Panama project should boost U.S. shipping’s fortunes

Walter Pincus
Reporter February 13, 2012

While congressional Republicans seek to cut holes in the safety net for the poor and the unemployed, a little-known Pentagon-financed safety net for corporations is being kept in place to help American business meet a new foreign challenge.

It’s the 2014 completion of the $5.2 billion widening and deepening of the Panama Canal. When completed, ships double the size of those that currently go through the Panama locks will be able to make the trip. Larger container ships will be able to carry 12,000 or more normal containers, better than double the 5,000 they carry today.

Ships wide enough to fit through the Canal today are called Panamax. Those that will go through the wider Canal are called Post-Panamax. These larger ships were first used in the Far East, transporting goods through the Suez Canal to Western Europe. Later they added a route between Asia and the West Coast as commerce increased, particularly to and from China.

U.S. ports on the West Coast — at Long Beach, Los Angeles and Oakland, Calif. — could take the larger ships. They already handle almost twice as many containers as all the ports on the East Coast do.

Though more container ships have begun heading for the East Coast, most ports in that region don’t have harbors and channels deep enough to handle the Post-Panamax container ships, which need harbor water depths of 50 feet. The East Coast ports that today have the main container terminals — New York, Savannah, Ga., Charleston, S.C., and Miami — are at 42 feet or less. Norfolk and Baltimore have the depth but not the container volumes.


Cranes work in part of the new set of locks of the Panama Canal as a part of their expansion project in Panama City on Dec. 21, 2011. (Arnulfo Franco/AP)

Enter the federal government, which, not surprisingly, has programs to help the multibillion-dollar import-export business. The Port of New York and New Jersey alone “provides more than 269,900 full-time jobs and $11.2 billion in personal income in port related activities,” according to a December 2011 report by the Army Corps of Engineers. Cargo valued at $175 billion passed through the port in 2010, according to the report.

The Corps’ role as a key player became apparent Thursday during a routine Senate Armed Services Committee confirmation hearing on the nomination of Army Lt. Gen. Thomas Bostick to become commanding general of the Corps. There were no GOP complaints about too much federal interference in business or even any hand-wringing over earmarks — a liberal and Tea Party press favorite.

Sen. Lindsey O. Graham (R-S.C.) asked Bostick whether there were administration or congressional plans to deal with the issue because “it would affect infrastructure in the nation to make sure we can export our products to market.”

When Bostick said he didn’t know of any, Graham responded, “Well, I can tell you there’s not, and that reflects badly on all of us.”

The Corps has been studying the issue for years, and some major port programs are underway. The New York/New Jersey Port, for example, has a 50- to 53-foot deepening project underway that is projected to cost $1.6 billion, according to a December 2011 Corps release. The federal government will supply $882 million of that amount while state, local and other sources are to come up with $752 million.

These multiyear construction programs depend on incremental annual congressional appropriations, some requested by the president, some allocated by Congress as members work around the earmarks ban. President Obama’s fiscal 2013 budget proposal, released Monday, allocated $68 million in Corps construction funds for the New York/New Jersey Port project, $3 million above this year.

Meanwhile, Graham, whose Charleston harbor needs deepening, asked at the Senate panel hearing on Thursday, “Who says no?” when every East Coast port asks for funds so they can go to 50 feet. “And if you’re not lucky enough to get in the president’s budget, what are you supposed to do, go home to your people [and] say, ‘sorry, we just lost, I can’t help you?’ ”

The Charleston harbor project began with an earmark to Obama’s fiscal 2010 budget to begin a feasibility study on whether to deepen past 45 feet. There was no funding in Obama’s fiscal 2011 budget, but the Corps work plan authorized $150,000 to begin the study, which could cost $20 million. This year, another $2.5 million has been allocated, matched by $2.5 million from the state. And Obama’s new budget proposal included $3.6 million for Charleston’s harbor.

Graham told Bostick he wanted to work for a merit-based system “in a collaborate fashion. . . . Rather than just talking about how bad earmarks are and how dirty Congress is, I want to do a little more than that. I want to actually bring a solution.”

Sen. Saxby Chambliss (R-Ga.) warned, “If we’re not ready by 2014 for these Post-Panamax ships, then not only is Savannah going to suffer but [also] retailers throughout the whole East Coast [and] manufacturers throughout the eastern part of the United States.”

Savannah, he said, had become the fastest-growing container port in the nation, with 12.5 percent of the national total last year. It now has a “small tranche of federal money” that is to be supplemented by state money.

Chambliss said Savannah had been working on a deepening project for 10 years, “jumping through all of the hoops . . . some dictated by the Corps, some by environmental requirements and what not.” From now on, he said, “It’s going to be extremely difficult under the process that we have now . . . because history dictates to us that every major Corps project is an earmark, that’s the way it’s always been.”

There was no money for Savannah harbor in the Obama fiscal 2012 budget, but thanks to the Georgia delegation, Congress added $588,000 and the Corps work plan added another $2.5 million, providing more than $3 million for this year. In Monday’s announced fiscal 2013 budget, there is $2.8 million in pre-construction money for Savannah’s harbor.

Let’s see how the harbor projects do when the Corps money comes up on Capitol Hill.

For previous Fine Print columns, go to washingtonpost.com/fedpage.

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