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Building boom in American ports

Despite Trump’s protectionist-led trade policies, imports into the United States climbed strongly in 2018

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A second deepwater berth is being developed at Seagirt Marine Terminal in Baltimore
A second deepwater berth is being developed at Seagirt Marine Terminal in Baltimore

Despite the trade war initiated by the US president, when it comes to trade, there is general optimism about the country’s long-term prospects. Moreover, there appears to be robust investment interest in US ports/ terminals, with over a dozen companies/ consortia apparently expressing interest in acquiring the Cosco Shipping Holdings (formerly OOCL)-owned Long Beach Container Terminal (LBCT). It is reportedly valued at over US$1B.


Elsewhere, Sharjah (UAE)-headquartered Gulftainer substantially increased its operating presence in the US last year by securing a 50-year concession to operate and develop the Delaware state port of Wilmington. The port management company, which has ambitions to be among the top 10 leading operators of container terminals in the world, has been involved in the Florida east coast port of Canaveral since 2014, and pledged to invest US$100M in the facility. Its concession is for 35 years.


Yilport Holding Inc has also been chasing opportunities in the US. Throughout 2016/17, the group held meetings with Highstar Capital, an investment group that owns Ports America, and the terminal group’s senior management team, about buying a majority stake, but an agreement was never reached. At the right price, Highstar appears keen to sell at least some part of its shareholding in the terminal operating company.


Meanwhile, Yilport has signed a letter of intent covering lease and investment opportunities at the Mississippi State Port of Gulfport. “We believe that we have very good know-how and expertise in multipurpose port operations
globally, and we see a lack of investments in many US ports,” explained Robert Yuksel Yildirim, chairman of Yilport. “We are committed to Gulfport Port Authority to upgrade, improve terminal productivity and services by applying state-of-the-art port technologies at Gulfport, in order to make the port the most competitive port in that region.”


DoT funding


In 2018, 14 port-related projects were allocated funds totalling US$229M under the 2018 BUILD (Better Utilizing Investments to Leverage Development) grants awarded by the US Department of Transportation (DoT).


“BUILD grants are one of the few federal funding programmes available to public port authorities to help them pay for critical infrastructure to move and handle freight more efficiently,” said Kurt Nagle, president and CEO of the
American Association of Port Authorities.

 

When it comes to container ports and multimodal transport activities, the main projects being supported by BUILD, comprise:

  • Port of Baltimore - US$6.6M to Maryland Port Authority for the development of a second berth with a draught alongside of 50ft at the Seagirt Marine Terminal.
  • Virginia Port Authority - US$15.5M to build additional rail tracks at the Front Royal inland port, construct a new bridge, and improve access with the highway.
  • Port Morrow (Oregon) - US$19.4M for the development of a barge-rail transloading facility to serve the port’s various barge terminals on the Columbia River. In addition to building a mainline switching junction, over 11,000ft of new rail track will be laid, various rail and bridge improvements carried out, and equipment installed.
  • Port Arthur in Texas - US$20M towards the creation of Berth 6 (1,000ft) and development of an on-dock multimodal rail facility.
  • South Carolina Department of Transportation - US$25M for purchasing additional handling equipment, extending the lead track, and lengthening the Carlisle rail siding to 15,100ft at the South Carolina Ports Authority (SCPA)-controlled inland port at Greer.

The Port of Charleston’s marine elopment strategy is also highly significant. In 2018, SCPA finished its near US$400M berth strengthening and refurbishment project at the Wando Welch Terminal. Last year also saw SCPA make
considerable progress on the construction of the new Hugh K. Leatherman Sr. Terminal. Phase one of the latter facility should be completed in 2021 and, on full completion, it will more than double Charleston’s current box handling capacity.


Crucial to the success of the above mentioned developments is the deepening (to 52ft) and widening of the access channel and harbour basin so that bigger ships can access the port fully loaded. The dredging work, which has
received more than US$41M from the US Army Corps of Engineers (USACE), began in early 2018 and is scheduled for completion in 2021.

