|
Items in cart [1] |
Questions? Call 888-624-8373 |
| Copyright © 2009. National Academy of Sciences. All rights reserved. Terms of Use and Privacy Statement |
Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter.
Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.
OCR for page 26
4
Does the United States Need
to Accommo(late Large Vessels?
INTRODUCTION
Assessing the nation's need for additional capacity to accommodate
large vessels involves balancing a complex set of factors. Proponents
of additional capacity give three reasons: (1) economics, (2)
national security and defense, and (3) the need to be able to respond
rapidly and flexibly to future changes in the character of the ocean
transportation system. This chapter appraises the purported need for
additional capacity to handle large vessels in terms of these three
categories of justification.
As an initial step, it is necessary to define "large ships."
Two categories of deficiency in port capacity have been identified in
studies conducted by the U.S. Army Corps of Engineers and by the ports
of the United States: (1) the limited ability of the United States to
handle large bulk carriers, and (2) the need by some ports to handle
medium size vessels; in particular, the latest-generation
containerships, but also other specialized or general vessel types of
Panamax dimensions. The limits of the Panama canal are 900 ft length,
106 ft beam and 42 ft draft (draft limits vary with water supplied to
the canal and may in some seasons be less). These two identified
needs have been taken by the committee as defining "large ships."
Proposals for additional dredged capacity are briefly
summarized in Table 2 (Appendix G). The range of large bulk carriers
cited in these proposals have cargo-carrying capacities of 105,000 DWT
to 150,000 DWT. The latest-generation containerships referred to vary
in length from 800 ft to 950 ft. and in beam between 105 ft and 110
ft. These vessels have cargo-carrying capacities of about 3500 TEUs*
and require water depths of 37 to 43 ft. Owing to the windage area of
these vessels when containers are loaded on deck, additional channel
width may be necesary, particularly in bends or turns.
This chapter discusses the present port situation in the United
States for accommodating large vessels, status and trends in the world
*A TED is a "twenty-foot-equivalent unit." Containers are 8 ft wide,
and 10, 20, 30, or 40 ft long. "TED" is the standard for comparing
container-carrying capacity.
26
OCR for page 27
27
fleet, arguments that have been advanced for and against creating the
capacity to handle large ships, the present situation of other ports
worldwide, and considerations of national security and defense.
WHAT IS THE PRESENT PORT SITUATION?
It has been suggested that the United States is already paying
penalties because of its limited capacity to accommodate large ships;
specifically, that many large vessels call on the ports of the United
States less than fully loaded, owing to the limited water depths in
navigational channels. A review of 1980 data indicates that 3849 port
calls were made in the United States by vessels with design drafts
greater than 45 ft. but only 754 of these port calls were at actual
drafts greater than 45 ft. For most of the major ports of the United
States, water depths become limiting for vessels at about 40 ft of
draft. Additional feet of draft are achieved by operating vessels in
navigational channels at slower speeds, by taking fully loaded vessels
in or out of port at high water, and other means, but the additional
draft that can be achieved by-these means is limited.
While the inference might be drawn that light-loading is always due
to channel limitations, there are several other reasons. A major one
is avoidance of a ballast leg; for example, a large combination
(liquid and dry bulk) carrier may deliver a large oil cargo to a U.S.
port and load a smaller grain cargo at another U.S. port for export.
Other reasons are discussed in succeeding sections.
Channel depths at mean low water for the coastal ports of the
United States are listed in Table 3 (Appendix G), together with the
number of port calls at vessel drafts at or exceeding channel depths
(at mean low water) in 1981.
For the vessels defined in this report as large ships, data for
1980 indicate that 476 vessels greater than 90,000 DWT made 2863 port
calls in the United States. Bulk carriers (liquid, dry, combination)
that would have drafts of 46 ft or more fully loaded made 1590 port
calls that year, but only 236 were at actual drafts of 46 ft or more.
