Administration can effectively deal with the fiscal challenges and avoid major meltdown on the economic front, then we can feel pretty good about where the economy is going to go in upcoming year.”