The Port of Charleston is being deepened to service even bigger ships
The Port of Charleston is being deepened to service even bigger ships

In the neighbouring Port of Savannah, which is owned by the Georgia Ports Authority (GPA), the agency has pursued an aggressive investment programme that has modernised its infrastructure, led to the opening of inland ports and to more imports and exports being routed by rail.


Expanding Savannah’s rail capacity is fundamental to the port’s future growth, and the Mason Mega Rail programme, which is scheduled for completion in 2020, will increase the port’s rail capacity to over 1M lifts a year.


Dredging Savannah


Savannah is also deepening its river access, with the Savannah Harbor Expansion Project increasing the draught from 42ft to 47ft. It is expected to be completed towards the end of 2021.

 

In 2018, Savannah handled 4.3M TEU, up almost 8% on the previous year. This performance consolidated its position as the second largest container gateway on the Atlantic seaboard of North America after New York/New Jersey.


The latter port’s investment priorities have been to improve its access so that cargo can move through its various cargo handling facilities more freely. On the maritime front, this has included dredging the Kill van Kull channel to 50ft, and raising the navigational air draught under the Bayonne Bridge to 215ft so that ULCVs can call.


Landside, the Port Authority of New York/New Jersey (PANYNJ) has been expanding and improving the efficiency of its intermodal rail yards. In December 2018, PANYNJ opened the initial phase of its new ExpressRail Port Jersey intermodal rail facility and feeder track, which connects Global Container Terminals’ Bayonne facility with both CSX Transportation’s and Norfolk Southern’s mainline networks. It comprises four working tracks and two railmounted gantry cranes, and cost US$149M.


The second stage of the project is already underway, with a mid-year completion date targeted. This will increase the number of loading/discharge tracks in the yard to eight, result in another lead track being constructed from the facility to the mainline rail network, and to more support and handling equipment being phased into operation.


It is at smaller ports in the north Atlantic sector of the US where some of the most interesting developments are underway. Baltimore, Philadelphia (PhilaPort) and Wilmington (Delaware) are all engaged in large-scale capital expenditure programmes.

 

In Baltimore, construction of a second deepsea berth at the Seagirt complex will start in H2 2019, and is expected to take 12 months to complete. In addition to the BUILD grant, the state of Maryland is contributing US$7.8M and Ports America, which operates Seagirt, US$18.4M.


The expansion of the Seagirt terminal will allow Baltimore to handle two ULCV-class container ships simultaneously. The Maryland Port Authority is also filling in the marine basin at the Fairfield Terminal to give more yard area to support its burgeoning ro-ro/auto handling activities.

 

Both PhilaPort and Wilmington will benefit from the Delaware River deepening programme, which is scheduled to be completed later this year and will increase its operating draught from 40ft to 45ft at mean low water level.


Enthusiasm


Sean Mahoney, director of marketing for PhilaPort is enthusiastic about the development. “Carriers want to take as much cargo as they can, and the deeper water will mean larger container vessels, especially those loaded with refrigerated fresh produce from South America for which Philadelphia has developed a market, will be able to carry bigger loads to Philadelphia without having to lighten their ships,” he said.


“As the old adage goes, a rising tide will lift all boats. You just have to look at the investment that’s going on, all over the river, on both sides and further south. It all hinges on a deeper channel.”


At PhilaPort, over US$300M is being invested in modernising and expanding its main cargo handling facilities. This includes:

  • US$188M being ploughed into the main Packer Avenue Marine Terminal to almost double its container handling capacity from 500,000 TEU a year to 900,000 TEU a year. Three super postPanamax STS cranes, the last in a series of five, will be delivered in Q1 2019.
  • The port’s auto processing facility receiving US$93M to double its capacity from 155,000 CEU a year to 350,000 CEU a year.
  • About US$12M being invested in the Tioga Marine Terminal. Its handling capacity will be ramped up by more than 20% to 540,000t a year. The facility handles mainly forest products.

The small Port of Wilmington (Delaware), which is located about 35 miles downstream of PhilaPort, is also undergoing a revamp following Gulftainer securing a 50-year concession to operate and develop the complex. The company is investing U$580M in the port, with 66% of this capital earmarked for the building of a 1.8M TEU capacity container terminal in the Edge Moor district of the port. Currently, Wilmington handles no more than 350,000 TEU a year of mainly perishable products.