Of these, 26 were at the deep-water terminals of Long Beach, Los
Angeles, or Puget Sound. Thus, less than 13 percent of total port
calls by bulk carriers were at 46 it or more in draft. Table 4
(Appendix G) presents port calls in 1980 by large liquid- and dry-bulk
carriers at the four ports with approved plans for construction
dredging to accommodate such vessels. While definite conclusions
cannot be drawn from the table, shippers and ship operators dealing in
bulk commodities in these and other ports uniformly emphasized to the
committee their need to load additional feet of draft. Draft
limitations for tankers or bulk carriers limit their cargo-carrying
capacity as follows: for a 150,000 DWT or 200,000 DWT vessel, failure
to use a foot of draft may translate into 3400 to 4900 long tons of
lost cargo-carrying capacity. Some representative figures are given
in Table 5 (Appendix G).
Table 6 (Appendix G) lists U.S. port calls by containerships in
1980, in comparison with port calls by other vessels carrying general
OCR for page 28
28
cargo. Owing to the aggregation of the data from this source into a
large category of 16 ft to 45 ft of draft, it is not possible to
determine the use being made of U.S. ports by large containerships.
Delivery has been taken in the past three years of several large
containerships, and some have called on U.S. ports. Great care has
been exercised in some ports to achieve transit of these vessels, such
as entering/leaving at high water, one-way traffic, and operation at
slow speeds. If in the future two-way traffic, higher speeds, or
other operational changes are desirable, greater channel dimensions
may be required. Efficiency or higher traffic density may depend on
depth. If vessels pass or overtake one another, or if higher speeds
in port are desirable, or if shipowners want to be able to enter and
leave port at periods of low water, these operations require more
depth (and possibly greater widths) than one-way traffic, slower
speeds, and transits at high water (see Chapter 71.
Thus, the broad implication that can be drawn from these summary
data is that the physical dimensions of navigational channels in the
United States are being used in some instances to capacity (and
beyond). Whether significant benefits are to be gained (and if so,
how much and over what period) from additional navigational capacity
is difficult to determine, owing to the volatility of trade, and of
oceanborne shipping, and several uncertainties affecting projections
of the future, as discussed in succeeding sections.
Vessels in the World Fleet and Major Trends
Tables 7, 8, and 9 (all in Appendix G) list the dry bulk and
combination carriers, tankers, containerships and roll-on/roll-off
vessels (Ro-Ros)* of the world fleet. Inspection of Tables 7 and 8
indicates that the proposals of U.S. ports to increase their capacity
to handle large bulk carriers are not for the largest of these
vessels. The proposals to dredge deeper channels for 105,000 DWT to
150,000 DWT vessels encompass perhaps 600 vessels in the world fleet,
but note that because of variation in draft in this range of
cargo-carrying vessels approximately 300 to 350 of the vessels may
still need to be light-loaded by 1 ft to 5 ft to call on U.S. ports
even after deepening. There remain beyond these vessels 82 dry bulk
carriers and 475 tankers that are larger, and that would be
significantly light-loaded if they called on the deepened ports.
Containerships in the world fleet and on order can be categorized
in two groups: those having less than 30 ft of draft (79 percent),
and much larger vessels with container-carrying capacities of 3000 or
3500 TEUs or more, and design drafts of 37 to 43 ft. It should be
pointed out here that there is greater ambiguity between the design
and actual draft of a containership (fully loaded) than is the case
with bulk carriers and tankers carrying dense and fairly uniform
*Roll-on/roll-off vessels are equipped with ramps, over which their
cargoes are loaded or unloaded. Some also carry containers.
OCR for page 29
29
cargoes. Tankers and bulk carriers tend to be weight-limited and
containerships tend to be volume-limited. Thus, tankers and bulk
carriers fully loaded with dense cargoes will be at or near their
maximum draft (as indicated by load lines), but containerships loaded
with the maximum number of containers they were designed to carry
rarely approach maximum draft.
With the great number of smaller vessels in the world fleet, why
are the larger vessels of concern to ports? First, many of the
vessels included in summary tables of the world fleet are designed for
short sea routes (as, for example, between European ports) and
coastwise trade.
Second, the maximum achievable speed of vessels is related by
physical laws to their shape and length. Since the increase in the
price of fuel, speed requirements have been reduced, but any change in
the future giving an advantage to speed will favor larger vessels.
Third, the transportation costs per ton of cargo (or per container)
are lower for larger than for smaller vessels, as illustrated in
Figure 2 (Appendix G).
