Fears Grow that U.S. Unready for Larger Panama Canal

May 15, 2011
Experts warn that U.S. ports, creaking from years of underinvestment, will be unable to handle the bigger ships coming through the waterway.

The United States could get a major trade boost from the soon-to-be-finished expansion of the Panama Canal, but experts worry poor infrastructure means Uncle Sam will miss the boat.

From 2014 some of the largest ships in the world will again fit through the 50-mile Panama Canal. Vessels carrying around 14,000 containers rather than today's 5,000 will be able to cross the isthmus.

Traffic is expected to double through the inter-oceanic waterway, which already handles around 5% of world trade.

For people linked via the canal -- most notably consumers in the eastern United States and factory owners in China -- that could spell cheaper goods and lower costs.

It could also provide President Barack Obama with a late boost in his effort to double U.S. exports by 2015 and help create jobs.

In Florida alone, the authorities believe upgrading the Port of Miami to handle these larger ships could help create 30,000 jobs.

But during a visit to Washington the canal's administrator, Alberto Aleman Zubieta, expressed concern that the United States is not ready.

"There is a lot of infrastructure that basically needs to be upgraded," he said, pointing to problems with dock length, port depth and rail and road links.

Like much of America's infrastructure, U.S. ports are creaking from years of underinvestment, and many even struggle to handle today's largest "panamax" ship sizes.

"We don't have the channel depths that are required to take the post-panamax vessels," Dave Sanford of the American Association of Port Authorities admitted flatly.

The list of ports that do, he said, "is really short. It's only one port: Norfolk [Virginia]."

While Baltimore, New York and Miami may also be ready by 2014, they handle a fraction of U.S. trade and are not on the Gulf Coast, which serves consumers and exporters in the vast center of the country.

Perched on the meandering Mississippi, the Port of New Orleans is one of many facilities that has struggled to match infrastructure to its opportunities.

It is investing $650 million on new canal-linked projects, mostly on container terminals, but CEO Gary LaGrange said the port is still not at fighting weight.

"We'll be ready, but not as ready as we could be, or should be," he told AFP.

Blame for the unpreparedness is being spread far and wide: George Washington, the Army Corp of Engineers and Congress are all in the firing line.

Since Washington's time the U.S. army has played at role ensuring waterways are navigable.

Even today the Army Corps of Engineers -- with one eye on its own limited budget and resources -- must approve and execute many upgrades.

Congress, which is currently focused on cutting U.S. debt, then has to approve funding.

That results in significant delays, according to many in the industry.

LaGrange said New Orleans already holds much-sought-after permission to dredge its channel to 50 feet -- enough to handle post-panamax ships.

But bureaucracy means the project is on the back burner.

"Right now it is everything we can do to get the Corp of Engineers to maintain it at its current 47-foot depth," he said.

Similarly the Port of Beaumont in Texas is waiting for approval of a $1.2 billion project to deepen its channel.

But even if the project is approved this year, it is likely to take 15 years to complete.

"Our system is broken, it's just broken. It needs to be fixed," said John Roby, head of the port's customer services.

In the meantime shippers are looking to deeper ports beyond the United States; to Freeport in the Bahamas and Kingston in Jamaica.

"Unless we can get more channel capacity they are going to be the primary beneficiaries of an expanded canal," said Sanford of the American Association of Port Authorities.

Ultimately that may cost U.S. consumers.

"If you can't take advantage of the economies of scale that the larger vessels offer, said Paul Bingham and economist with Wilbur Smith Associates, "the bottom line is it's going to cost you more."

"For the economy that ultimately means that the consumers are going to be worse off."

Copyright Agence France-Presse, 2011

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