Tuesday, June 12, 2012

East Coast Gateways Continue Expansion

By Jim Shaw

Looking at a slow but steady economic recovery, and the potential for more cargo following the enlargement of the Panama Canal, East Coast ports from the Great Lakes to the tip of Florida are modernizing and expanding facilities. They are also going green, with the Massachusetts Port Authority recently joining the Port Authority of New York & New Jersey and the South Carolina Ports Authority in implementing a Clean-Truck program. In addition, the development of offshore wind power is drawing attention and the South Jersey Port Corporation has started construction of a new terminal that will specifically target this emerging market. In the north, a resurgent US auto manufacturing industry and purchases by China are driving up demand for iron ore, a trend that is seeing substantial mining activity taking place along the Mesabi Range and in Eastern Canada. This has already generated expansion plans at Quebec’s Port of Sept-Îles and the possibility of new construction at Sault Ste. Marie, Ontario.

At the same time, US ports are gearing up for the larger size of “Panamax” ships that will be allowed by bigger locks at the Panama Canal. This has seen a number of harbor deepening initiatives launched as well as the expansion of docking facilities. It has also seen the Port of New York & New Jersey launch a billion-dollar project to raise the Bayonne Bridge while the Port of Miami is tunneling under its main navigation channel at a similar cost. It remains to be seen how much extra business the enlarged Canal will generate for these efforts but most East Coast gateways feel some West Coast traffic can be diverted.

Great Lakes St. Lawrence Recovery
Although few containers are funneled in and out of the Great Lakes, cargo shipments along the Great Lakes St. Lawrence Seaway totaled over 37.5 million tons in 2011, a modest upswing from 2010. This year marks the Seaway’s 54th shipping season and the St. Lawrence Seaway Management Corporation expects about 38.6 million tons of cargo to be moved. This would represent a near 3 percent increase over last year, with coal exports expected to account for most of the additional tonnage. Exports of coal have been boosted by producers in the Rocky Mountains region sending coal by rail to Lake Superior ports where the commodity is loaded on to Lake freighters for transportation to deepwater ports on the lower St. Lawrence. From there the coal is transshipped to ocean-going vessels for movement to Europe and Asia. Ore cargoes on the Lakes and along the St. Lawrence have been up recently because of additional purchases by China as well as a resurgent US auto manufacturing sector.

“The mood in the industry is that we are moving in the right direction,” said Glen Nekvasil, vice president of the Lake Carriers’ Association (LCA), a trade group representing 17 US lines active on the Lakes. “We have seen iron ore and limestone rebound and in the case of iron ore, it has rebounded very nicely.” Nekvasil added that shipments handled by the Association’s member vessels were about 27 percent ahead of the 5-year average through this year’s first quarter.

Ore Rebounds
Several mining projects currently being developed in the Great Lakes region and along the lower St. Lawrence are expected to continue boosting iron ore movements. India’s Essar group plans to open new capacity at its iron ore pellet plant in Minnesota later this year, which will increase total output capacity to around 7 million tons annually. Most of this production will be sent to the group’s Essar Steel Algoma plant in Canada but about 1 million tons will be available for disposal on the open market. Another international firm, Luxembourg-based ArcelorMittal, plans to invest over $2 billion to expand its iron ore facilities at Mont-Wright, Quebec in order to produce 24 million tons of iron ore concentrate annually. This will be a major increase over the 14 million tons the facility currently produces.

As the world’s largest steel producer, ArcelorMittal has already acquired considerable assets in Canada, including the former Dofasco steel-making facilities in Hamilton, Ontario and the Baffinland Iron Mines Corporation operations in Nunavut. US-based Cliffs Natural Resources also has its eyes on expansion after acquiring the former Consolidated Thompson Bloom Lake iron-ore operations in eastern Canada for $4.9 billion last year.

Bloom Mine to Bloom
The Bloom Lake mine, in which China’s Wuhan Iron and Steel Group is an investor, shipped its first concentrate in mid-2010 and is expected to reach its targeted production rate of 8 million tons annually by the end of this year. However, Cliffs Natural Resources CEO Joseph Carrabba said feasibility studies are now being undertaken to see if it would be worthwhile to expand the mine’s iron-ore production to 24 million tons per year. If so, Cliffs will invest around $600 million in the project, which could be completed by as early as 2016. Construction is already underway at the site to boost production to 16 million tons per year over the next two years, with first-phase expansion expected to be completed by the second-half of next year.

The expansion is considered “strategic” as the Bloom Lake mine is located about 20 miles from Cliffs’ existing operations at Wabush, Canada where a 5.6 million ton per annum iron-ore pellet operation with integrated rail and port infrastructure is already in place. The company believes the existing rail and terminal network there will support the Bloom increase to 24 million tons, although some infrastructure enhancement will be required. The rapid growth of ore production in eastern Canada has already pressured the Canadian government to invest in new facilities at Quebec’s Port of Sept-Îles, where ore producer MillenniumTata plans to construct a $1 billion pelletizing plant.

NY&NJ: Higher Bridge, Deeper Channel
South of the St. Lawrence, in New York state, the Port Authority of New York and New Jersey (NY&NJ) plans to spend $345.9 million on seaport projects and another $15.2 million on work related to the planned elevation of the Bayonne Bridge this year as it works to expand and modernize facilities.