Primarily because of their lower transportation costs and higher
productivity, movement to larger vessels has been the trend for the
past two decades, as illustrated in Figure 3 (Appendix G). This trend
was first evidenced for tankers, and although the lack of deep water
in the ports of the United States and many other oil-importing
countries has resulted in the use of smaller tankers to lighter larger
tankers, 72 percent of the world's oil supplies are carried in tankers
100,000 DWT and larger (Cargo Systems Research Consultants, 1982~.
Bulk carriers 100,000 DWT or more increased their share of oceanborne
shipments from 6 percent in 1971 to 35 percent in 1980 (H. P. Drewry,
19821. Large bulk vessels dominate iron ore trade: 80 percent of
iron ore shipments were carried in vessels 100,000 or more in 1981.
The trend to larger vessels for iron ore and coal was reinforced by
the introduction of combination carriers (oil, ore, dry bulk), which
tend to be larger than dedicated dry-bulk carriers. Large bulk
carriers now carry 45 percent of all coal shipments, and 10 percent of
grain shipments. Other bulk cargoes (the "minor bulks"--phosphate
rock, sulfur, wood chips, etc.) are carried in smaller vessels. Among
the commodities imported or exported in vessels calling on U.S. ports
at 46 ft of draft or more in 1980 were corn, edible oils, sugar, iron
ore, sulfur, chemicals, rubber, coal, oil and oil products, and
vehicles.
Containerships, because of their much higher productivity as
compared to other general cargo ships, are displacing older general
cargo vessels, and their productivity appears to increase with size.
Cargo-carrying Ro-Ros of large size are also growing as a percentage
of the world fleet, as they are flexible vessels (many carry
containers) able to load and unload in a great variety of ports, and
able to carry cargoes too large or awkward for packing into
containers. In the world fleet, both types of vessels are of recent
vintage--80 to 90 percent are less than 10 years old. Aggressive
building programs have been instituted the past three years aimed at
replacing smaller with larger containerships and Ro-Ros. The
vessels.
OCR for page 30
30
latest-generation containerships are entering round-the-world service
in attempts by large liner companies to retain and enlarge their share
of markets (Maritime Transport Committee, 1984~.
There are several possible difficulties in assessing the reasons
for the trend to larger ships. One is that while larger ships offer
economies of scale in transportation, they may or may not have higher
loading/unloading costs in port.
Another difficulty is that economies of scale are usually
represented in terms of the costs, rather than the actual price, of
oceanborne transportation. For example, the market prices of
oceanborne shipping in bulk carriers for the past three years, while
reflecting lower costs for transport in larger vessels, also reflect a
smaller price spread between transport in larger and smaller vessels
(some representative prices are given in Table 10, Appendix G) than
the cost differential would suggest. Price is set by the perceived
relationship of supply and demand for various vessel types, and the
past three years have been characterized by low (uneconomic) prices
for transportation in all bulk carriers. Owing to the high rate of
new orders for bulk carriers and (despite record scrapping) continued
surplus of tankers, prices may remain depressed for some time into the
future.* In sum, price differentials do not necessarily reflect cost
differentials.
Other difficulties make shipping hard to assess. While shipowners
would like always to sail fully loaded, the size of cargoes may be
determined by shippers in a surplus market. For the past three years,
trade in the major bulk commodities has been characterized by spot
markets, rather than long-term, fixed contracts, and the same has been
true for vessel charters. During the recent worldwide economic
recession, demand for vessels was influenced by the use of existing
stocks of major bulk commodities, and the amounts shipped tended to be
smaller than the amounts consumed (Maritime Transport Committee,
1984~. Other factors which can influence port needs are suggested by
a new trade pattern that emerged for coal in 1982. It illustrates
some of the uncertainties associated with projecting the additional
benefits to be gained from channel improvements. Large bulk carriers
(100,000 DWT and more) were light-loaded with coal in Atlantic ports
in the United States and sailed to Japan via the Cape of Good Hope,
where they were topped off in a deep coal port (Richards Bay, South
Africa). It is not possible to predict whether deepening the coal
ports of the United States would capture this additional amount or
whether buyers will still prefer to buy from both sources. Yet
another possibility is that even larger vessels might be used, loading
to 150,000 DWT or so in the United States and topping off in South
Africa or elsewhere.
