Facility upgrades at The Port of New Orleans — particularly the arrival of two giant blue cranes earlier this year — have positioned the port to capture its share of the expected swell in container cargo after the 2015 opening of an expanded Panama Canal.
But port officials said there is still more that can be done — including pursuing private investment in the port’s container terminal — to help it take a bigger bite of the 5 million additional containers expected to come into the Gulf of Mexico by 2025.
“We think we have a reasonable chance at 30 to 40 percent of that,” said Gary LaGrange, the port’s president and chief executive officer. “That would be our goal. Quite honestly, if we got 20 percent of it, that would be excellent.”
The port recently spent $36 million on two new gantry cranes and a 4.5-acre marshalling yard that expanded its container-handling area to 115 acres. The site is anchored by the Napoleon Avenue Container Yard, completed in 2004. The port can now handle 640,000 20-foot equivalent units in container cargo per year.
But the port estimates another $478 million in upgrades will be necessary to help boost that capability to 1.5 million TEUs per year for when the Panama Canal opens its wider, longer and deeper locks in 2015.
When that $5 billion expansion is complete, the canal will be able to handle the passage of ships as large as 13,000 20-foot equivalent units, compared with 5,000 TEU-sized vessels today, LaGrange said.
LaGrange said three separate studies have indicated most of the increase in container traffic will go to the East Coast — Baltimore, New York and Virginia — but he said the influx of more container cargo into the Gulf will translate to an annual growth rate of about 7 percent a year between 2015 and 2025.
In the Gulf, Houston is the proverbial 800-pound gorilla when it comes to container cargo. Containers need to get to consumers quickly and tend to head for population centers, port spokesman Matt Gresham said. The Port of Houston and its 6 million-strong population base take in an average of about 2 million TEUs per year.
The Port of New Orleans, on the other hand, is primarily a through-put, break-bulk operation, taking in commodities including steel, rubber, grain, soybeans and petrochemicals, with 80 percent of the cargo passing through to other destinations.
But its container cargo business has been growing in recent years. The port handled 476,000 TEUs of container cargo in 2011, about twice what it did in 2009.
But LaGrange said the port will soon hire a firm to determine the current and potential value of the container terminal to attract outside investment. That possibly could be a shipping line, stevedoring firm or financing entity that could take an equity position in an upgraded terminal and take a share of the revenue.
“We know the challenges in securing state funding and federal funding at this point,” Gresham said.
The port is gearing up for a $26.1 million upgrade of its intermodal railyard next to the Napoleon Avenue terminal. The project should increase its capacity with a more efficient layout and set the stage for another 10.5-acre yard that would add 65,000 TEUs of container capacity.
When the port installed its two new gantry cranes at about $14 million each, that brought its total number of cranes to six. LaGrange said the port would like to bring in another four cranes in the coming years and add two 1,000-foot berths to unload more than the two to three container ships it can unload at once now.
Norman Romagosa, of Metairie-based Diversified Foods, said the canal expansion does indeed promise to put more container traffic up for grabs, though he noted Houston is “light years” ahead of other ports in terms of readiness.
He said New Orleans has done an admirable job of bolstering its container operations, though he noted all the Gulf ports have.
Romagosa, who spent 27 years in the shipping business before entering the import/export business eight years ago, said the key is building up the manufacturing base in the city and across the region.
“If the freight is on the dock, the ship is coming to get it,” he said. “That’s what I’ve always preached.”
While there is some manufacturing in and around New Orleans, “we need much more of it.”
“That’s something the port has never had much success getting … support from the state or the city,” he said. “It’s almost like sometimes they’re working in different directions. But that’s what we need: The actual industry that is going to produce the freight for export or consume the freight for import.
“In terms of industry, we’ve got a long way to go compared to Houston and even Mobile,” noting the latter has automobile manufacturing plants and the Airbus jetliner assembly line. “That’s the kind of thing Louisiana has always been lacking in.”
The port did complete a $40.3 million cold storage facility at the Henry Clay Avenue Wharf in July for New Orleans Cold Storage to flash-freeze beef, pork and poultry for export. The project, necessitated by the closure of the Mississippi River-Gulf Outlet, was made possible by $23.5 million in block grants through the state’s Office of Community Development.
Another issue that typically comes up when discussing the expanded Panama Canal is channel depth at ports. A number of domestic ports and shipping associations have begun to push for more dredging to allow waterways to take in bigger and bigger ships. A channel of at least 50 feet is the goal, with only Baltimore and Norfolk, Va., ports able to boast that depth. However, a call to arms has been met with skepticism by some analysts.
LaGrange said the Port of New Orleans supports a bill introduced by U.S. Rep. Cedric Richmond that would deepen the Mississippi River channel to 50 feet from its mouth to Baton Rouge. However, Gresham said that effort is less connected to the surge in container traffic from the expanded Panama Canal than getting more traditional bulk cargo up the river.
The mega-container ships carrying cargo through the Panama Canal couldn’t get any farther up the Mississippi River than New Orleans anyway because of the downtown bridges, LaGrange said. He noted New York faces a similar problem and is spending $2 billion to elevate the Bayonne Bridge.
LaGrange said most of the container traffic on the supersized post-Panamax vessels is headed overseas. Therefore, it is common for container vessels to have the cargo broken down and put onto smaller feeder ships in Jamaica, Mananillo, the Bahamas or the Dominican Republic. It is those smaller container ships New Orleans will be targeting for cargo.
The real reason to add another five feet of depth to the river, LaGrange and Gresham said, is for the tankers and bulk ships supporting the agriculture and petrochemical industries to allow them to carry larger loads.
“That makes us very, very competitive when you talk about ships carrying coal, grain, soybeans and petrochemicals,” Gresham said. “One foot of draft is worth a lot to a shipping company. And when the margins are so small … it’s a huge competitive advantage for the Mississippi River.”
LaGrange said if any Gulf port should have a 50-foot channel, it should be New Orleans. A deeper channel from New Orleans to Baton Rouge would benefit the Port of South Louisiana near LaPlace, the Port of Greater Baton Rouge and the ports in St. Bernard and Plaquemines and as well, he said.
“It sure would be the logical and the most economical because you have five ports benefitting instead of one,” he said. “At the end of the day, if you take Baton Rouge and all the other (Louisiana ports combined), that’s the largest port in the world.”
LaGrange said Houston has pipelines that would make a deeper channel difficult; Mobile and Gulfport, Ala., have environmental issues; and Tampa, Fla., has an impediment in the Sunshine Skyway bridge.
“There’s only one place you could do it realistically on the Gulf and that would be New Orleans,” he said.
LaGrange pointed out The Port of New Orleans is the gateway to a 14,500-mile inland waterway system and 62 percent of the consumers in the United States. It provides access to the Mississippi River and its tributaries, with entry into 33 states and three Canadian provinces and cities such as Pittsburgh; Chicago; Little Rock, Ark.; Tulsa, Okla.; Memphis and Nashville, Tenn.; St. Louis; Cincinnati; and Kansas City, Mo.
“It would be a huge competitive advantage,” Gresham said. “We’d be the only port in the whole Gulf region that would be 50 feet. Other ports in the Gulf have a lot more limitations than we do.”