Preparing for the New
Panama Canal
BG C. David Turner
Commander, U.S. Army Corps of Engineers,
South Atlantic Division
Georgia Foreign Trade Conference
2 February 2015
US Army Corps of Engineers
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The 20th Century “Golden Age” of
Infrastructure Construction
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CW’s Economic Benefits & Revenues to Treasury
(2010-2012 Average)
Each dollar spent on the USACE Civil Works program generated
~ $16 in economic benefits and $5 in revenues to the U.S. Treasury.
Program
NED Benefits
(Billions of Dollars)
Net NED Benefits
(Billions of Dollars)
U.S. Treasury
Revenues
(Billions of Dollars)
Flood Risk Management
$59.47
$58.84
$18.90
Coastal Navigation
$9.47
$8.70
$3.70
Inland Navigation
$8.10
$7.51
$2.07
Water Supply
$7.00
$6.98
$0.09
Hydropower
$2.30
$2.11
$1.37
Recreation
$3.20
$2.91
$1.13
$0.03
$89.54
$87.05
$27.29
Leases and Sales
Total Annual NED
Notes:
(1) Net NED benefits are defined as NED benefits less the costs of operations, maintenance, and investigations. Since
the costs associated with expenses and oversight by the Assistant Secretary of the Army (ASA) serve all Corps
programs, including those we did not calculate benefits for in this report, this report does not account for those
costs.".
(2)
The Benefits and Revenues numbers are not additive.
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What’s Happening to Our
Infrastructure Value?
• Much of USACE’s water infrastructure was built between
1930 and 1982.
• Many structures have reached or exceeded their design
life.
• The estimated peak value of USACE infrastructure was
about $237 billion (in 2011 dollars) in 1982 and has
fallen, due to natural degradation, to about $164 billion in
2011, a decline of almost 31 percent (USACE 2012).
• Meanwhile, operating demands on USACE’s
infrastructure have grown and changed dramatically over
the last 30 years.
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Patterns in Global Spending on
Infrastructure
As a fraction of GDP, the U.S. lags other
Developed Nations in Infrastructure Investment
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What is at Risk?
Potential Impact on“Public Benefits”
• Missed opportunities for:
• Additional job creation
• National and regional economic growth
• Improved intermodal freight transportation
logistics & reduced consumer prices
• Increased exports and imports
• Reduced flood vulnerability to life & property
• Improved hydro-electric energy generation
• Flexible provision of water supply
• Enhanced fish and wildlife habitat
& restored wetlands
• Sustaining the availability of outdoor recreation
USACE Capital Stock presently yields
$48.8 BILLION PER YEAR in realized
NED benefits!
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• Reduced contributions to legacy U.S.:
• Standard of living
• Economic prosperity
• Quality of life
• Environmental health
• National security and defense
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What is Needed?
$6.7
Billion
$5.7
Billion
$5.7
Billion
$29.3
Billion
U.S. Chamber of Commerce
Estimates of Waterborne Transportation Needs
for 2013-2030
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Transforming the Future with
Echoes of the Past
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Source: Panama Canal Authority (ACP)
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Trends
• Population and
incomes are growing
worldwide and within
the U.S.
• Trade follow growth in
population and
income. It has
increased 100-fold
since 1950
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U.S. Population Growth Expected to
Be Greatest in the South and West
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U.S.Trade to More than Double
2008 - 2028
Millions of TEUs
70
60
50
40
30
20
10
0
2008
2010
2012
2014 2016
Imports
2018
2020 2022
Exports
2024
2026
2028
Total
Source: I H S G I World Trade Service
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“Megaship” Fleet on the Rise
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Ever Larger Containerships
Driving Need for Ever Larger Channels
Pre-1970
1,700 TEU
<10
Containers
Wide
1970-1980
1985
1986-2000
2000-2005
2,305 TEU
3,220 TEU
4,848 TEU
8,600+ TEU
10-11
Containers
Wide
11-13
Containers
Wide
13-17
Containers
Wide
17-22
Containers
Wide
SEA
LEVEL
<30’
33’
38’-42’
42’-46’
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> 46’
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Prime Candidates for Deepening
• Ports along the U.S. Southeast and Gulf Coast (where
population growth is expected) are likely candidates for
investment to deepen to be “post-Panamax” or “cascade”
ready.
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And Inland from the Coasts …
• Inland waterways need to be maintained (both channel depth and
reliability) to service opportunities for growth in agricultural exports.
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Total 2009 U.S. Internal Traffic by
Commodity (short tons)
Source: USACE Institute for Water Resources, Waterborne Commerce
Statistics Center
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U.S. Harbor Deepening Challenges
• Study Process: Difficult and lengthy from
study to authorization
• Funding: Federal appropriation process
uncertainties
• Dredging: Escalating costs, placement,
environmental mitigation
• Handling Facilities and Space: Need
expanded cargo handling facilities and
improved intermodal connections
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for
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Environmental Impacts
• The navigation system and port expansion
have environmental impacts. Negative
impacts must be mitigated. If not fully
mitigated, impacts could include:
• Degraded air and water quality that
threatens human health and safety,
especially of low income and minority
groups;
• Loss of important natural and cultural
heritage found in parks, refuges,
wetlands and scarce species; and
• Loss of recreation, commercial and other
economically important resources.
• Those mitigation costs can be significant
and will play an important role in
investment decisions.
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(Zebra Mussels)
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Conclusions
• Despite uncertainty in market responses
to deployment of post-Panamax vessels
and expansion of the Panama Canal,
investment opportunities for port
expansion can be identified using
established decision making under
uncertainty techniques.
• Adaptive management techniques can be
used to address uncertainty issues.
• Preliminary estimates indicate the total
investment opportunities may be in the
$3-$5 billion range.
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Funding: The Primary Challenge
• The primary challenge with the current
process to deliver navigation improvements
is to ensure adequate and timely funding to
take advantage of potential opportunities.
• The Report to Congress presents a
notional list of financing options to
initiate discussion of possible paths.
• A variety of options may be desirable,
and in all cases individual project
characteristics, including economic
merits, would need to be considered in
selecting optimal financing
mechanisms.
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Savannah Harbor Expansion
Project
NAVIGATION FEATURES
MITIGATION FEATURES
Entrance Channel Dredging
Environmental Monitoring
Inner Harbor Dredging
Dissolved Oxygen Injection System
Kings Island Turning Basin
CSS Georgia Recovery
Raw Water Storage Impoundment
Disposal Area 14A Dike Raising
Striped Bass Stocking Payment
After Dredging Dike Raising
USCG Navigation Aids
Fish Passage
1S Marsh Restoration
McCoy’s Cut Area Work
SHEP: $706M Value
Sediment Basin Area Work
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Brunswick Harbor O&M
Non-Critical Shoaling
Authorized/not dredged
Critical Shoaling
ODMDS
CRITICAL SHOALING:
Controlling Depth: -27 feet mllw (before we started dredging this year)
FY15 funds ($3.8M) allow for dredging approximately 30% of entrance channel only
FY 15 funds will deepen to -34 feet mllw
Average Annual shoaling 1.2 MCY – Current Shoaling 3.9MCY
GPA contributed $3M for second year in a row, getting harbor down to -36 feet mllw
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Questions/
Comments
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