.
*Some observers are pessimistic about a near-term balance of supply
and demand in these vessels and in liquid and dry bulk cargoes
(Maritime Transport Committee, 1984), others are optimistic that
balance will be achieved in a few years (Office of Technology
Assessment, 1983~.
OCR for page 31
31
Understanding why light-loading occurs requires information about
the maximum desired sizes of shipments, frequency of delivery, amount
of stockpile desired by various customers, time-value of the
stockpile, and the influence of political decisions and new technology
on demand.
Political considerations are sometimes significant in decisions
determining the composition and characteristics of the world fleet and
in its deployment. For example, governments subsidize shipyards for
noneconomic reasons and give preference to their ships when the
government is the customer. Many newly industrializing nations that
are seeking to build a merchant marine protect their fleets by
assuring those fleets a share of the nation's imports and exports.
These considerations may result in agreements reserving cargoes for
national-flag fleets and other stipulations that will (besides
inhibiting competition) enhance or reduce the need to accommodate
large vessels in the future.
Ports Worldwide
Ports in other maritime nations have perceived a need to increase
their capacity to accommodate large vessels. There are now 76 ports
worldwide with depths greater than 55 ft (Table 11, Appendix G). Most
of these ports export or import one (or more) major bulk commodity.
To gain information about the expectations of world ports, the
committee sent a list of questions (Appendix D) to a large number of
ports with the assistance of the International Association of Ports
and Harbors and the embassies of several maritime nations.
Of the 59 ports responding, 22 indicated they had plans for
expansion of navigational facilities, or that expansion was under way,
and 5 had just completed improvements. The responses of these ports
are briefly summarized in Table 12 (Appendix G).
Some ports that are already between 55 ft and 64 ft deep are
planning further improvements--Antwerp and Zeebrugge, Belgium, for
example. Richards Bay, South Africa, has just completed deepening to
64 ft. and is now deepening to 75.9 ft. Two of the ports in the very
deep category (greater than 65 It) noted the need for a new deep-water
port in their respective countries (Mombasa, Kenya, indicated plans
for a deep water port at Lamu; Su-Ao, China, stated that another
deep-water port was needed).
Review of the existing and planned dimensions of ports elsewhere in
the world suggests that a large number expect to need the ability to
handle large vessels in the future.
ECONOMICS
Clearly, the primary factor influencing the movement toward larger
ships is that they offer lower transportation costs. Stated in the
simplest terms, the argument for additional channel dimensions to
handle larger ships is to allow the nation to enjoy the transportation
OCR for page 32
32
savings that ultimately flow from using larger ships. In the absence
of adequate port capacity, large ships must either enter and leave
U.S. ports less than fully loaded or U.S. trade must be carried in
smaller ships. In either case, the cost to the nation will be higher.
Most of the controversy over whether there is a need to develop
additional port capacity to handle large ships revolves around whether
the reduced transportation costs flowing from that capacity will be
sufficient to cover the costs of developing the capacity. In general,
the debate has been focused on proposals for deepening existing
ports. Table 17 (Appendix G) indicates the range of costs associated
with various proposals for port deepening. In the case of those
projects calling for deepening to 55 ft. construction estimates range
from $372 million to $440 million. In each of these instances, the
U.S. Army Corps of Engineers' analysis of benefits and costs concludes
that the benefits outweigh the costs. Many factors influence whether
benefit/cost analyses turn out to be positive or negative. The most
critical single variable is the expected level of use. Future use of
additional port capacity, however, is inherently uncertain.
The committee posed two questions for itself: Is there sufficient
present need to justify developing additional capacity? Will there be
sufficient future need to justify developing additional capacity?
With regard to the first question, the committee could find no
convincing evidence of present needs to develop additional capacity to
handle large ships. It should be emphasized, however, that even
assessing present needs involves dealing with considerable
uncertainty. Perhaps the key example was the committee's inability to
determine whether (and how much) channel limitations result in the use
of smaller rather than larger vessels, or light-loading of large
vessels.