The largest amount of spending, $87.4 million, will go for the development of the Global Terminal on the Port Jersey Peninsula in Bayonne and Jersey City where additional money will be spent to improve intermodal rail and road connections to the 98-acre cargo facility. The second-largest capital project will see $58.3 million spent on the development of a new rail ramp at the Greenville freight yards, which the authority acquired in 2010. Another $36.3 million will go to funding capital projects at the New York Container Terminal on Staten Island, which will require approximately $30 million in dredging, while $12.4 million will be spent to revive portions of the aging Brooklyn Marine Terminal in Brooklyn.

The two major long-term projects for NY&NJ will be raising the Bayonne Bridge and deepening the harbor, with the Port Authority recently applying to the federal government for “fast-track” environmental permitting for the bridge-raising. This could shave six months off the billion-dollar project, which will raise the roadway to 215 feet to allow taller container ships to pass under, but would still mean that the raising will not be completed until 2016, two years after the Panama Canal enlargement.

New Port for New Jersey
In South New Jersey work is continuing on construction of the Paulsboro Marine Terminal, which is being sited across the Delaware River from the Philadelphia International Airport. The South Jersey Port Corporation (SJPC) and the Gloucester County Improvement Authority are developing the facility, largely on speculation, with the state providing approximately $200 million in funding. To date, about $70 million has been spent to clear the site, construct a shoreside retaining wall and raise the site elevation using some 300,000 cubic yards of fill material. Later this month bids will be advertised to construct the main wharf, which will be followed by new equipment purchases.
Kevin Castagnola, executive director and CEO of the SJPC, has stated that about $65 million in construction and equipment-supply contracts will be executed before the end of the year. When completed late next year the terminal will encompass a total of 190 acres and feature three berths designed for both breakbulk and project cargo handling. Castagnola said port officials have been talking to several potential tenants, including offshore wind farm developers, about using the new facility. He noted that eleven private offshore wind farm developers are already considering developing farms that would total more than 12,000 megawatts of capacity off New Jersey’s coast.

Georgia and South Carolina Duel
In the South Atlantic range the states of South Carolina and Georgia have been dueling for dredging funds and it appears that Georgia may have come up the winner. In mid-April the US Army Corps of Engineers, after a decade of research, reached the conclusion that the proposed $652 million deepening of the Savannah River shipping channel by five feet, from 42 feet to 47 feet, is economically viable, environmentally sustainable and is in the best interest of the country. According to Col. Jeff Hall, commander of the Corps’ Savannah District, the project, which has been given a benefit-to-cost ratio of 5.5 to 1, could be completed by the fourth quarter of 2016. The state of Georgia has already set aside $180 million for the job but the remaining$472 million will have to come from federal funds.

In addition, there are several groups in neighboring South Carolina who see the deepening of the river as a threat to that state’s Port of Charleston, which is also searching for dredging funds. Charleston harbor currently has a draft of 45 feet but port officials would like to see it deepened to 50 feet and South Carolina lawmakers have been considering a bond measure to get the work jump-started. Container volume at the South Carolina gateway during the first quarter of this year was the highest it’s been since the summer of 2009, registering a 7 percent jump – and a 12 percent jump in March alone.

More Lift in Florida
While South Carolina and Georgia duel to the north, Florida ports are laying track, deepening channels and adding new box handling capacity. Last year the Port of Jacksonville added two new Chinese-built container cranes to its Blount Island Marine Terminal at a cost of more than $10 million. This has brought the terminal’s container crane count up to eight, with the latest units standing 165 feet tall with a lifting capacity of 50 tons. In south Florida, Seaboard Marine has added two more Liebherr-built LMH400 mobile harbor cranes to its facility at the Port of Miami, each having an outreach of 148 feet and a maximum capacity of 115 short tons. The new machines are allowing Seaboard to handle boxes up to 13 across on container vessels as well as bulk products and breakbulk cargoes.

New cargo handling equipment is also being added to a 25-acre marine cargo terminal recently brought on line by SeaFreight Agencies at Port Everglades, Florida following the signing of a ten-year lease agreement. The facility is located within a 41-acre containerized cargo area opened at the port last year following a $12.3 million investment. The site will eventually be connected to an Intermodal Container Transfer Facility (ICTF) to be built near the port by the Florida East Coast Railway (FECR) at a cost of $72 million. The ICTF is due to become operational by the beginning of 2014 following completion of a required $53 million highway overpass.

Laying Track and Tunneling Under
The Port of Miami is also gaining additional intermodal rail capacity as the FECR completes construction of a 4.2-mile extension that will link the port to the railroad’s Hialeah switching yard and its mainline running north to Jacksonville. The new connection, being built at a cost of $22 million, will allow the FECR to transport port cargo, including containers, to northern Florida for interchange with trains moving to and from other parts of the nation. As the rail project nears completion the construction of a new tunnel to the port’s Dodge Island terminals is just getting started (see Pacific Maritime Magazine, March 2012).

Public concern over material disposal sites had delayed the project at the start of the year but trucks are now moving some 280,000 cubic yards of tunnel spoils from Watson Island to nearby Virginia Key under a $1 billion project being overseen by Miami Access Tunnel LLC (MAT). The tunneling, expected to be completed in 2015, will see two parallel highway tunnel bores constructed between Watson Island and Dodge Island big enough for heavy trucks but low enough to allow the port’s main navigation channel to be deepened, with the Corps of Engineers having a permit to widen the channel’s entrance by some 300 feet and deepen it by as much as 52 feet. Miami, which has four post-Panamax container cranes on order with China’s Shanghai Zhenhua Heavy Industries, moved in excess of 900,000 TEUs last year, ranking it No. 11 in the nation.