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Is the Deep Dredge Worth the Risk?

What do the economic considerations of the proposed dredging have to do with protecting the St. Johns River?  Everything.

If the prospect of jobs and speculative economic benefits are going to be used to justify the extensive environmental damage that will likely result from the deep dredge, then we must understand all of the costs and risks associated with the project.  How reliable are the economic projections?  What is the likelihood that Jacksonville will be the choice of shippers when so many East Coast ports are also deepening their harbors and so many unknowns still remain?  

The bottom line is that ALL of the pros and cons must be identified and fully vetted before we move forward with such a speculative and extremely costly project, both economically and environmentally.  It is imperative that we make an informed decision that is in the best interest of our community and our St. Johns River.  We simply can't afford to get this wrong. 

Here are some shipping industry articles and resources to help you determine whether or not this megaproject is worth the substaintial risks, impacts to our river, and costs to taxpayers: 

"Does the Deep Dredge Make Economic Sense for Jacksonville?",
The purpose of this document is to assist readers in the assessment of the economic rationale for dredging the St. Johns River to 47 feet by demonstrating 1) the major challenges and obstacles that exist to Jacksonville becoming a first port of call for the supersized post-Panamax ships, 2) the limited economic benefits that may accrue to only a few deep water ports on the East Coast, 3) the significant uncertainties that remain regarding future shipping routes and distribution patterns, 4) the investment decisions that indicate a preference by shippers and railroads for other ports and 5) the opportunities that may exist for Jacksonville to succeed as a cascade-ready port.

Panama Canal: Myths and Misconceptions, American Shipper 
"But the impact of the Panama Canal expansion, now due to be completed by 2015, may be much more subtle than generally anticipated in large measure because the factors that impact all-water services have already happened, analysts say."

Transhipment DCs: U.S. logistics jobs could be outsourced to Caribbean, Central America as new shipping patterns evolve, American Shipper
"New transshipment activity could changeshipping patterns from the United States tothe Caribbean, with negative consequencesfor ports in Florida, and create incentivesfor importers to resort to packaging goodsoffshore for store delivery instead of at U.S.-based distribution centers, John Martin, awell-known port economist and the head of Martin Associates, recently told a gatheringof maritime industry stakeholders."

Panama Canal chief: Florida, America must choose wisely in funding port projects
"The state needs to look at what’s best for the state, and on the federal level the government has to look at what’s best for the country to determine where money goes first, Quijano said."

Exploratory Study of the 2014 Panama Canal Expansion Regarding Two East Coast Port (Charleston/Savannah): Can the "Business Case" be Made?
"In our view, the Corps of Engineers projections are flawed in that they do not make a rational business case for the preparation of any port. In every case we have examined, the benefits accrue almost exclusively to shipping companies."

"The danger, then, is that ego will prevail over business logic. Everyone wants to be able to tout the ability to handle larger ships. With taxpayer money, it may be all too easy to ignore the business case which should be made prior to expansion."

Panama Canal expansion: Game changer, or more of the same?, Supply Chain Quarterly
"There are five to seven ports that expect to be major gateways post-2014. Yet it is unlikely that more than two or three will achieve that status....In the Southeast, the ports of Charleston, South Carolina, and Savannah, Georgia, will probably both remain dominant. Both have competitive advantages and disadvantages relative to the other. (Charleston is closer to the ocean and has deeper water, while Savannah has plenty of land and established arrangements with big retail importers.) Wilmington, North Carolina, and Jacksonville, Florida, will remain minor all-water players and will continue to rely on other business segments to prosper."

Post Panamax transshipment fantasy begins to unwind, South East Shipping News
"The decision by industry leader Maersk to build ships larger than the expanded Panama Canal and sail instead through the Suez Canal between Asia and Europe is beginning to have its first major ripple effects."

Panamanian Scramble: Americann ports vie for future benefits, OnboardOnline
"According to Colliers, ports are only considered post-Panamax ready when they’ve met three key criteria: channel depths of 15m (50 ft) with sufficient width and turning basin; cranes capable of loading and unloading the larger vessels; and docks engineered to handle the new, bigger cranes."

"It’s not clear just how much Panama will benefit from the canal’s expansion, given that no one knows just how much it will increase traffic....That seems to be the message for just about everyone: Nothing is guaranteed."

The Panama Canal expansion: business as usual or game-changer?, Port Technology
"While what is known is fairly straightforward, such as the operational characteristics of the expanded canal, it is by far supplemented by what remains uncertain, namely trade flows, shipping network configurations and the growth of the amount of transshipment in the region. The problem in assessing the potential impacts of such a capacity expansion project is that in reality the consequences are multidimensional and prone with feedback effects, some of which may even be unintended consequences....It can be inferred that the expansion of the Panama Canal is going to be a game-changer, but the new rules of the game are not clear."

