CHICAGO U.S. ports are doing what they can to meet future freight capacity needs with insufficient federal funding, but the U.S. risks losing out on the global stage if it doesnt step up its infrastructure investment, two industry executives told a Senate committee hearing.
The expansion of the Panama Canal, expected to be completed around June 2015, will more than double the waterways capacity to handle "dramatically larger ships," according to testimony from John Vickerman, president of Vickerman & Associates LLC, a Williamsburg, Va.-based civil engineering company specializing in the port and intermodal industry.
Panama also is moving beyond the canal expansion to potentially become Latin Americas transshipment logistics center, which Vickerman likened to Singapores role in the Far East. Panamanian ports handled 6.8 million containers last year, but that could surge to more than 12 million annually, he said.
As transshipments relocate from the middle of the Caribbean to Panama, changes to U.S. Gulf Coast and Southeast port logistics should follow. This means the United States must not limit its perspective to the Western Hemisphere and North America.
If the Panama Canal tolls are competitively set, "we could see significant increases in freight flows and changes in vessel types and their routings, particularly to U.S. ports," Vickerman said.
The Suez Canal competes with Panama and conceivably could deliver Asian cargo to New York a day faster than transiting the Pacific. Maersk Line Ltd. has stopped using the Panama Canal to move goods from Asia to the U.S. East Coast because it finds the Suez route more profitable.
"Inadequate infrastructure such as shallow channels, outdated terminals, insufficient roads, bridges and rail routes increases the cost of getting goods to market," J.J. Keever, senior deputy executive director of the Virginia Port Authority, told the Senate Commerce, Science and Transportation Committee. "Higher transportation costs impair our ability to compete for exports and make our imports more expensive."
The United States ranks 25th in the world in terms of overall infrastructure quality, he said, and the canal expansion "shines a light on the inadequacies of U.S. freight and transportation infrastructure, as well as the limitations of the funding mechanisms and processes we have in place to bring infrastructure improvements about."