In an Era of New Panamax Vessels, East Coast Ports and Their Private Sector Partners Have Big Plans For Terminal Expansions, Intermodal Infrastructure and Regional Warehouses
This summer, South Carolina and Georgia announced they are spending about $15 million during the next three years to conduct studies required to get permits to build a new $4.5 billion shipping container terminal along the Savannah River. The long-term vision is to have the 1,500-acre Jasper Ocean Terminal up and running in the next decade or so, when port capacity in Savannah, Ga., and Charleston, S.C., begins to run out. How the joint project will be financed remains to be seen.
Meanwhile, the U.S. Army Corps of Engineers is in the midst of deepening 41 miles of the Savannah River at a cost of about $700 million, and Charleston has its own plans for a $500 million harbor deepening project to possibly kick off next year—plus it’s already under way on a $700 million container terminal expansion expected to wrap up by 2020.
Georgia and South Carolina are in good, albeit competitive, company. Virginia, North Carolina, Florida and, of course, New York and New Jersey are busy building in and around their ports to accommodate larger container ships that can now gain access to the East Coast via the expanded Panama Canal, which opened in June to much fanfare followed by intense criticism
from The New York Times
regarding the quality of construction.
Previously, Panamax vessels had a cargo capacity of just 5,000 twenty-foot equivalent units (TEUs). With the larger locks up and running, New Panamax (or Post-Panamax) vessels can carry up to 13,000 TEUs.
“The Panama Canal expansion has affected West Coast ports, maybe 5 percent to 20 percent,” says Doug Norton, senior vice president of CBRE’s Port and Integrated Logistics Group
, which specializes in the strategic use of real estate as it relates to containerized freight. “Is it quicker or cheaper for a Shanghai shipper to drop off in Long Beach and then rail somewhere and then truck somewhere else? Or should they go all the way to Newark? There’s always a balance to consider.”
It also could be argued the impact on West Coast ports is more about labor. “Labor issues in Los Angeles and Newark caused a lot of angst among shippers,” says William Waxman, executive vice president of CBRE’s Port and Integrated Logistics Group. “Nobody wants to have all their eggs in one basket, so they’re looking at other ports to mitigate if one port goes down.”
In March, members of the American Association of Port Authorities (AAPA
that they and their private sector partners plan to spend $154.8 billion on port-related freight and passenger infrastructure during the next five years—a three-fold increase over the $46 billion that survey respondents estimated five years ago. Gulf Coast ports and related private capital expenditures account for a whopping $127 billion due to plans for new energy processing, production and transfer facilities—with another $11 billion tied to ports along the Pacific Coast. The South Atlantic total came to $9.3 billion, followed by $4.8 billion for the North Atlantic.
In contrast, AAPA believes the best-case scenario for federal government investment in U.S. ports is just $24.8 billion through 2020. $11 billion already has been designated for landside freight improvements via the FAST Act surface transportation bil enacted at the end of 2015. Like the nation’s road transportation network, demand seems to far outweigh government funding, despite evidence that ports generate trillions of dollars for the U.S. economy and millions of domestic jobs.
Uncertainty aside, strategic planning is the name of the game for port authorities. Across the United States, long-range investments are earmarked for new or expanded terminals, berths, piers, storage buildings and cranes; plus dredging, facility rehabilitations, security upgrades, and related transit infrastructure and warehouses.
Ramping Up Capacity
In September, the Port of Virginia
signed a 50-year lease effective Nov. 1 that allows it to double the annual throughput capacity of Virginia International Gateway. The $320 million terminal build-out will be developed on 60 acres and will include a 650-foot wharf extension, four new ship-to-shore cranes, 10,000 additional feet of on-dock rail and 13 new container stacks for a total of 28.
The Port of Virginia also anticipates starting work in spring 2017 on a $350 million renovation of the South Berth at Norfolk International Terminals, with the first stacks being complete by year-end.
