DALLAS — The $5.25 billion expansion of the Panama Canal scheduled for completion in 2014 has sparked billions of dollars worth of highway, rail and port projects in Texas as the state races to complete construction in time for the expected surge in trade traffic.

At the same time, Texas is competing with other states that see similar opportunities. Georgia’s governor proposed selling nearly $47 million in bonds to deepen Savannah’s harbor, and neighboring Louisiana has bond projects in the works to accommodate the larger ships that will require deeper channels and, in some cases, higher bridges.

The canal expansion includes a third set of locks that will allow wider, longer and heavier ships to traverse the isthmus from the Pacific and Atlantic. One Texas port official jokingly credits former President Jimmy Carter for the expansion, saying that if he had not sold the canal to Panama, the U.S. would be taking “15-20 years to expand the canal instead of seven.”

Complicating the response for the U.S. is election-year politics that has kept transportation funding bottled up in Congress.

“Without a long-term surface transportation bill and predictable, long-term funding sources, it’s a challenge for Texas to develop and execute long-term plans,” said Karen Amacker, spokesperson for the Texas Department of Transportation.

By any measure, the combination of state, local, federal and corporate investments already committed represents the largest public-private partnership since the canal was completed in 1914.

“Texas is poised for dramatic — almost volcanic — growth,” Mike Wilson, director of trade development for the Port of Freeport, told the Greater 288 Partnership, a group promoting development of a combination tollway and freeway connecting the Gulf port to Houston, 60 miles away.

The Port of Freeport in September signed a memorandum of understanding with the Panama Canal to promote the expanded canal to handle exports from Asia.

In addition to highways, TxDOT is working with railroads to solve the choke-points of the so-called “last mile” leading to the ports.

Long before the recent recession, logistics firms were complaining about the difficulty of moving cargo from the ports and across bridges on the Rio Grande.

Under recent legislation, railroad issues are under the jurisdiction of TxDOT rather than the Texas Railroad Commission.

“This isn’t just a highway issue,” Amacker said. “We’ve done a lot of coordination work with the ports to provide the support they need from us, and with railroads to do what we can to reduce congestion on the freight rail lines.”

Driving the expansion is not just the expected arrival of more container cargo traffic from China, but the new role of the U.S. as an exporter of energy products.

New technologies for capturing natural gas, the revival of oil production in the Permian Basin of West Texas, and other developments could lead to energy exports.

In Corpus Christi, a $25 million terminal was designed to double the volume of crude oil storage from the newly productive Eagle Ford Shale fields of South Texas. 

“Our infrastructure and strategic location for the Eagle Ford Shale activity is giving us the opportunity to play a major role in the handling of this commodity,” said Mike Carrell, chairman of the Port of Corpus Christi Commission.

TxDOT recently completed a 4,415-foot-long bridge as part of a $32 million project to improve mobility and safety at the port.

The bridge is projected to carry about 500 large trucks per day to Port Corpus Christi between southbound Interstate 37 and the Joe Fulton International Trade Corridor.

The port expects spillover traffic from the ports of Houston, Freeport and Beaumont-Port Arthur. Dredging is already underway and facilities are under construction, but the port still needs a $500 million replacement bridge for one that traverses the ship channel, said John LaRue, executive director of the port.

The current span, which is too low for the taller cargo ships, must be replaced by TxDOT, which has not yet found the money for the project, LaRue said.

The department’s chief financial officer, James Bass, said $500 million might be a “conservative estimate” for the bridge project.

To accommodate traffic coming and going from the ports, planners have created coalitions to eliminate choke-points on road and rail corridors.

Statewide, the most important project for cargo traffic is the creation of Interstate 69, which will run from three major crossing points on the U.S.-Mexican border to the Gulf Coast ports, then north toward Texarkana, from where it is envisioned to reach all the way to the Great Lakes.

One 6.2-mile section of Texas I-69 was dedicated in December, with the first signs installed.

Using existing highways, the newly designated Interstate will fork three ways from Corpus Christi, reaching the border crossings at Laredo, McAllen and Brownsville.

The cost of the southern section alone is estimated at $1 billion.

“Surface transportation is crucial to our state, especially in light of the soon-to-be-finished expansion of the Panama Canal. My work will not be done until all of South Texas is serviced by I-69,” said Rep. Blake Farenthold, R-Corpus Christi, who serves on the House Transportation and Infrastructure Subcommittee.

New York, Baltimore and Miami are among the cities with ports that are expected to be retooled for the massive container vessels that are projected to arrive through the expanded Panama Canal. But actual construction, which includes harbor deepening conducted by the U.S. Army Corps of Engineers, could take years.

Texas has 28 seaports, which employ more than 1 million people and generate more than $180 billion in annual revenue, according to industry officials.

Each year, more than 500 million tons of cargo move through Texas seaports. Five Texas ports — Houston, Beaumont, Corpus Christi, Texas City and Freeport—rank among the top 25 U.S. ports for tonnage handled.

In a recent 2012 outlook for the transportation industry, Fitch Ratings noted that the economic downturn had weakened the momentum of port-related undertakings.

“As a result, Fitch anticipates proposed terminal transactions to have lower leverage levels, tighter financial provisions/triggers, and more realistic growth expectations that those seen prior to the financial crisis,” analysts wrote. “As market conditions stabilize, terminal financings with private partners are expected to return to the spotlight.”

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