CHARLOTTE, N.C. - Larger cargo vessels and the uncertainty of funding to finance upgrades in port infrastructure to accommodate them poses a serious challenge for a number of east coast ports, officials said Tuesday.

The port officials discussed the challenges and opportunities for investment in ports during a panel discussion here at the Bond Buyer’s Transportation Finance/P3 conference. A major theme was cargo ships, which have grown far larger in recent years, being unable to use some ports that have not been deepened or retrofitted to accommodate them.

A container ship at Norfolk, Va.
A container ship at Norfolk, Va.

Container ships calling on ports 50 years ago were a fraction of the size of today’s ships, with today’s largest vessels now almost three times as long and capable of carrying ten times as many containers as the ships of the 1970s.

The increased size of those ships and the larger loads they bring in necessitate not only deeper channels and higher docks, but also more land-side infrastructure to efficiently transport, load, and unload the cargo. Those investments are expensive, and not all east coast ports have done them.

“There certainly has been a dynamic shift” said Rodney Oliver, chief financial officer of the Virginia Port Authority. “With these big ships come numerous challenges.”
Oliver described a $1 billion project underway at the Port of Virginia to increase its container capacity by 40% annually, as well as a project to increase the port’s depth to 55 feet from 50 in the next few years. That would make it the deepest on the U.S. east coast.

Stan Van Ostran, senior vice president and CFO of the South Carolina Ports Authority, also described extensive terminal upgrades and inland infrastructure investments aimed at improving South Carolina’s competitiveness, as well as dredging to increase depth. The harbor will be 52 feet deep, seven more than today, by 2020, he said, making it briefly the deepest until Virginia’s project overtakes it. While other ports such as Jacksonville, Fla. have targeted shallower depths as their goals, Van Ostran said he viewed 50 feet as the new standard.

“If you’re not at 50 feet these days, you’re probably going to lose out,” he said.

Ports not at that number include Jacksonville, Boston, Philadelphia, and Savannah, Ga., among others.

The port officials were also asked about their views on how Trump administration action might affect them.

“There’s nothing concrete coming out of Washington,” Oliver said.

James Preusch, CFO of the Alameda Corridor Transportation Authority which owns a rail line moving freight from the Ports of Long Beach and Los Angeles to the downtown Los Angeles rail yard, said he has seen no evidence of any of the feared trade slowdowns with Mexico elicited by the president’s tough talk on trade deals. But Preusch did note the failure of Trump’s promised $1 trillion infrastructure plan to develop so far, saying it seems to be “evaporating,”

“That’s a far greater concern,” he said.

The conference concluded Wednesday.

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Kyle Glazier

Kyle Glazier

Kyle Glazier is the Deputy Washington Bureau Chief of The Bond Buyer. He covers securities law, regulation, and enforcement.