The level of uncertainty is substantially greater in answering the
second question; that is, future needs. Confident assessment of
future port needs would require reliable information on: (1) the
over-all size and growth patterns of the future world economy, (2) the
level of oceanborne U.S. exports and imports, and (3) the character or
mix of those exports and imports.
Data presented in Chapter 3 suggest two trends with regard to the
U.S. and world economy. First, the United States is increasingly
becoming an interdependent part of the world economy. Among important
U.S. exports to industrializing countries, for example, have been (and
are) manufacturing machinery and equipment, while manufactured goods
produced at lower cost in those countries are imported into the U.S.
The U.S. both exports and imports raw materials and agricultural
products. These relationships involve trade among countries in
various geographical regions. The growth of manufacturing capacity in
many countries is broadening and diversifying patterns of trade.
Low-cost oceanborne transportation is generally seen as contributing
to the enhancement of interdependent national economies and to the
promotion of world trade which ultimately benefits the United States.
But while the world economy and world trade are expected to exhibit
over-all growth in the mid- and long-term future, trade is volatile,
and oceanborne transportation is more volatile. Thus, sharp,
short-term fluctuations can be expected.
OCR for page 33
33
The primary pressure driving the demand for U.S. capacity to handle
large bulk carriers rests on the expectation that there will be
opportunities for increased exports of bulk commodities, particularly
coal and grain. The potential world market for U.S. coal has been the
most frequently used rationale for developing additional port
capacity. The landed price of coal in foreign markets can be heavily
influenced by transportation costs. For example, one recent study of
the potential advantages of using large bulk carriers for transporting
coal between Hampton Roads and Rotterdam indicated a potential cost
per ton differential ranging from $10.33 to $6.95 (Graves et al.,
1984~. Depending on the assumptions used, these investigators found
that transportation costs could vary by as much as $3.38 per ton.
Assuming a landed cost for coal in Rotterdam of $50 per ton, these
differential transportation costs could range from 14 to 20 percent
of landed costs. Many analysts believe that this 6 percent
differential in delivered costs could, for a low-value, high-volume
commodity such as coal, make the difference between U.S.
competitiveness and lack of competitiveness. Stated differently,
these transportation costs could significantly influence the share of
the world coal market supplied by the United States.
The authors of the study referenced here found compelling reasons
for recommending caution in funding the dredging of coal ports. They
did, however, find that, given optimistic assumptions about future
European demand for U.S. coal and accepting what they referred to as a
lower societal return-on-investment, dredging one coal port could be
justified. In general, economic studies have recommended caution
(Energy Information Administration, 1983; General Accounting Office,
1983).
The potential benefits to the U.S. grain export trade of being able
to handle large bulk carriers is even less clear. First, because
grain has a much higher value per ton, transportation costs represent
a smaller portion of landed costs. Second, many of the markets for
U.S. grain do not have adequate unloading facilities or ports with
sufficient depth to handle large bulk carriers. These two points are
regularly made. The committee would caution, however, that it was
repeatedly informed of instances where large bulk carriers were used
to transport grain. Additionally, the Soviet Union has recently been
investigating the possibility of topping off grain ships in the Gulf
of Mexico. We include these references simply to indicate that even
in the case of grain, there is evidence that if additional port
capacity were available, larger portions of U.S. grain exports might
be carried in large bulk carriers at lower prices.
The relative advantages and disadvantages of being able to
accommodate larger oil tankers are also difficult to evaluate. Oil is
a flexible commodity that can be loaded and unloaded by several
different technologies (as described in Chapter 5~. There are
additional costs associated with some of the alternatives, and the
cost of oil imports might also be reduced by the ability to
accommodate larger tankers in port.
The potential economic benefits of increased capacity to handle
high-value cargo in larger ships have not been as extensively debated
OCR for page 34
34
or studied as those of increased capacity to handle bulk carriers.
The movement toward large containerships suggests economic advantages,
however, and the costs of developing the additional capacity to handle
these ships in some of the major U.S. ports may be economically
justifiable.