“Our schedule shows all stacks, which will be served by 30 new rail-mounted gantry cranes, will be complete by the end of 2019,” says Joseph D. Harris, spokesman for the Virginia Port Authority.
The construction contracts have not yet been awarded for either project. “Combined, these projects will create additional annual throughput capacity of nearly one million containers at the Port of Virginia,” Harris says.
The projects also will allow the Port of Virginia to handle increased cargo volume while Craney Island Marine Terminal (CIMT) is developed during the next decade in partnership with the U.S. Army Corps of Engineers. The land reclamation effort serves a dual purpose by positioning Craney Island as a dredge disposal area while creating a site that will double the port’s capacity to handle containers.
“The creation of the land on which CIMT will sit is considered the first phase, and it is the project’s most time-consuming and labor- and cost-intensive phase,” Harris says. “Though we are not on a strict timeline for completion, we must have the first phase ready when the demand arises.”
Currently, a contract is out to bid to install wick drains in the dike and begin stockpiling sand that will be used to replenish areas that settle, as well as begin dredging the footprint to the main dike. When all is said and done, the multi-billion-dollar CIMT will serve super Post-Panamax class vessels via a 50-foot navigation channel, as well as offer a direct interchange with the interstate highway system and double-stack intermodal rail service.
Transportation infrastructure is crucial in and around ports, which is what brought Dana B. Kenyon Company (DBK
), Jacksonville, Fla., to this market. The company has a long history of success completing railroads, locomotive shops and maintenance facilities, making it a great fit for the Port of Jacksonville’s (JAXPORT
) Intermodal Container Transfer Facility (ICTF) at the Dames Point Marine Terminal.
Funded by $30 million in grants from the U.S. Maritime Administration and Florida Department of Transportation, the ICTF offers direct access to CSX rail lines so cargo can move more quickly among ships, trains and trucks. The fast-track project included sitework, utilities, drainage basins, mechanical storage, roller-compacted concrete paving, track installation, road relocation and an administrative building.
DBK completed the design-build job in 2015 and received the 2016 “Project of the Year” award from the Florida First Coast Chapter
of Associated Builders and Contractors, as well as an honor award from the Florida Region
of the Design-Build Institute of America.
The project team created a structured partnering process with an executive leadership group at the early procurement stage to ensure an optimal environment for collaboration and the exchange of critical ideas. DBK also integrated its performance management and quality management systems into the organizational structure, and held pre-task safety meetings with each subcontractor. The job, which lasted 20 months, recorded zero fatalities, recordable cases and days away from work.
“The project team’s expertise and approach led to significant cost and time savings, as well as a higher quality facility—a testament to the best value design-build approach,” says Joe R. Miller, JAXPORT’s senior director of facilities and development.
Ultimately, the ICTF allows JAXPORT to become more of a regional gateway for cargo bound for cities such as Atlanta, Chicago and Memphis, Tenn. JAXPORT also has projects under way to deepen the main harbor to 47 feet to accommodate fully loaded New Panamax vessels and improve Mile Point—where the Intracoastal Waterway and St. Johns River converge—so deep-draft container vessels approaching JAXPORT can enter the harbor more than twice daily (as currently restricted by tidal currents).
Meanwhile, DBK is performing exterior and interior terminal improvements for AMPORTS and Tote Maritime at JAXPORT’s Blount Island Marine Terminal, as well as pursuing a $20 million near-port (warehouse/distribution) facility in Houston and a $30 million near-port facility in Charleston, S.C.
“The Panama Canal expansion has been driving change for the past 10 years,” says DBK Chief Operating Officer/Executive Vice President Joseph Bajalia. “We anticipate increased port-related construction opportunities along the East and Gulf coasts because they can now provide services more competitively with the West Coast ports due to lower freight cost and shorter delivery times. This activity includes warehouses, distribution and rail yard service facilities.”
