While legislators in Washington, DC, debate how to kick-start the US economy governors from the US east and south-east coastal states have been touting one potential stimulant: the widening the Panama Canal, a project that is due for completion in 2014. There are two main reasons for their support.

A widened canal will make it possible for the world's largest container ships – namely, the Super Panamax, which can carry upwards of 9000 20-foot equivalent units – to call direct to states on the east coast of the US and those that border the Gulf of Mexico, instead of stopping at the west coast and transporting freight to the east via rail or truck. This means that goods will be able to reach consumers more quickly, and that transportation costs will diminish considerably since much of the cargo will no longer need to cross the US overland. 

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A boost in the seaport business also translates into more jobs, not only at the ports themselves, but in areas such as logistics, warehousing, freight forwarding, distribution and even manufacturing.

Big berth

Maryland's governor, Martin O’Malley, has hailed the efforts of the Maryland Port Administration (MPA) after it signed a landmark 50-year agreement with Ports America Chesapeake in January 2010. Under the agreement, MPA leases its 81-hectare Seagirt Marine Terminal in the Port of Baltimore to Ports America. In return, Ports America is building a 50-foot container berth for the Port of Baltimore. 

The new berth will make Baltimore one of only two ports on the US east coast capable of handling larger vessels that require 50 feet of water. Without a 50-foot berth, larger ships would not be able to dock and bring additional business to the Port of Baltimore. 

According to MPA officials, this capability will create additional business opportunities at the Port of Baltimore. The partnership between the MPA and Ports America itself is expected to produce 5700 new jobs, while the total investment and revenue to the state of Maryland could reach up to $1.8bn over the life of the agreement and generate nearly $16m per year in new taxes for the state. 

“Most public-private partnerships [PPPs] do not pan out. But when this one came along, I saw this as a win-win,” says Mr O’Malley.

Work on the new berth is ahead of schedule and it is expected to be fully operational two years before the widened Panama Canal is opened in 2014.

Run ashore 

Mr O’Malley points out that given the challenges presented by the recent economic downturn, these improvements would have to be put on hold if it were not for his state’s PPPs with Ports America. The partnership, he says, is changing the face of the maritime industry. He adds that Baltimore’s future will be greatly bolstered by “our ability to upgrade, modernise and make vibrant and competitive this tremendous engine of job creation and economic growth in our state”.

As much as [Baltimore needs] the port, we need that National Gateway... And we need for the port to be well connected by rail to those markets in the midwest

Adding to that growth engine is CSX Transportation’s $1bn National Gateway project, a multi-stage railroad construction project that has created a double-stacked, intermodal service and which has linked the Port of Baltimore with its intermodal hub in north-west Ohio.

Virginia's Port of Norfolk is the only other port on the east coast with a 50-foot channel and berth. It also has its own intermodal corridor – the Heartland Corridor – as a result of a PPP. It was conceived with Norfolk Southern Railroad, the federal government and three US states.

“As much as we need the port, we need that National Gateway,” says Mr O’Malley. “And we need for the port to be well connected by rail to those markets in the midwest.”

Dredge for victory

Florida's governor, Rick Scott, agrees that one of the best ways to attract new business to the state is by expanding its ports. Only in office since January 2011, Mr Scott has already moved the Florida Department of Transportation to amend its work plan to include $77m for the dredging of the Port of Miami from its current 42-foot depth to 50 feet. By doing so, the port would become the only port south of the Port of Norfolk in Virginia capable of accommodating the world’s largest container vessels.

Other infrastructure improvements at the port include the construction of the Port of Miami tunnel, which is due to be completed by May 2014. By providing trucks (and passengers) direct interstate access between the Port of Miami and interstate 395, the port will be able to double its truck capacity.

“This is a solid first step toward enhancing Florida’s infrastructure and getting our state ready for a new generation of international trade with South America and beyond,” says Mr Scott. In fact, by ensuring that the Port of Miami completes these projects, Mr Scott maintains the port will double its cargo output and create more than 30,000 new trade-related jobs.

Caught short

There is a catch. The dredge project proposal will cost an estimated $150m, and $75m of that is being sought in federal money. This means that port authority officials and Florida’s congressional delegation must navigate around the growing debate on spending and federal earmarks if they are to have any hope of securing the required funding.

Meanwhile, Mr Scott insists that new business coming from the expanded Panama Canal will change the dynamics of the region. “We are the local winner of the Panama Canal expansion,” he says. “We have a good rail system and infrastructure to get product up north and west.”

He also believes the canal expansion will result in significant opportunities for all of Florida’s 14 ports, and that eventually the Port of Tampa and Port Manatee will also be able to accommodate Super Panamax ships. “These are already deep ports and not that expensive to dredge,” he says. “The ports are not that long.”

Full steam ahead

Georgia, which is home to the Port of Savannah – the fastest growing port in the US – has a different set of problems. While the port serves a large percentage of the US population and enjoys an even trade balance that includes 12% of all containerised exports in the country, its Savannah Harbor Expansion Project (SHEP) is stuck in second gear. The port is the shallowest of the US's top 10 container ports. The $600m federally funded SHEP would deepen the Savannah River from 42 feet to 48 feet, which would allow deeper draft ships to call on the port.

Based on existing forecasts, construction on the SHEP should be undertaken between 2012 and 2016. However, its environmental impact study is currently in the public comment stage and not scheduled for final federal approval until next year.

Transportation planning on a regional scale will further strengthen Georgia’s position as a logistics leader

Meanwhile, officials in Georgia remain frustrated. "We believe this is a project that has significance not just for this area of the state or the state itself, but for the entire south-east and the entire eastern side of the US," says governor Nathan Deal.

Volume, velocity and visibility

Earlier this year, Mr Deal revealed a state budget that would include $32m in bond funding to deepen the Port of Savannah. Meanwhile, he has launched the Georgia Competitiveness Initiative to focus on job creation and a state-wide economic development strategy. Logistics remains a strategic focus. In fact, the Georgia Department of Economic Development is the home of the state’s Center for Innovative Logistics. “A result of this is Georgia businesses have been able to increase their volume, velocity and visibility,” he says. 

Georgia is also home to Georgia Tech, a Tier 1 centre for transportation where a new National Transportation Institute Center is being created to link researchers from universities across Georgia and the south-east with the goal of tackling the south-east’s growing logistics problems. “Transportation planning on a regional scale will further strengthen Georgia’s position as a logistics leader,” says Mr Deal.

Of course, the Port of Savannah remains a vital logistics link for the state. For that reason, Mr Deal hopes the US government recognises the importance of SHEP. “We know that it is important to have that port deepened so that we can attract the larger vessels that will be passing through the Panama Canal,” he says. “It makes sense for Georgia, the south-eastern region, and the country as a whole. We are going to press forward on that project.”