Jaxport aspires to be one of the leading East Coast ports.
Unfortunately, so does Miami, Savannah, Charleston, Norfolk, Baltimore,
Philadelphia, and New York/New Jersey.
Therefore, we now have a “war between the ports” -- intense
competition among East Coast ports for the anticipated increase in cargo
associated with the expansion of the Panama Canal. Almost every port is making
significant investments in infrastructure and seeking Federal funding for
coastal engineering projects. For Jaxport this involves the request to deepen
the St Johns River channel to 50 feet at an estimated cost of $1 billion. In New York/New Jersey they are actually
planning to raise the Bayonne Bridge -- for another $1 billion.
Many of these infrastructural re-engineering plans were first
conceived prior to the Great Recession. At that time there was a unique set of unsustainable
conditions responsible for the massive consumption of imported goods from Asia;
namely, a housing bubble and debt-driven consumer demand. Those days are long
gone.
Today one must consider the extent to which current overcapacity
will continue to plague the shipping industry even if the global economy
recovers. The future of Jaxport may depend on the simple matter of supply and
demand. An oversupply of container ships and port terminal space and
infrastructure, in the face of depressed global trade and commodity imports,
could result in widespread underutilization or excess capacity for all maritime
ports.
Observers of the maritime port industry are beginning to
highlight the irrational and dysfunctional situation of multiple East Coast
ports competing and expanding for limited and continuing depressed levels of
container cargo. The Journal of Commerce
notes the “serious overhang of unused terminal capacity” and the fact that
major East Coast ports such as Savannah, Charleston, and New York/New Jersey
are all currently operating at less than 60% container capacity. In spite of this, East Coast ports are
still projecting $15 billion in infrastructural upgrading over the next ten
years.
Investment in, and the building and expansion of, maritime
port facilities does not generate its own demand. In the language of economics,
the demand for these services is “derived”, meaning that it is a consequence of
the demand for something else, namely goods that are either imported or
exported. In a global recession, where
the demand for goods is severely depressed, port economies will suffer regardless
of the modernized state of the port terminal facilities or the depth of their
channels. And the losers will not just
be the ports that are unable to attract the cargo, but also the taxpayers who
are financing these port mega-projects.
All of this has led inquisitive observers to ask why there
is no national policy that would evaluate the various ports and allocate scarce
resources based on a rational assessment of the costs and benefits of each
project in relationship to each other.
This would inevitably necessitate picking winners and losers and
creating a division of labor among the ports as well as a hierarchy of
prominence. But it would also avoid the wasteful duplication and redundancy of
a current system that seems intent on building a greater number of deep channel
ports than are needed to accommodate the given level of cargo.
Such concerns recently prompted Congress to ask the Army
Corp of Engineers “how the Congress should address the critical need for
additional port and inland waterway modernization to accommodate post-Panamax
vessels.” In response, the Army Corp
recently released its report titled “U.S. Port and Inland Waterways
Modernization: Preparing for Post-Panamax Vessels”. While acknowledging the
great uncertainty in predicting the volume or direction of global cargo flows,
the report also emphasized that the “expanded canal could provide a significant
competitive opportunity for U.S. Gulf and South Atlantic ports and for U.S.
inland waterways – if we are prepared.”
More specifically, with regard to the issue of
an East Coast port hierarchy, the report makes a distinction between
“post-Panamax ready” and “cascade ready” ports. Post-Panamax ready ports would
have a depth of 50 feet and accommodate the largest vessels. . Cascade-ready
ports would include lower-tier ports and accommodate the re-deployed smaller
vessels.
This Corps report does not indicate which ports
will be post-Panamax and which will be cascade, but it clearly suggests a
movement toward planned port differentiation as individual port infrastructure
projects are evaluated.
Based on conversations with knowledgeable observers of the
port logistics industry, there is considerable opinion that Jacksonville will
fall into the lower or second tier. This does not mean that Jaxport and the port-logistics
sector will play an insignificant role in the regional economy. It simply means
that a more realistic scenario must be acknowledged. This position was recently
advanced on the pages of the Jacksonville Business Journal where it was suggested that Jaxport modify its
mega-port aspirations and pursue “Plan B” involving a focus on niche markets
and “trade with the fast-growing countries of South and Central America, Brazil
first and foremost.”
Taken together, these recent developments would indicate
that there is an emerging consensus toward a more rationalized and strategic
plan for East coast ports, an acknowledgement that not all ports can aspire to
post-Panamax status, and that Jaxport would be a likely candidate for “cascade”
status.
Given the dollar and potential environmental costs of
deepening the St Johns, this might be the best strategy for Jaxport,
Jacksonville, and the region.
No comments:
Post a Comment