Recent history shows a significant increase in the quantity of bulk
commodities exported from the United States. A more narrowly focused
review of those data indicates another important characteristic. That
is, in the case of both coal and grain exports, the quantity of
exports can differ substantially from one year to the next. For
example, coal exports in 1981 amounted to 110.2 million tons. By
1982, those exports had dropped to 105.2 tons, and in 1983 to 76.9
million tons. Similarly, in 1978, the peak year for grain exports,
the U.S. sold 105.2 million metric tons overseas. By 1982, those
exports had dropped to 97.2 million metric tons.
The point which appears to deserve emphasis is that in bulk
commodities, extreme swings can occur over very short periods of
time. To take advantage of rapidly expanding markets, the nation
would benefit from having available port capacity when the swing is
upward. Because the buyers of these commodities are often concerned
with the delivered price, inability to accommodate optimal vessel
sizes and types may affect the nation's ability to secure long-term
agreements that at least minimize the freight rate (H. P. Drewry,
1981).
One conclusion seems demanded from a review of the preceding data:
it is that the United States faces great uncertainty with regard to
the size and character of the future world economy, the nature of
future oceanborne transportation into and out of U.S. ports, and the
future mix of commodities that the nation will export and import.
Further, the character of U.S. exports and imports, particularly
exports of such bulk commodities as coal and agricultural products, is
likely to change from year to year. In conclusion, the size and
character of future U.S.-world trade and oceanborne transport is
simply not now predictable over any length of time with any degree of
reliability. Most of the analyses and most of the arguments made by
proponents and opponents of additional capacity to handle large ships
start from assumptions that this conclusion suggests must be suspect.
Assumptions bound the ratios found in benefit/cost analyses.
Decisions with regard to developing additional port capacity, then,
must be made with the recognition that the fundamental reality is an
uncertain future. An uncertain future implies risks:
· If the decision is to do nothing, trade may be lost.
Or trade may be sustained with existing port capacity but at a
higher cost.
If additional port capacity is created, the anticipated trade
or traffic may fail to develop.
Or the additional capacity may be insufficient.
Changes in technology may supersede improvements, and make them
obsolete.
OCR for page 35
35
LONG LEAD TIMES
The nation's dilemma with regard to the port capacity question
revolves around the fact that future need is fundamentally uncertain,
short-term needs may experience substantial fluctuation from year to
year, and developing additional port capacity requires sustained
programs carried out over many years. In the case of major federal
dredging projects (as pointed out in Chapter 7), the lead time may be
up to 22 years. Even assuming that those lead times can be
substantially reduced, there is a mismatch between the uncertain and
fluctuating character of need and the activities required to develop
port capacity. In sum, the nation's decisions with regard to
developing additional port capacity must find some accommodation
between what will likely be a continuing uncertainty about need and
the long lead times required to develop that additional capacity.
Stated simply, the nation's choice is: "What should be done in the
face of uncertainty?"
Summary of Factors Contributing to Uncertainty
A review of the debate over additional capacity in navigational
facilities indicates its complexity. Some of the arguments made by
opponents are: (1) The prices charged for ocean transportation have
little relationship to costs. Rather, rates vary with surplus and
scarcity of vessels relative to cargoes. When vessels are in surplus,
unit prices for transport in large versus small ships vary less than
the difference between the unit costs. Alternatively, when there is a
scarcity of transportation, vessel owners charge whatever the market
will bear regardless of cost. (2) The historical movement to larger
ships reflects fashion more than economics, but the movement was
partly subsidized by nations that (to keep their shipyards busy) moved
from subsidizing one generation of ships to subsidizing the next
generation of ships. (3) The pattern of developing additional port
capacity to handle large ships, again, may reflect fashion as much as
compelling economic reasons. (4) The-United States is such a major
factor in the world economy and in world oceanborne transportation
that shipowners will build their ships to ensure that they are able to
use U.S. ports. That is, the United States can set the standard for
ship size with that standard being existing port capacity and it does
not need to develop additional capability. (5) Most of the major
competitors with the U.S. for the world's coal market are countries
such as South Africa where the government controls the mines, the
railroads to the ports, and the ports. Those countries will, as
matter of national policy, ensure that their coal always sells for
less than American coal. That is, competitors with the United States
for the world coal market will do whatever is necessary to ensure that
their coal sells for less than coal from the United States.
