(The following story by Aaron Nathans appeared on the News Journal website on March 7, 2010.)
PORT OF WILMINGTON — The folks at Dole are looking forward to the day when a deeper shipping channel on the Delaware River might allow them to bring in their fruit in bigger ships.
But first, they want their equipment to stop getting stuck in the mud in the yard, where the port still has not laid down pavement.
“It’s a quagmire,” said Stuart Jablon, the fruit importer’s Wilmington-based vice president for operations. The port also must find a way to keep the cranes from breaking, he said.
The long-delayed river dredging was advertised as an economic boon for ports along the river, a way to attract the big, lower-riding ships with imports from the Far East once the widened Panama Canal debuts in 2014.
Observers say the dredging alone will bring little new business, or jobs, to Wilmington without significant investments to expand facilities that are near capacity and upgrade aging facilities.
At best, a deeper channel is viewed as a step needed to keep current tenants of the port happy, setting the stage for possible future growth.
Dennis Rochford, president of the Maritime Exchange for the Delaware River and Bay, said deepening the channel from 40 feet to 45 feet will help ports along the river to be competitive with the other East Coast ports.
And with the Panama Canal improvements, and growing rail delays for shipments from Long Beach, Calif., Rochford said, maritime activity is expected to pick back up in the coming years.
“You’ve got to look forward to say, ‘Where do you want to be when the economy rebounds?’ ” Rochford said.
The 102.5-mile deepening project from Camden, N.J., to the Atlantic Ocean began Monday after the last court challenge from environmentalists was rebuffed.
The dredging is expected to cost $308 million, and take five to seven years.
The federal government is expected to pay 65 percent of the costs, and 35 percent would be borne by the Philadelphia Regional Ports Authority.
Pennsylvania is prepared to pay even more to reap the benefits of dredging.
That state has pledged $25 million toward the planning and permitting of an expansion project at the Port of Philadelphia, building a new terminal designed to receive additional container deliveries. The port authority and state will solicit private investors to construct the project, which is estimated to cost $400-500 million, said Bill McLaughlin, a port spokesman.
Port officials are confident they can at least double the port’s container traffic with the expansion, McLaughlin said.
The Norfolk Southern railroad has already built a new intermodal transfer facility to move containers onto railroad cars and trucks near the port, although it is not operational because of the economic downturn.
And the port is close to landing a big fish at its current terminal: Hyundai is negotiating to place an auto import and finishing facility there.
At the Port of Wilmington, meanwhile, the warehouses are nearly full, but there are no expansion plans, as the port deals with the problems of today.
The Diamond State Port Corp., which runs the port, has made $41.9 million in budget requests to Gov. Jack Markell, including $15 million for a new crane, and $6.3 million for repairs to berth pilings. Markell has placed $10 million in his proposed bond bill for the port to use as it sees fit.
“You look at our port today, it’s tired. It needs to be fixed. It needs to be paved, it needs the drainage, it needs to look like it’s 2010, not 1990,” said Alan Levin, chairman of the port’s board of directors and the state’s director of economic development.
Gene Bailey, executive director of the Port of Wilmington, said the deeper draft that a dredged channel will provide in the future would allow companies to take advantage of the port’s proximity to one-third of the nation’s consuming population.
As the Port of New York and New Jersey gets congested, shipping lines will begin looking at other nearby ports to use instead, he said.
“What Delaware will get out of this, as far as I’m concerned, is opportunity. Those vessels going up the river, I have an opportunity to bid on every one of those if they’re looking to change facilities,” Bailey said.
Bailey said he envisions private investors one day building a new berth on the Delaware River side of the port, which has all but one of its berths along the Christina River. There’s no more land, so the port is considering building on a dredge placement site or landfill adjoining the port.
But it takes a lot more than a deeper channel to make a port attractive to shipping lines, said Peter Talbot, vice president for operations and information technology at China Shipping Container Lines, which calls upon ports in New York, Norfolk, Savannah and Miami, as well as West Coast ports.
In addition to storage space and equipment, shippers also need connections both major railroads, Norfolk Southern and CSX, Talbot said. Philadelphia has connections to both, but Wilmington only has Norfolk Southern.
And near Wilmington, Norfolk Southern operates on the Amtrak regional rail line, which has a wire above the tracks that makes it impossible for high-volume, double-stack trains to use the line, said Rudy Husband, spokesman for Norfolk Southern.
Talbot said the main question for shippers is whether it’s cheaper to get cargo to New York and New England by going through the New York port, or bypassing it for the longer trip to Delaware River ports. The additional time would mean added costs for the shippers, he said.
The port saw no reason to expand until it was sure dredging would proceed, Levin said.
Bailey said any expansion talk now is “back-of-the-napkin type of planning.” He declined to discuss any potential investors, although Rochford said there’s been interest.
Levin said the most important thing for the port is to keep the business it has now. That includes Dole and Chiquita, which make Wilmington the country’s top port for fresh fruit. The fruit shippers said they wanted a deeper shipping draft to bring the next generation of vessels to the port — someday.
A 2008 Army Corps of Engineers study showed oil shippers would be the primary beneficiary of dredging, since the tankers make up more than half the traffic on the Delaware, heading to the refineries that supply 7 percent of this country’s petroleum needs. A distant second would be the refrigerated meat facilities at the Port of Philadelphia.
But additional tanker business does not translate into job growth.
“If you look at an oil terminal, not too many people work there,” said Asaf Ashar, research professor at the National Ports and Waterways Institute, which is based in New Orleans. “It’s hard for me to believe lowering the cost to big vessels will justify the investment in dredging.”
The Army Corps study made no claim that dredging would help Delaware River ports win over business from other East Coast ports, nor did it spell out the number of jobs that could be created. In summer 2008, William Keller, a Pennsylvania state representative from Philadelphia, contended the dredging would create 45,000 jobs at the river’s ports.
The U.S. Government Accountability Office is expected to file an updated report in the coming weeks on the dredging project’s economic costs and benefits.
Levin said the biggest area for growth in Delaware could be in auto shipping.
When Fisker Automotive is up and running at the Boxwood Road plant, there will be products to export, he said. They can use the auto berth that was built several years ago for Volkswagen, which left the port last year to consolidate its operations in Rhode Island. The berth is mainly now used by AutoPort, a small automobile shipper and retrofitter.
Bailey said AutoPort has plenty of parking space to lease to automobile companies outside the port.
Jablon, of Dole, said the company had no plans to leave Wilmington even if the dredging did not get completed, but it opens up the opportunity to bring more cargo ashore.
“We like Wilmington. The port is a good location for us,” and Dole enjoys good relations with organized labor, he said.
As for this budget year, if the port gets all $10 million, Levin said, it will look to either lease a crane or buy a used one. About $3 million would go toward a repaving and drainage project, which would address Dole’s concerns, in addition to the $2 million per year subsidy it takes to keep the port operating.
Levin noted that even amid the recession, in fiscal 2009, overall tonnage at the port, including petroleum and forest products, tropical fruit and juice concentrates, was up roughly 350,000 tons over the previous year. The port still ran an operating loss of $2.4 million, but that was better than the $4.8 million it lost in 2008.
“I think we still have the best work force. We clean up what we have there and make it right, there won’t be any reason to go any further north,” Levin said.