Dredging Jaxport? 9 Points You Should Consider

3. The Panama Canal.

Currently most of the cargo from East Asia that reaches US consumer markets is brought through the West coast ports of LA and Long Beach. It is then placed on rail in order to reach consumer markets in the mid-west and east coast. This is because the largest container vessels – post-Panamax – cannot fit through the Panama Canal.

The widening of the canal, which is anticipated for completion in 2014, will allow these large container vessels to travel through the canal and therefore reach East coast ports (the ”all-water” route). But the largest vessels can only use the port and reach their container terminals if the depth of the channels and harbors are close to 50 feet. Therefore, any East cost port with a channel draught less than 45 feet is seeking federal funds to deepen their channels.

The Jacksonville channel is currently 40 feet deep and Jaxport has requested a deepening to 47 feet.

4. Narrowly Defined Benefits of Channel Deepening.

The Army Corp Jacksonville Harbor Deepening Study -- which has recommended dredging the St. Johns River to a particular depth (45 feet) and has approved the “Local Preferred Plan” of 47 feet -- is purportedly based on a cost-benefit analysis.

However, one must be aware that the only costs factored into the calculation are financial costs associated with the deepening project and the only benefits are the savings in transportation costs as a consequence of larger vessels having access to the port terminals. Transportation cost saving accrues primarily to shippers and carriers. There is no necessary or automatic relationship between the reduction in transportation costs and economic benefits to the city or region. The Army Corp report provides no calculations of the broader economic benefits to the Jacksonville community and NE Florida region resulting from the project. Also absent is any calculation of the non-project costs such as additional necessary infrastructure(roads), pollution (water and air), ongoing maintenance (retaining the channel depth), and general congestion (traffic from trucks moving containers).

In short, public interest considerations are entirely ignored in the cost-benefit equation used by the Army Corp. In addition to a reduction in transportation costs, shippers and carriers benefit from these projects in another important way. While shippers and carriers do not necessarily need more than one deep-water port on the East coast through which to move their discretionary cargo, it would be to their great advantage to have every port capable of receiving the largest vessels. This would severely weaken the bargaining position of any single port, increase the competition between ports, maximize shipper/carrier flexibility, and allow shipper/carriers to engage in “port arbitrage” playing one port against another for the best terms and concessions.