New Orleans renewal


On the Gulf coast, some of the most ambitious developments are earmarked for the Port of New Orleans. In December, the port authority and Ports America, which operates the Napoleon Avenue and Nashville Avenue Terminals, agreed a new deal that involved setting up a new 50-year lease in return for Ports America guaranteeing to invest US$66.5M in new equipment and infrastructural improvement programmes. Potentially, the combined handling capacity of these facilities will increase from 840,000 TEU a year to 1.5M TEU a year.


However, the most interesting aspect of the new lease is to investigate the construction of a new 1.5M TEU facility capable of handling much larger vessels and located downstream of the existing port. It could involve investment
of US$300M. However, with funding not complete and considerable environmental issues to resolve, neither party was prepared to talk about the development. Elsewhere on the same coastline, the Alabama State Port Authority (ASPA) is working on a number of projects, including with USACE to both deepen and widen the port of Mobile’s access channel. This is likely to cost US$388M.


In addition, ASPA is cooperating with APM Terminals to expand the container terminal, and with MTC Logistics to develop a new distribution centre. The first project, which comprises phase three of a possible five-stage expansion programme and is geared to handling Neo-Panamax tonnage, involves expenditure of approximately US$50M.

 

It will result in the existing berth being extended by 400ft, super post-Panamax crane rails being laid, and the yard area being expanded by 20 acres. The work, which is scheduled to be completed by early 2020, will raise Mobile’s container throughput capacity by 650,000 TEU a year. Meanwhile, if all five phases of the investment plan are completed, Mobile will be able to handle 1.5M TEU a year.


On the Pacific coast, at the Northwest Seaport Alliance (NWSA - Seattle/Tacoma), the most significant plan centres on an estimated budget of US$340M to reconfigure and deepen the quay at Terminal 5 so that ULCV tonnage can be handled. Currently, discussions are taking place with a potential tenant for the facility, and it is hoped that the plan will be actioned in Q1 2019.

 

In addition, the NWSA’s fiveyear capital investment plan (up to 2023) will result in the redevelopment of Terminal 91, the construction of a new cruise facility, and the provision of electrical power at the waterfront, thus allowing more ships to cold iron.

 

Sharing costs


In other developments, NWSA and USACE have signed a costsharing agreement to initiate a feasibility study on carrying out navigational improvements to the Blair and Sitcum waterways in Tacoma.


But it is not only about handling bigger ships. At the Port of Los Angeles, for instance, it is increasing competition from all-water routes via the larger Panama Canal and intermodal rail options through Canadian and Mexican ports that are driving improvements and investment. Over 60% of Los Angeles’ container traffic arrives from/is destined for regions east of the Rocky Mountains, and competition for it is intensifying.

 

“Maximising our rail network is vital to operating America’s cleanest, most competitive seaport,” stressed Jaime Lee, president of the Los Angeles Harbor Commission. “The economic and environmental benefits extend to our customers, neighbours, regional transportation system and our nation.”


The key project is the socalled Terminal Island Railyard Enhancement Project (TIREP), which has received a US$21.6M grant from the State Road Repair and Accountability Act of 2017 - Trade Corridor Enhancement Program. Overall, it is expected to cost US$34M.


TIREP will lead to five more storage tracks being created and an estimated 31,000ft of additional rail being laid at the port’s Pier 400 on-dock rail yard on Terminal Island. It will increase this facility’s rail capacity by more than 520,000 TEU a year and free up space at other yards in the area. To improve its competitiveness, LA wants to support BNSF and Union Pacific to load trains directly at the port for destinations like Denver and Salt Lake City.


The neighbouring Port of Long Beach also has a large-scale rail improvement programme in place, with approximately US$870M alone earmarked for the Pier B On-Dock Rail Support Facility. It will take until 2032 to complete, and will result in a total reconfiguration of existing tracks, provide direct connections to on-dock facilities and the Alameda corridor, and allow trains of up to 10,000ft in length to be worked.

 

 

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