American Institute of Marine Underwriters Mr. Scott Bergeron Chief Executive Officer, Liberian Registry Commissioner, Virginia Port Authority May 8, 2013 1
Existing Lock Dimensions vs. Expanded Lock Dimensions Existing Locks 4,400 TEUs 106 13 containers wide Post-Panamax Locks 12,600 TEUs 160 18 containers wide 110 180 22
Panama Canal Expansion 3
Panama Canal Expansion New locks will accommodate post-panamax vessels Economies of scale have dictated an upward trend in ship size Opening of new locks is predicted to alter current shipping routes More container freight from Asia is expected to be routed to U.S. East Coast ports Status of largest U.S. East Coast ports to handle post-panamax vessels 4
New York/ Jersey New York / New New Jersey Baltimore Baltimore The Port of Virginia Charleston Savannah Miami 5
NEW YORK-NEW JERSEY Current channel depths range from 37 feet to 45 feet Channel deepening program is on schedule for 50-foot channel to be complete by 2014 The Bayonne Bridge is too low for the biggest ships to access four of NY/NJ s terminals Anticipated completion of raising the Bayonne Bridge to 215 feet clearance is 2017. Cost $1B Limited space for expansion Highway congestion 45 Feet Current Depth 50 Feet 50 Feet Authorized Depth Proposed Depth 2014 2014 6
BALTIMORE Six hour trip up the Chesapeake Bay 50-foot channel Seagirt Marine Terminal operated by Ports America opened 50-foot depth berth in August 2012 The three other berths are at 45 feet, larger cranes needed Currently unable to access CSX s National Gateway project pending double-stack tunnel completion, expected date mid-2014 Limited space to expand capacity 50 Feet Current Depth 50 Feet Authorized Depth 50 Feet Proposed Depth 7
THE PORT OF VIRGINIA Current channel depth 50 feet, already authorized by USACE for 55 feet Naturally deep channels and inexpensive dredging maintenance Dual service rail; road/rail connections to major population centers 18 miles to the open ocean No air draft restrictions Capacity with lease of APM Terminal Available land to double capacity with Craney Island 50 Feet Current Depth 55 Feet 55 Feet Authorized Depth Proposed Depth 8
Future Craney Island Marine Terminal 99
Charleston, S.C. Channel depth is 45 feet. The port can handle ships that require a 48-foot draft; tidal restrictions. Plans to dredge deeper 155 air draft restriction Limited space to expand capacity Active anti-port-expansion community 45 Feet Current Depth 50 Feet Authorized Depth 2020 50 Feet Proposed Depth 10
PORT OF SAVANNAH Channel depth is 45 feet Approval to deepen to 47 feet Dredging has not begun Talmadge Bridge - 185 foot air draft restriction Expansion plans for Jasper Ocean Terminal are delayed 42 Feet Current Depth 47 Feet Authorized Depth 47 Feet Proposed Depth 11
PORT OF MIAMI Channel depth is 45 feet Approval to deepen to 50 feet by 2015 Tunnel project with connect port directly with I-395 and I-95 Difficult access to markets 42 Feet Current Depth 50 Feet Authorized Depth 50 Feet Proposed Depth 12
Current U. S. East Coast Competitive Port Water Depths JAX 38 ft 4,500 TEU NY/NJ Savannah 42 ft Miami Charleston 8,500 TEU 45 ft Baltimore Norfolk 50 ft 10,00 to 12,500+ TEU Norfolk 55 ft (authorized) Based on fully loaded vessel 1313
Chart for illustrative purposes only. Do not reproduce. Ocean Fairway Approach: Port of Virginia Off shore VA coastline Off-shore VA coastline Red: Depths less than 60 feet 1414
Ocean Fairway Approach: Port of Savannah Red: Depths less than 60 feet Chart for illustrative purposes only. Do not reproduce. 1515
Will East Coast Ports Significantly Benefit by The Expanded Panama Canal? 1616
No No significant delays/constrictions on the West Coast West Coast railroads will fight against eroding rail share Cargo diversion has already occurred West Coast ports will address costs aggressively Port of NY/NJ will be limited until completion of Bayonne Bridge raise in 2017 All-water transit times are too long East Coast labor uncertainties after 2018 Canal Pricing 1717
Yes 59% of U.S. population lives east of the Mississippi River Most low value exports ship from US East Coast East Coast ports traditionally have lower costs and higher productivity compared to West Coast ports Increase of transloading Global container fleet capacity has abundance of ships that need to be deployed Economies of scale for larger ships are realized on longer voyages Expiration of volume commitments for major West Coast rail contracts East Coast more reliable route for goods i.e. all water route and short truck/rail to delivery point 1818
Productivity and Fuel Cost Will Drive East Coast Growth As container ship size increases, improving turn-around times will be crucial 1980 largest container vessel was 2,800 teus 2006 7,100 teus 2013 Maersk EEE Class will be 18,000 teus Balance productivity with increased new vessel capacity coming on line Alphaliner current vs. ordered ship. Ordered capacity is greater than current fleet Average container vessels of 8,000 TEUs at normal speed requires 225 tons/day of bunker fuel x $612/ton = $137,700 per day per ship Maersk announcement regarding Panama Canal 19
U.S. East Coast Market Reach: 8000 TEU Vessel vs. 4000 TEU Vessel For a typical ASIA-USEC voyage, shifting to an 8000 TEU vessel expands the market reach of the USEC ports. This image cannot currently be display ed. Source: Worley Parsons 2020
8000 TEU Ship vs. 4000 TEU Ship The larger vessels are 30% less expensive per TEU Container shipping has always been about economy of scale Panama Canal and market forces restricted that scale for U.S. East Coast ports until now Shiplines are now routing large vessels destined for East Coast through the Suez Canal 2121
Global Container Fleet Capacity Alphaliner* projects that by the end of 2015, 52% of global container fleet capacity will be Post-Panamax vessels MSC Bruxelles calls at the Port of Virginia *Source: Alphaliner Monthly Monitor August 2012 Container ships within the 8,000 to 10,000 TEU range are already becoming the mainstays of U.S. East Coast trade routes 2222
Hub and Spoke Possibility for Larger Ship Ready Ports OCEAN SHIPPING TRANSSHIPMENT FEEDER SERVICE OFF-LOADING AT REGIONAL PORT ONWARD TRANSPORT TO FINAL DESTINATION Truck Feeder Port Rail Truck Feeder Port Feeder Port Rail Truck Rail INTERNATIONAL CONTAINER SHIP HUB PORT Feeder Port Truck Rail 23
In Conclusion The Port of Virginia sets East Coast deep draft loading mark at 48.5 feet with MSC Roma. Container ships continue to increase in size The expanded Panama Canal may divert cargo volumes from the West Coast Four East Coast ports will be ready to handle postpanamax ships by 2015: Baltimore (ready), Miami (2014), New York (2015) and Port of Virginia (ready). Larger ships are already calling the East Coast and not waiting for the Panama Canal expansion in 2015 2424
Thank You 25