The Warehouse Effect
What happens to the freight once it lands in the United States represents another opportunity for real estate and construction activity. With industrial supply falling short of demand, the warehouse, food, e-commerce and home goods markets remain strong, especially around ports, according to CBRE’s Port and Integrated Logistics Group.
“Unfortunately, the big ports such as Los Angeles, Long Beach, New York and New Jersey have very little land to develop,” Norton says. “As such, there is a lot of infill construction in those areas, where antiquated buildings are being torn down and redeveloped into new warehouses. Companies are looking at transportation costs as they relate to real estate costs. How far can they go away from the port for cheaper real estate before reaching diminishing returns?”
E-commerce is a significant driver with the demand for same- or next-day delivery. “The margin for e-commerce companies is higher, so they can afford higher rent, but they also want to be closer in because they want fast delivery to be competitive,” Norton says.
Internet business is responsible for increased activity at secondary and tertiary ports as well. “Companies need to locate in these areas in order to service demands being placed on them for quick delivery,” Waxman says. “Amazon is the 800-pound gorilla, but there are hundreds of smaller companies looking for warehouse space too.”
Due to the Panama Canal expansion, those products will be arriving on larger ships. “With 12,000 TEUs coming in at once, you need a place to put all those goods. You need more warehouses,” Waxman says. The bottom line: “I can’t think of a U.S. port market that’s suffering.”
Award-Winning Project Modernizes the Port of Guam
The need for port upgrades isn’t limited to the coastal United States. Way out in the Pacific Ocean, situated along major shipping routes, the Port Authority of Guam (PAG
) has been busy executing the largest modernization program in its 50-year history to create operational efficiencies and maximize capacity.
In October 2015, Guam-based Black Construction Corporation (BCC
) completed the third and most expensive phase of a $50 million improvement program overseen by the U.S. Department of Transportation Maritime Administration: a $29 million expansion of the port’s existing container yard, a new 3-acre gate complex allowing more trucks to enter and exit the facility, and upgrades to site utilities, lighting, storm drainage and treatment facilities. The 18-month project—subcontracted to BCC by EA Engineering, Science and Technology, Inc.
—was funded by a U.S. Department of Defense grant in anticipation of the relocation of 5,000 Marines and their families to Guam from Okinawa, Japan.
BCC received an “outstanding” performance evaluation for its quality work on the job, as well as an Excellence in Construction
® award from Associated Builders and Contractors
. The expansion was completed safely without any lost time, with the team overcoming an aggressive schedule, logistic and procurement challenges related to working in such a remote environment, and an unexpected change order related to the discovery of four underground cavities during earthmoving activities at the new container yard.
“The extent of the subsurface cavities had to be determined through an exploratory drilling program and then filled with a combination of gravel and grout per the geotechnical consultant’s recommendation,” says BCC Project Manager Dean E. Bates.
“The other major challenge was meeting the contract requirement to supply three 500-kilowatt standby generators compliant with Tier 4i emissions limits the same year that U.S. generator manufacturers were re-tooling their plants to meet the final effective date of stricter Tier 4 emission requirements for stationary power sources,” Bates says. “Fortunately, we were able to locate the Tier 4i generators from a Caterpillar distributor on the East Coast, which had to remove them from their pre-packaged weatherproof housings and then ship them to Guam.”
This project was one of many BCC has performed with PAG since the 1970s, including repairing earthquake damage and gantry crane typhoon tie-downs. Bates anticipates future work will be aimed at renovating more than 40-year-old infrastructure at the port. Currently, PAG is seeking additional funding to reconstruct the Hotel Wharf, which has been underutilized for the past decade. So far, the U.S. Department of Transportation awarded PAG a $10 million TIGER grant to put toward the $20 million wharf project to construct a multi-use facility to move break-bulk cargo, vehicles, and sand and aggregate.
Joanna Masterson is senior editor of Construction Executive. For more information, email email@example.com or follow @ConstructionMag.