Federal money for Charleston port shows that the future relies on deeper water

A new generation of larger container ships demands deeper ports, and leaves other facing an uncertain future. Here, the container ship Hyundai Voyager is worked by three ship-to-shore cranes Wednesday, Aug 15, 2012 at the Georgia Ports Authority's Port of Savannah in Savannah, Ga.
A new generation of larger container ships demands deeper ports, and leaves other facing an uncertain future. Here, the container ship Hyundai Voyager is worked by three ship-to-shore cranes Wednesday, Aug 15, 2012 at the Georgia Ports Authority's Port of Savannah in Savannah, Ga. © Stephen Morton

It may be the most important seven feet in recent South Carolina history. These seven feet – of dirt, sand and a shellfish sediment called coquina – could very well be the difference between a bright shiny future for the state, and a cloudy, uncertain one.

When Congress recently approved the federal half of funding for deepening the Port of Charleston, and gave the green light for the Army Corps of Engineers to go ahead with the project, it was not simply a sign that the port could thrive in the future, but that it would survive.

The water must be deeper to load and unload a new generation of bigger ships. On June 26, the Panama Canal finished a decade-long expansion project that allows these bigger ships to pass through its locks. The size of the canal, for its first 102 years, set the standard for cargo ship size, the so-called Panamax size.

When the canal announced it was adding a wider, deeper channel, the neo-Panamax ship was born. Put the new ships in football terms: They are a field longer, and a couple of first downs wider.

The difference means the new ships can carry almost three times as many 20-foot-long shipping containers, 13,000 compared with 5,000. The industry expectation is that ships carrying 8,500 containers will be, as Port of Charleston President and CEO Jim Newsome noted, “the new workhorse.”

So, Rep. Mark Sanford, R-S.C., said that the meaning, on one level, was pretty simple: “It means bigger ships.”

But it’s more than that.

“There is a winnowing of ports coming with this,” Sanford said. “There will be fewer and fewer ports of call. This deepening project means that Charleston will be one of those. It means Charleston stays competitive in its ability to handle freight. It means the corresponding jobs that go with that will stay in South Carolina. The reality in shipping today is that it is us vs. other places, and this means it’s going to be us.”

The shipping industry is consolidating, sharing ships. The days of half-empty ships crossing the Pacific to reach the lucrative American market, or leaving the industrial southeastern United States half packed, are over.

Newsome said shipping companies are forming “mega-alliances,” and that represents “a significant game changer.”

“In the next decade, 80 percent of container ships will be bigger than the old Panamax size,” he said. “This project removes limitations in our being able to deal with them.”

It doesn’t necessarily mean other ports will fail. Newsome noted that shallower ports even today can deal with the deeper drafting ships, but only during high tides. The Port of Charleston this week was unloading an 8,500-container ship, before the deepening project. In April, a 13,000-container ship will pull into port.

As such, U.S. Sen. Lindsey Graham called the federal approval of the deepening project “monumental.” He said the legislation would save “time, money, and allow us to become the premier port on the East Coast.”

The Port of Charleston channel today is 45 feet deep at low tide in the inner harbor. A ship with an 8,500-container load needs 48 feet of water to avoid scraping the bottom. In addition, it should have four feet of clearance. So the deepening project will dredge the inner harbor, which is mostly soft sea bed, down to 52 feet. One potential issue: A ship loaded with 13,000 containers can require 49.9 feet of water, meaning the harbor would need to be deeper still. The port’s economic impact studies, though, indicate that the biggest economic benefit focuses on the handling ships needing 48 feet of water.

The outer harbor, where ships must deal with stronger waves, will be deepened from the current 47 feet to 54 feet. There, the Army Corps of Engineers will contract someone to cut through what is called coquina, a “consolidated” rock-like collection of shells.

“They can only sail in, or out, on high tide, though,” said Barbara Melvin, the port’s senior vice president for operations and terminals. “They have a three- or four-hour window in which to sail.”

In this new world of shipping, losing a full day of sailing because of the tide means a competitive disadvantage, so shipping companies and those who use them will look more and more to ports that can handle their cargo without tidal restrictions.

That doesn’t fall entirely on the federal approval of the channel deepening. South Carolina had already approved a 35 percent share of the $520 million deepening cost. Beyond that, the port is putting $1 billion into expansion and improvements in the next five years, and probably another billion in the following five years. That’s all to make sure the big ships can be loaded and unloaded quickly and safely, and get back to sea without delay.

“There are two categories of ports going forward: those who are deep enough and can invest enough to be a Top 10 port, and those who can’t,” Newsome said. “This development, of the bigger ships, is unprecedented in the industry. If your port can’t invest enough, it will be very difficult.”

Sanford said the obvious conclusion is that small commercial ports will struggle and many will vanish.

Ports such as Charleston, he noted, are national treasures.

That is a huge benefit to all of South Carolina. Consider a University of South Carolina Darla Moore School of Business study in 2015 that noted the port is responsible for 10 percent of the gross state product. The port’s impact increases the deeper into South Carolina you go. It’s responsible for one of every 12 jobs in the Midlands (total of 48,000), and one in every eight jobs upstate (total of 94,500).

As impressive as those numbers might seem, the numbers reflect reality before the deepening project.

Michelin North America operates out of South Carolina and is one of the largest customers of the Charleston harbor port. Pete Selleck, Michelin chairman and president, said: “It’s only seven feet, but those seven feet make a big difference to us.”

Selleck said that when Michelin decided to locate in South Carolina in the 1970s, the port was a big part of that decision. The company ships the equivalent of 41,000 20-foot containers each year, much of it in mining tires and the rubber they bring in from Asia to make them. He stopped short of saying the company would have had to relocate if the port hadn’t gotten approval for deepening, but not by much.

“If you can’t get your product out of the plant and to market, it doesn’t matter how good the product is,” he said.

Matthew Schofield: 202-383-6066, @mattschodcnews