Thursday, February 16, 2012

Funding for US East Coast Port Expansions

From Ti's Americas email newsletter:

East Coast ports continue to seek funding to deepen harbors and rivers as the Panama Canal expansion completion date of 2014 creeps closer.  The ports face a stiff challenge as all those ports seeking funding are in direct competition with one another for federal money.  Not only is competition fierce, but any type of funding is becoming more and more difficult to obtain in a year that is not only an election year but also one in which the political mood is to cut versus that of invest in much needed infrastructure projects.

This week President Obama submitted the FY2013 budget to the US Congress for approval. Within the budget, port improvements are included for such ports as Charleston, Savannah and the Delaware River project. Funding request for each are $3.5m for the Port of Charleston, $2.8m for the Port of Savannah and $31m to the Delaware River project. Due to the political environment, it is doubtful much of the budget will be approved. 
Still, some success for a few ports was achieved in the past week. The US Army Corp of Engineers’ allocations of its $5bn FY2012 budget was finally approved by Congress in December. These allocations included funding for port expansions for such ports as Charleston, Jacksonville, and Savannah and also for continued dredging of the Delaware River. Charleston received $2.5m for continued development of its channels deeper than 45 ft and $228,000 for maintenance dredging. The Port of Jacksonville received $7.7m to extend and correct navigation issues and maintenance work.  The Savannah Port also received $2.5m for harbor expansion and $4.8m for maintenance dredging. Of particular interest, however, was the allocation of $16.8m to dredge the Delaware River. When completed, the 102-mile channel will allow access to larger vessels to the ports of Wilmington Delaware, Philadelphia and Camden New Jersey.

The Delaware River project is interesting due to its geographic location. In close proximity to the largest East Coast port of New York/New Jersey, this region will be a major competitive threat to other East Coast ports once completed. For example, railroad companies, CSX and Norfolk Southern are investing in track extensions and intermodal facilities that will link this region to the Mid-West and Canada. Although the rail companies have similar projects along the East Coast, the close proximity to Chicago, a major railroad and intermodal hub that links the major Class I railroads will prove to be a major plus for this region.
Although the Panama Canal expansion has fueled this race to dredge deeper ports other factors are also playing a role. For example, due to increased drilling in the Gulf, the Port of Tampa recently received $45m to expand and enlarge its petroleum facilities.  Also, increased trade with South America and cargo moving through the Suez Canal is also fueling this need to update and expand East Coast port infrastructure.