Port Expert: New Charleston Depth Won’t Ensure Competitiveness

The major East Coast ports are as deep or deeper than Charleston’s will be after the dredging. Charleston isn’t really gaining any competitive advantage from this. They are just keeping up with the pack.

All it is a Google search to find Dr. Asaf Ashar’s bias. He contradicts the above statements by acknowledging that Charleston will gain an advantage over Savannah. And he acknowledged that Corp of Engineers, who also have experts, disagree with him about Savannah not getting as deep a port as Savannah. This article is clearly meant to support Savannah at the expense of Charleston. I put key statements are in bold.

Devolution of U.S. Port Channels

The following is a guest commentary by Asaf Ashar, Professor Research (Emer.), National Ports & Waterways Initiative, University of New Orleans. An earlier version appeared in the Journal of Commerce’s 2015 Annual Review & Outlook.

After 15 years of relentless struggle, the U.S. Army Corps of Engineers approved a 47-foot deep channel for the Port of Savannah. Two years later, the Army Corps approved a 52-foot channel for the Port of Charleston. Having a 52-foot channel, the deepest on the east coast, provides Charleston with an important competitive advantage: ability to serve a fully loaded 13,500-TEU, New-Panamax ship. The consecutive Army Corps decisions to deepen two adjacent ports serving the same ships to different depths was made by applying the same economic assessment methodology, based on the same criterion of national benefit/cost ratio. Why was Savannah, twice the size of Charleston, so harshly discriminated against relative to its archrival located just 104 nm to the north?

The apparent explanation is that the Army Corps’ methodology is based on speculative and, in some areas, flawed assumptions, especially on the benefit side. The benefit assessment mandates developing a highly detailed, 50-year (!) forecast of the ports’ traffic by trade lane, service pattern, and vessel size, a speculative undertaking in the notoriously volatile shipping market. Strangely, the forecast disregards port competition and therefore contains an unavoidable internal contradiction: it is reasonable to expect that Charleston’s much deeper channel will increase its market share and respective national benefits at the expense of Savannah’s. Should the Army Corps redo Savannah’s study resulting in reduced benefits and, accordingly, reduce Savannah’s recommended depth?

The benefits are derived from the differential in shipping cost between two hypothetical scenarios, with and without deeper channel which, at least in the case of Savannah, I found flawed (see: www.asafashar.com), along with other Army Corps assumptions on tide delays and ship’s load factors. The cost-side calculation also is flawed; it only includes the channel cost, but excludes the much higher costs of deeper docks, taller cranes and other landside infrastructure required for the bigger ships.

But the real problem is with the concept of national channels and respective national benefits. Access channels are integral parts of port facilities, and port facilities essentially are regional infrastructure which, because of inter-modalism, also can serve a nation-wide market. Most of the investments in ports are made by regional governments: port authorities, cities, counties and states. Recently, the states’ share has been on the rise as was demonstrated in the decision by Florida’s governor to invest heavily in his state’s ports in attempt to “repatriate” cargo presently handled by ports in other states – as well as to capture the cargo of other states. Why should the federal government intervene in the evolving competition among the states of Florida, Georgia, South Carolina and California for handling Florida’s cargo? How can one determine which states’ ports are more “nationally beneficial”?

It is time to end the fiasco around our ports’ channels. The federal government should transfer the economic responsibility for channel deepening and maintenance to regional port authorities, along with the right to collect user fees (Harbor Maintenance Tax included) to cover their channel cost—as ports already do with all other port-related infrastructure. Provided that it complies with environmental and safety regulations, Savannah should be allowed to deepen this port channel to the depth it considers economical and necessary to compete with Charleston and other ports, without going through another 15 years of federal approval ordeal.

It is time to liberate our ports and allow them to compete freely—to the benefit of our nation.

– See more at: http://reason.org/news/show/surface-transportation-news-137#.dpuf