Panama could open floodgates for Charleston

Charleston Regional Business Journal
Daniel Brock
October 19, 2010

As the 96-year-old Panama Canal undergoes a $5 billion expansion that will allow many of the world’s largest cargo ships to pass through its locks, a delegation from the Charleston area saw the project first-hand recently.

The 23-person group from South Carolina that included port officials, business leaders and state lawmakers spent two days in Central America meeting with Panama Canal Authority leaders and touring the facilities.

“We are a very capable South Atlantic port,” said S.C. Ports Authority President Jim Newsome, while recounting the trip this month, prior to speaking at an annual growth forum hosted by the Charleston Metro Chamber of Commerce Developers Council.

In 2014, when the widening is scheduled for completion, giant ships from Asia will be able to utilize the expanded canal, bringing their cargo to ports on the East Coast, and more specifically to ports that are deep enough to accommodate the vessels’ size.

The canal now can handle ships with capacity for about 5,000 20-foot equivalent units. The larger ships that are coming later this decade, known as post-Panamax, will hold upwards of two or three times that number.

The Port of Charleston already plays host to multiple post-Panamax vessels, which arrive via various other ocean routes, each week. Meanwhile, about 400 ships go through the Panama Canal on their way to or from Charleston each year, a number that is expected to increase in the post-Panamax era.

Speaking to business leaders about what they could expect from the port in coming years, Newsome said there is opportunity for Charleston to siphon off up to 3 million TEUs annually that would have previously been destined for West Coast ports.

With the increased production of ever-larger containerships, which are more cost-effective for shipping lines, and their ability to utilize the expanded Panama Canal, the balance of power could tilt toward East Coast ports.

“Logistics is a cost game,” Newsome said.

At minimum, post-Panamax ships need 40 feet of draft to enter a harbor. Charleston, which leads the Southeast with a 45-foot-deep shipping channel, can accommodate up to 48 feet, depending on the tide. Port leaders say that’s Charleston’s primary advantage as the Panama Canal prepares to expand.

So far in 2010, the port has hosted 80 ships with 40 or more feet of draft and will have hosted 26 calls of 8,000 TEUs or greater by the end of the month.

It’s paying off: July was the busiest month volume-wise at the port since October 2008, and volume is above budget for the first part of the fiscal year. Newsome said the port was trying to get back its “natural share of the market.”

The harbor’s width, which allows for two-way traffic, the container terminal under construction at the former North Charleston Navy Base and recent distribution center growth also are keys for future success, Newsome said.

In recent months, a furor has arisen over a $400,000 federal earmark that would fund part of a study that would examine deepening the harbor beyond 50 feet.

Business leaders at the event were appreciative of the chamber’s efforts to keep them up to date.

Daniel Hiers, a senior manager at the accounting firm Elliott Davis, said that his company works with an array of businesses associated with the port.

“Five years ago, you didn’t hear as much about the port,” he said. “There’s a lot more emphasis on how important it is to the economy.”

Later in the afternoon, Newsome addressed the Charleston County Legislative Delegation’s State Ports Authority Ad Hoc Committee. There he touched on the big-ticket items that the port has dealt with in the last year, including: the cruise industry; new container terminal; and harboring deepening.

“Quite frankly, there has been some sensationalism,” he said about environmental concerns over the cruise industry.

Newsome added that while competitor ports may cost more than $600 million to dredge to Charleston’s current depth, going 50-feet of beyond in Charleston would likely come at a price of about $310 million.

“We’re the best value in this region for harbor deepening,” he said.

The meeting eventually turned toward a discussion of rail access to the new terminal, before Senate Transportation Committee chairman Larry Grooms, R-Bonneau, said that discussion was best left for another time.

Grooms said his committee was continuing to work on a report about rail access that would likely include findings such as any rail plan “had better not give one line advantage over the other.”

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