PANAMA CITY, Fla. — The port of Panama City, Fla., is a busy place. Containers of biofuel-wood pellets head to Europe. Copper from South America is offloaded onto railroad cars for transport further north. Frozen chicken, machine parts and other materials are shipped south to Mexico and Central America.
But Port Director Wayne Stubbs envisions a day when this port will be even busier because of increased shipping volume through the Panama Canal. A $5.25 billion project expected to be completed in 2015 will nearly double the canal’s cargo capacity and the size of the ships that can transit through the Panama Canal. While Panama City doesn’t plan to equip itself to handle the larger ships, port officials are hoping to increase their business by serving as feeder for goods heading to ports that do, such as Jacksonville, Miami and Mobile.
Still, experts warn that it could take years for most ports along the Gulf Coast and Southeastern U.S. to fully reap the benefits of the expanded canal.
Panama City has invested about $60 million over the last to decade in port improvements including dredging, container cranes and expanded cargo handling and warehousing space.
“But we are not basing all of our plans on the canal expansion. Some ports are putting all of their eggs into that, we’ve been careful not to,” Stubbs said. Instead, the Florida Panhandle port is banking on continued steady growth of regional exports and growth linked to a recently opened international airport.
Alabama, Florida, Georgia, Louisiana, South Carolina and Texas have invested hundreds of millions in improving port facilities with the hope of growing local economies.
In Florida, officials have invested millions at the port of Miami on a tunnel to divert inland ship traffic around the city and on customs facilities to reduce the time it takes to process cargo.
Charleston, the nation’s 10th largest port, already handles a massive amount of cargo and is up gearing by investing about $2 billion to handle even more cargo because of the expanded canal.
Jim Newsome, director of the state’s port authority, said he believes his port will see about twice the normal level of market growth beginning in 2016.
Charleston imports chemicals, rubber, retail goods and other products. It exports about 200,000 cars a year from the state’s BMW plant along with agriculture products and manufactured items including gas turbines.
The port is already seeing bigger ships coming via the Suez Canal.
Charleston has an aggressive plan to compete with other southeast ports such as Savannah, Georgia, and Wilmington, N.C., by deepening its port to 50 feet, improving land access to the port, adding a new terminal and facility to transfer cargo.
Charleston and other ports in the Southeast and Gulf Coast have an advantage because they are not located in the sprawling cities that surround ports on the West Coast and in the Northeast, Newsome said. This makes it easier for cargo to move inland from those ports, he said.
Adie Tomer, a transportation expert from The Brookings Institute, said the states’ investments will pay off and that the South is in an ideal position to benefit from the expanded canal.
“I see the South as the region that will benefit the most from the canal expansion,” he said.
But there is no definite answer as to when the Southern ports’ efforts will begin to pay off, he said.
“A lot of local economic development officials want to pump up their ports’ infrastructure, but they are all trying to predict the future and that is really impossible,” Tomer said. “Dramatically recalibrated international ship movement could take decades, we don’t know.”
The bottom line for all concerned is revenue, he said.
And there are a lot of unknowns, including the cost the Panamanians will charge ships to travel through expanded canal, investments by railroads and the time it will take ports to load and offload the massive ships.
“(The canal expansion) is a generational kind of improvement that, in the long run, will improve freight movement throughout the U.S. and result in better trade routes for exports, making us more competitive,” he said.
Because of the increased cargo, Tomer sees a future where ports are more specialized. Some ports might become known for automobiles and automobile parts and others for bulk goods like grain and others for liquid fuel, he said. Ports in Texas and Louisiana have already captured a large part of the liquid fuel market, he said. Because the Gulf Coast and much of the Southeast is so undeveloped, Tomer said there is room for port growth and for specialization.
The Port of Mobile, Ala., is known for handling coal shipments. Jimmy Lyons, director and CEO of the Alabama State Port Authority, believes the port will see more business after the canal expansion is complete.
But Lyons, said the growth will take time.
He predicted incremental growth for Gulf Coast and Southeast ports because of the expanded canal.
“I don’t see a flood of new business,” he said.
Asian trade is traditionally dominated by the West Coast and ports in the Southeastern U.S. have a tremendous transit time disadvantage, he said.
“The expectations for the canal far exceed the reality. A lot of people who are anticipating great, magnificent changes will be disappointed.”
He sees a potential growth for Gulf and Southeast Ports but not a flood of new business.
But West Coast ports have had years to increase capacity and compete with the expanded canal, Lyons said.
And, he said, ports that hope to become transit points between larger ports will have to compete with interstate highway trucking and rail and contend with regulations that require only U.S. flagged ships to travel from port to port within the United States.
“It will simply come down the dollars and cents it takes to move a product,” he said.
“If you do nothing, you will get nothing you cannot set there idly by and watch these trade lanes occur and not try and reap that benefit,” he said.