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Panama Canal expansion could mean little for Port of Tampa

Port of Tampa officials hope a bigger Panama Canal will bring more container ships like this one at the port on Monday.

SKIP O’ROURKE | Times

Port of Tampa officials hope a bigger Panama Canal will bring more container ships like this one at the port on Monday.

Between talk of panhandlers and permitting this spring, candidates for Tampa's mayor harped on two less familiar topics: the port and the Panama Canal.

Last week, new Mayor Bob Buckhorn flew to Panama City on his first official foreign trip. His itinerary included briefings about the ongoing project to widen the canal.

Buckhorn has pledged to help the Port of Tampa get a cut of the increased amount of container cargo expected to flow through the canal when the $5 billion-plus expansion is completed as soon as 2014.

"We've got to be competitive," Buckhorn said.

Big East Coast ports are scrambling to get ready for huge vessels that will fit through the canal for the first time.

The Port of New York and New Jersey is spending $3.1 billion in improvements to deepen shipping channels and upgrade rail and road access. In Florida, Gov. Rick Scott pledged $77 million to dredge the Port of Miami to 50 feet so the bigger ships can pull up to its docks.

Where does that leave Tampa?

"I'm concerned," port director Richard Wainio told the Tampa Bay Business Journal, "that some people think there's a pot of gold" from the canal expansion.

Some ports might indeed hit it big. But interviews with multiple port and shipping authorities make one thing clear.

It won't be Tampa.

• • •

The canal project is primarily about increasing its capacity to handle containers shipped from Asia to the U.S. East Coast. The steel boxes carry most cargo that isn't some kind of liquid (like oil) or dry bulk product (like grain or crushed rock). Consumer electronics, furniture and even privately owned cars are shipped in containers.

And when it comes to container cargo, the Port of Tampa is strictly minor league.

It ranked 48th among North American container ports in 2009. Bigger ships that will transit the widened canal draw too much water to get through Tampa's 43-foot-deep shipping channel. Even if they could, Tampa handles too little container cargo to justify it.

"We're a nascent container port," Wainio said. "We're not on the scale of a Miami or (Fort Lauderdale's) Port Everglades."

Miami and Port Everglades each handle 16 times Tampa's container volume.

Bulk products, mostly gasoline and chemicals coming in and phosphate fertilizer going out, dominate Tampa's cargo business. The port didn't buy the towering cranes needed to rapidly load container ships until 2005.

Only one container shipping line with international reach calls on the port. Israeli-owned Zim American Integrated Services runs routes to South America, Mexico and its hub in Jamaica.

But the canal expansion still creates opportunities to boost Tampa's container business, said Wainio, who grew up in the Panama Canal Zone and worked as an economic forecaster for the Panama Canal Commission.

Port marketers keep knocking on doors to recruit another major container shipping line. But it's tough to convince them to move into the gulf from traditional Florida routes along the East Coast, where ships can hit a string of big established container ports, Wainio said.

Ultimately, Tampa has a chicken-and-egg problem.

Shipping companies don't want to commit vessels to ports that might not generate enough cargo to make money. But small container ports can't get bigger without more shipping lines.

Take the example of Rooms To Go. The company runs distribution centers in Seffner and Lakeland that supply stores across the Florida peninsula with furniture made in China and elsewhere in Southeast Asia.

Rooms to Go moves 250 to 300 containers on the once-a-week Zim ship. But that's just 20 percent of its container business traffic. The rest moves through ports in Jacksonville, Savannah, Ga., and Miami. All are busier container ports with more frequent ship service.

"Tampa has only one ship a week," said Ali Hoisen. vice president for international freight and merchandising at Rooms To Go. "I can't put all my eggs in one basket."

A year ago, Tampa teamed up with ports in Mobile and Houston to sell a three-stop route that would feed markets in the Southeast and south-central states. They drummed up interest for "The Gulf Coast Advantage," said Wade Elliott, the port's marketing director.

But no shipping company has signed up yet.

Tampa's port officials are playing smart by not shooting for business Central Florida can't support now, said Robert West, principal port strategist for the global engineering firm Worley­Parsons.

New York and Norfolk, Va., serve large enough populations to attract the biggest vessels, he says, but others are questionable.

"If you look along the U.S. East Coast, a lot of people are jumping up and down looking to see a line of these big ships," said West, who previously did consulting work for Tampa's port.

"People can only buy so many bicycles from China. Bigger ships don't mean more cargo. The demand is what the demand is."

Contact Steve Huettel at huettel@sptimes.com or (813) 226-3384.

A bigger and better Panama Canal

Started in 2007, the Panama Canal expansion will double the maximum size of container ships it can handle.

For the first time, container ships as big as 160 feet wide and requiring a depth of 50 feet when fully loaded will fit through the canal on trips between the Pacific and Atlantic oceans. They can carry as many as 12,600 containers.

New, wider locks at each end also will add capacity and speed up ship movements through the canal, like adding a highway lane.

Maritime experts debate whether the widened canal will steal away containers from ports along the U.S. West Coast.

About half the containers carrying goods from Asia and to the U.S. East Coast are unloaded in Los Angeles or Long Beach and travel the rest of the way by rail. That's more expensive but faster than cruising through the canal to such "load center'' ports as New York and Norfolk.

When bigger ships can go through the canal, experts say, shippers will gain economies of scale and make the "all-water'' option even cheaper. That would mean more business for East Coast ports.

But railroads like Union Pacific and Burlington Northern Santa Fe could respond by lowering prices to keep their container customers, said Paul Bingham of the transportation consulting firm Wilbur Smith Associates in Arlington, Va.

Either way, the canal will likely handle growing numbers of containers as long as American consumers keep buying flat-screen TVs and appliances from Asia, experts say.

Information from Bloomberg Business News was used in this report.

Panama Canal expansion could mean little for Port of Tampa 05/07/11 [Last modified: Monday, May 9, 2011 6:01pm]
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