He made his comments to a conference of shippers and logistics professionals one day after the head of the Panama Canal Authority told another logistics conference the U.S. wasn’t doing enough to get ready. “We’re doing everything in our power to move that project forward,” Deal said at the Georgia Logistics Summit. Congress authorized the project in 1999, and $40 million has been spent on studies of its environmental and economic impact. One concluded it would save shippers four times its cost. Deal noted the state has already set aside $134 million for its share of the $600 million deepening project with another $47 million planned in the next fiscal year. At the same time, the state has installed larger cranes to unload the ships, upgraded the port facilities and improved truck and railroad access to the port.
“We have a lot of things going for us in that regard,” he said.
Tuesday, Alberto Aleman Zubieta, CEO of the Panama Canal Authority, said he was puzzled by the pace of U.S. preparations when he spoke to the MODEX trade show for the materials-handling industry meeting in the same conference centre. In follow-up comments, Aleman said the canal’s expansion will create opportunities for ports that can accommodate the larger ships.
“As the Panama Canal expands to serve world commerce, we encourage the U.S. ports to take advantage of the projected growth in trade,” he said.
Georgia Ports Authority head Curtis Foltz said that Aleman was correct to be dismayed.
“Generally speaking, he’s spot on,” Foltz said. The canal’s expansion is on target for the 100th anniversary in 2014 of the system of waterways and locks. Aleman said delays with the marine-concrete mix and a recent labor strike upset the pace of production, but the construction schedule anticipated them. More equipment was deployed, and the concrete production was stepped up to
get back on schedule. “In addition, there are liquidated damages in the order of $300,000 per day for completing the works late, which does motivate the contractor to take completion date seriously and take whatever actions are necessary to avoid any significant additional cost for delays,” he
said.
Foltz said he expects to get the U.S. Army Corps of Engineers’ final approval this summer so construction can begin next year, and he’s confident federal funding will be coming, too. While deepening could not be completed by the target date of the canal’s widening, the
two-year lag should not concern shippers enough to transfer their business to another port, he speculated.
However, Home Depot’s senior vice president for supply chain, Mark Holifield, told reporters, “If other ports can take these ships and Savannah can’t, that will divert cargo to other ports.”
For his company, the shift wouldn’t be immediate, he said, because of the large investment it has already made in building an international distribution center near Savannah. But it wouldn’t be able to ignore price differences at the other ports.
Industry experts estimate having bigger ships calling on East Coast ports could reduce freight costs as much as $1.25 per ton.