DALLAS - U.S. East and Gulf Coast port infrastructure projects may get some breathing room if work on enlarging the Panama Canal is halted over a contract dispute.
The major contractor on the Panama Canal expansion project said Jan. 1 it would halt installation of the third set of new locks on the waterway in 21 days unless it received $1.6 billion of cost overruns on the $3.2 billion contract.
Ports in Miami, Houston, New York, New Orleans, Savannah and others are either working on or have plan to deepen shipping channels and expand cargo handling facilities to accommodate the larger ships capable of transiting the new wider and deeper canal.
The massive container ships can currently berth at several ports on the West Coast, including Los Angeles, Oakland, and Seattle.
The Spanish company Sacyr Vallehermoso, which leads the Grupo Unidos por el Canal multinational construction consortium, said it has "formally informed the Panama Canal Authority that it will suspend work if the failures to comply are not put right within the advised period."
A spokesman for the group said the cost overruns were a result of disputes over the cement used in the locks, geotechnical and geological uncertainties, tax and financial matters, labor issues, and weather conditions. Work on the locks began in 2009
Canal administrator Jorge Quijano said the authority intended to hold the consortium to its contract "no matter what kind of pressure is exercised."
Panama's President Ricardo Martinelli said he would appeal to the governments of Italy and Spain for help in resolving the dispute. The construction consortium includes companies from Italy, Spain, Belgium and Panama.
Problems with fabrication of the wider, deeper locks in fall 2013 had already pushed the operational date for the expanded Panama Canal into mid-2015, well beyond the initial completion date of August 2014 when the $5.25 billion project was proposed in 2006.
Port Miami plans to issue contracts later this month to dredge the main shipping channel to 50 feet deep from the current 42 feet to accommodate the larger ships.
Miami-Dade Country sold $382.7 million of seaport revenue bonds in September 2013 for the dredging work. Funding for the port's Panama Canal-related 5-year, $977 million capital program includes $100 million of GO bonds issued by the county for a seaport tunnel.
Bill Johnson, director of the Miami seaport, said a number of major infrastructure improvements have been scheduled to be operational when the canal opens in 2015.
"I am hopeful that the dispute can be resolved expeditiously," he said in a statement.
The Port of New Orleans currently is seeking federal funding for the dredging and freight-handling infrastructure improvements needed for the post-Panamax ships capable of carrying twice the cargo as current vessels.
The Port of Houston Authority has a 5-year improvement program that calls for $1 billion of capital spending through 2017. The port expects to invest up to $3 billion in infrastructure and capital expansion projects over the next 10 to 15 years to support projected growth from the Panama Canal expansion, including stronger cranes and longer docks.
A measure to appropriate $662 million for a dredging project at the Port of Savannah for the post-expansion ships is included in the House version of a federal water resources bill currently in conference committee with the Senate. Georgia has allocated but not spent $232 million for the project, mostly from bond proceeds.