Dredging - Key factor for US container port call strategies, Dredging Today
"There is also general agreement that despite the considerable increase in ship size and the respective reduction in shipping costs, the AWP route is likely to see only a modest increase in market share relative to its main rivals, the AWS and the US West Coast (USWC) landbridge. Where opinions start to diverge more sharply is on the impact of Canal expansion on carriers’ North American service patterns and, especially, whether the present approach based mainly on direct port calls will be replaced, at least in part, by a hub and spoke system. It is not unfeasible that that introduction of ships too large for USEC ports’ newly-dredged channels will trigger a change in the service pattern of both AWP and AWS to hub and spoke. In this case, USEC ports would find themselves served by feeder services based on foreign hubs in the Caribbean region for AWP and Canada for AWS." 

PortMiami bond rating drop shows not reward without risk, South Florida Business Journal
"In a nutshell, the issue is the port will be spending $1.32 billion to dredge, build the tunnel and build an intermodal rail yard, but it will take time to ramp up the business that will help pay for the $389 million in debt it is issuing this week plus other obligations. The port might have to dip into reserves to repay money it owes the county for debt issued on its behalf. The county is so strapped for money that it's raiding a rainy day fund to avoid layoffs and maintain hours for its library system, the Miami Herald reports."

Investors punish Miami port tripling debt to expand, Bloomberg
"The port of Miami, the world’s largest cruise-ship hub, is selling a record $389 million of debt to boost its cargo business as the Panama Canal expands. Investors are balking, as the plan would triple the facility’s bond load in four years....Moody’s cut the seaport’s rating one level last month to A3. By 2017, net revenue from the port won’t be able to cover its bonds and debt issued by Miami-Dade County on its behalf, said David Jacobson, a Moody’s spokesman in New York. The port may have to use reserves, Jacobson said."

The risky port expansion mindset, Port Strategy
"Take the example of Jasper county administration officials who want to speed up the development of a container terminal in their county, near Savannah. Are they trapped in a port expansion mindset that steamrolls any reasonable doubt? I don’t know the answer, but I do know the question is relevant and one that all ports intent on expansion should consider."

Will billions in East Coast port spending bring more trade through the Panama Canal?
"From the first, the Corps of Engineers’ study here in Savannah predicted that the amount of cargo handled at the Georgia ports would increase at the same rate over the next 20 years whether we dredged the river more deeply or did not. The logic is pretty simple, if not intuitive: If we dredge, we’ll see fewer but larger ships; if we don’t dredge, we will see more but smaller ships."

Racing to be ready - U.S. ports prepare for post Panamax era, Business Facilities
Port of Baltimore
- The 50-foot deep container berth was completed in 2012, two years ahead of its original schedule. Each of the four supersized cranes, known in the maritime industry as Super Post-Panamax, are 400-feet tall with the boom fully raised, can reach 22 containers across on a ship and can lift 187,500 pounds of cargo.

Nofolk - The Port of Virginia in Norfolk is the first port on the U.S. East Coast to be ready to handle the newer, bigger post-Panamax ships. The Port has had 50-foot-deep channels since 2006 and all of its berths are at 50-feet. As a result, the port is engaged in other projects to market itself as not only the deepest shipping channel on the East Coast, but the most attractive.

Philadelphia - A massive, $300-million Delaware River dredging project is helping the Port of Philadelphia get post-Panamax Ready. The project, which began three years ago and is expected to be completed by 2017, is more than halfway done after workers finished dredging an 11-mile stretch, known as Reach D, last month.

The Port of Charleston - Between the SC Ports Authority’s and the State of South Carolina’s planned investments, roughly $2 billion in port-related infrastructure, including a next harbor deepening project, are making the port post-Panamax ready. The port currently has the deepest harbor in its competitive region (the South Atlantic), which is critical to supporting exporting activity from the Southeast.

Miami - To prepare for the widening of the Panama Canal, PortMiami has invested over $2 billion in infrastructure improvements, the most significant of which are the Deep Dredge project, the restoration of on-port intermodal rail service and the PortMiami Tunnel project.

New York/New Jersey - The Port Authority of New York and New Jersey, which owns the Bayonne Bridge, is in the process of commencing an ambitious $1-billion project to raise the bridge roadway by an additional 65 feet. 

Panama Canal Countdown: Port of Lost Angeles Goes Big, Inbound Logistics
"The Panama Canal is making a loud impact, however, on the Port of Los Angeles, which expects to invest $3 billion in infrastructure enhancements over the next decade...'When the Panama Canal widens, the port still beats the East Coast's speed by five or six days.'"

Half a billion for upgrades at the Port of Long Beach, Journal of Commerce
"For the fiscal year, the Long Beach Harbor Department plans to spend $579 million on capital projects, part of a decade-long, $4 billion investment in port upgrades and efficiency improvements."

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