Why Deepen U.S. Harbors?—A Recession and the Panama Canal

Like other nations, years of growth in U.S. foreign trade sputtered to a halt with the advent of the steep economic recession in 2008-09. Across the world container ships have been laid up and the construction of new vessels has been curtailed. Meanwhile, at least 27 harbor deepening projects are underway in the U.S. based on economic analyses conducted while imports were experiencing double digit growth and as forecasts of ever larger container ships in the world fleet filled article after article in shipping trade journals. At the same time, a huge infrastructure project to enlarge the Panama Canal was initiated in 2007 and is scheduled for completion by the end of 2014. The plan entails two new sets of locks with dimensions of 1400-ft length, 180-ft wide, and 60-ft deep. The new locks will accommodate vessels with a 50-ft freshwater draft and are expected to handle "post-Panamax" container ships with a capacity in excess of 8,000 TEUs (Twenty-foot Equivalent container Units). The world container ship fleet has grown substantially in recent years in both numbers and in the capacity of vessels. Enlarging the Panama Canal is expected to result in redeployment of container ship fleets, with implications for U.S. harbors and their channel depth requirements. Since 1986, the U.S. Congress has passed eight Water Resources Development Acts (WRDAs) that have authorized over 50 major harbor improvement projects, the most recent being WRDA 2007. Some of these projects have been completed, some are underway, some are in design, and some are on hold while a variety of issues are negotiated. More than a few have been shelved indefinitely. This paper examines major U.S. harbor improvements that were authorized to serve the increasingly larger ships in use or on order in the context of recent economic events, particularly the flattening of trade growth due to the 2008-09 recession. Potential changes in trade patterns are assessed in light of the Panama Canal expansion, with implications for both U.S. ports and potential offshore transshipment hubs in the Caribbean. The paper will conclude by assessing the need for and viability of U.S. deepening projects underway and planned.