Panama Canal widening will bolster business at Gulf Coast ports, panel says
Thursday, 17 May 2012 | 11:00
The widening of the Panama Canal will bring increased business to Gulf Coast ports, even if most of them aren't deep
enough to handle the world's biggest container ships, regional port directors told the Gulf South Bank Conference. Greg Rusovich, moderator of the lunchtime panel at the conference at the Ritz-Carlton New Orleans hotel and chief executive of Transoceanic Trading and Development Company LLC, said that the perception is that the completion of the Panama Canal widening in 2014 is all about competition for the big ships, which are a better fit for ports with water more than 50 feet deep on the east and west coasts.
But Rusovich said the canal widening means that there will also be an expansion in medium-sized container ships that would be well-suited for Gulf Coast ports. "That's the opportunity," he said.
Leonard Waterworth, executive director of the Port of Houston, which is the largest container port in the region and has 45-foot-deep water, said that as bigger ships go through the Panama Canal, there will a reshuffling that will filter down through the maritime transportation industry. If today's "workhorse" ships are the 4,500 TEU vessels, or twenty-foot equivalent vessels, referring to a standardized measure of cargo, that serve Galveston, Waterworth said, tomorrow's "workhorse" ships will be the 8,400 TEU vessels. Bigger ships lower costs, and any ports that can lower costs in the logistics chain will benefit, Waterworth said.
Don Allee, executive director and chief executive of the Mississippi State Port Authority in Gulfport, said that Mississippi is investing $570 million in its port and increasing its footprint by 30 percent to be ready for whatever opportunities come. "You're going to see some redeployment of ships," Allee said.
Allee said he also believes that the widening of the Panama Canal will bring about "load centers" in places like the Bahamas, Jamaica or even Cuba, which could benefit Gulf Coast ports as goods are re-shuffled onto different ships to head to different places.
James Lyons, director and chief executive of the Alabama State Port Authority in Mobile, said that Alabama has recognized that the state's manufacturing base has expanded, and that presents many opportunities beyond Mobile's traditional mainstays of coal and pulp and paper.
The Alabama State Port Authority has been going through an eight-year planning process to try to improve its container business, and believes there will be opportunities to recruit new companies to Mobile that need to import or export goods, and the Panama Canal widening will increase those opportunities. Alabama also believes it will benefit from international companies trying to move manufacturing operations back to or near the United States to have the best access to U.S. consumer markets.
But Lyons conceded that no one really knows what to expect. "No doubt there will be some growth," Lyons said. "The biggest question is, how much?"
With that uncertainty, Gary LaGrange, president and chief executive of the Port of New Orleans, said that New Orleans is looking for "incremental growth" from its two new container cranes as opportunities become clearer with the widening of the Panama Canal.
LaGrange said that the widening of the Panama Canal will also present opportunities to expand the cruise business. While New Orleans, the nation's fastest growing cruise port, has itineraries that are seven days or shorter, cruise companies might want to plan trips through the Panama Canal to that would require ten-day trips with Pacific destinations.
Taking advantage of those opportunities, LaGrange said, will require new public-private partnerships. "We're looking for equity investors in the port. There are no more earmarks in Washington, and Baton Rouge is struggling to balance the budget."
Waterworth made a more direct appeal to the audience of bankers and investment firms gathered at the conference. The challenge, said Waterworth, who said the Port of Houston has a plan for $3 billion in capital improvements over the next 15 years, is how to upgrade old infrastructure at a time when traditional government funding streams are no longer available. "We're going to need your help to make that happen," he said.
The opportunity of the Panama Canal also raises the issue of the problem of inadequate funding for dredging to a new level, because if ports lose the depth that they have, they won't be able to take advantage of new opportunities that come, Waterworth said.
Source: The Times-Picayune