Some of the arguments made by proponents are: (1) Prices charged
for transporting commodities do in fact, over the long term, reflect
costs. Therefore, the economies-of-scale associated with large ships
OCR for page 36
36
are reflected in prices. (2) Only if the United States is able to
take advantage of low-cost transportation will it be able to maximize
its competitiveness in the international economy. (3) Even though
other countries may, as a matter of national policy, provide coal for
lower prices than the United States, the range of the price
differential can make a substantial difference in the U.S. share of
the market. If the price differential can be kept small by efficient
transport, many countries will pay a marginally higher cost to be
assured of the secure, stable supply offered by this country. (4)
Faced with a huge trade imbalance of over $100 billion, the United
States can pass up no opportunity to increase its exports. (5) Given
the long lead times necessary to develop port capacity, the United
States has no choice but to move ahead with port development in the
face of uncertainty.
The above samples of the opposing arguments made with regard to
port capacity and its economic implications are not susceptible to
resolution by studies. They reflect differing perceptions of what
will occur in the future, of the U.S. role in the world economy, and
perhaps most fundamentally they sometimes have an unstated premise.
That unstated premise reflects differing views about or whether the
federal government should underwrite the costs associated with
developing additional port capacity. In sum, much of this debate is
driven by differing perceptions of the appropriate role of the federal
government with regard to port funding, with the key issue being
whether tax dollars should be used for this purpose.
National Defense/Security
Although not a central point in the debate, some have argued that
additional port capacity would contribute to the nation's
security/defense capability. Like the economic issue, security and
defense needs are difficult to ascertain. To the extent that those
needs have been defined but are classified for security reasons, this
committee has been without the basis for making an informed
assessment. The committee did, however, seek information on
security-defense needs. Based on those efforts, several observations
seem in order. First, security-defense needs exist in three
categories: (1) military ships, (2) logistical support for overseas
military operations, and (31 access to strategic materials.
Responsibility for assuring adequate port capability to meet these
three needs rests with different defense and civilian agencies. The
Navy assumes responsibility for assuring adequate capacity to handle
its own ships. Logistical support for overseas military operations is
the responsibility of the Military Traffic Management Command, which
has designated the National Defense Ports to be used in case of
mobilization. The vessels supporting overseas military operations
would operate under the direction of the Military Sealift Command
which has responsibility for mobilization of the necessary cargo
vessels. Responsibility for assuring adequate capacity to transport
strategic materials in times of war or international conflict rests
OCR for page 37
37
with the U.S. Maritime Administration. The U.S. Army Corps of
Engineers has the direct responsibility to ensure the navigability of
the nation's ports and waterways.
The committee was unable to find any evidence that these three
areas of responsibility were being systematically coordinated or that
projected needs for dredging are being communicated to the Corps.
Given the changing character of the world's merchant fleet, this is an
area which would appear to warrant continuous and careful attention.
For example, in such areas as the ports of Hampton Roads (Norfolk,
Newport News, and Portsmouth, Virginia), which might in time of war
serve all three of the identified functions, such coordination and
planning would appear to be particularly appropriate. In the case of
the Navy, the committee found, for example, that the Navy has not
specified any need for additional channel depths. Channel depths in
that port are 45 ft. yet the Navy has specified that berths for its
aircraft carriers should be 50 ft. Before the largest carriers can
transit the channels into the Norfolk naval facility, they must unload
all their aircraft and pump off most of their fuel. The committee
questions whether existing depths are appropriate if rapid access
needs to be assured.
In the case of logistical support, the Military Sealift Command
expects to use vessels from the U.S.-flag fleet and those of
national-flag fleets in NATO. Given the movement toward larger and
specialized vessels, a continuing analysis of port navigational
facilities would appear necessary.
Finally, as is often noted, the United States is heavily dependent
on foreign suppliers for strategic materials. The committee found no
evidence that additional port capacity was needed to meet the nation's
strategic materials need. Neither did it find that these needs were
being coordinated in any meaningful fashion with other
defense/security needs and being communicated to the Corps of
Engineers.
Future Flexibility
The United States has very limited capabilities to take advantage
of any benefits that may be offered by larger ships. Only two of the
nation's major ports can handle dry bulk carriers of more than 90,000
DOT and only a limited number of the nation's major container ports
can readily handle the latest-generation, high-value cargo vessels.
Although evidence is mixed on the rate at which large ships will
increase and unclear about what the optimum size of large ships will
be, the nation's present capacity to handle these ships is limited.
The United States, then, has little flexibility to respond to any
developments which emphasize or accelerate the advantages of using
large ships.
The nation faces an uncertain future with regard to the quantity of
its exports and imports and the mix of cargoes that its ports will
need to handle. Its dilemma is that to be able to take advantage of
any benefits offered by large ships in the future, it must undertake
OCR for page 38
38
to develop port capacity now. That is because developing port
capacity to handle large ships requires many years. Further, whatever
the source of funding, the cost of developing port capacity to handle
large ships is high. A decision to develop such capacity, therefore,
involves risk. The question faced by the nation is: Should it take
that risk?
There is no existing body of data or associated analyses available
now or likely to be available in the immediate future which will
compel a consensus on this question. The committee found itself in
unanimous agreement that faced with this uncertainty, the nation
should develop sufficient capability to allow it to be able to respond
flexibly to whatever opportunities develop in the future. That is,
the United States should move from a position of not being able to
accommodate large bulk carriers on the Atlantic or Gulf Coasts and
limited capabilities to handle medium-size vessels to one where it has
expanded capabilities.
Specifically, it is the committee's conclusion that there should be
a capability to handle large bulk carriers on each of the nation's
coasts. In present circumstances, that capability could be minimal.
The committee can find no justification for the expenditure of federal
funds on all of the projects that have been proposed. Should local
ports determine it is to their advantage to underwrite the costs for
additional development, that is a judgment they should be allowed to
exercise .
Alternatively, a limited capacity to handle large bulk carriers on
each of the coasts and some expansion of the capacity to handle the
medium-size vessels, in the committee's judgment, is in the national
interest. In sum, the United States needs additional but limited
capability to assure that it will be able to capture the benefits that
may develop from being able to handle larger vessels in the future.
REFERENCES
Cargo Systems Research Consultants (1982), Large Dry Bulk Carriers -
Employment Prospects in the Eighties (Worchester Park, England,
Cargo Systems Research Consultants).
Cushing, C. R. (1984), "The Ships of Tomorrow," Cargo Systems, 11:
32-37.
Energy Information Administration (1983), Port Deepening and User Fees:
Impact on U.S. Coal Exports (Washington, D.C.: Government Printing
Office).
General Accounting Office (1983), Prospects for Long-Term Steam Coal
Exports to European and Pacific Rim Markets (Washington, D.C.:
Government Printing Office).
Graves, S. C., M. Horwitch, and E. H. Bowman (1984), "Deep-Draft
Dredging of U.S. Coal Ports: A Cost-Benefit Analysis," Policy
Sciences, 17: 153-178.
H. P. Drewry (1982), Shipping Statistics and Economics (London: H. P.
Drewry (Shipping Consultants), Ltd.~.
OCR for page 39
39
H. P. Drewry (1981), Governments and Dry Bulk Shipping (London: H. P
Drewry (Shipping Consultants), Ltd.).
MARDATA, Inc. (1984), Survey of World Fleet prepared for Committee on
National Dredging Issues, Stamford, Connecticut, Maritime Data
Network, Ltd.
Maritime Transport Committee (1984), ~ (Paris:
.
Organisation for Economic Cooperation and Development).
Office of Technology Assessment (1983), An Assessment of Maritime Trade
and Technology (Washington, D.C.: Government Printing Office).
Poten and Partners (1983), "Evaluation of a Port Improvement Project
from the Perspective of a Shipowner," Prepared for the Committee on
National Dredging Issues.
Schonknecht, R. et al. (1983), Ships and Shipping of Tomorrow
(Centreville, Md.: Cornell Maritime Press).
Tozzoli, A. J. and S. Frank (1984), "Federal Channel and Related
Development in New York Harbor, n Testimony presented to
Subcommittees on Energy and Water Development and Senate Committees
on Appropriations, U.S. Congress, April 2, 1984.
Representative terms from entire chapter:
port capacity
