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May16, 2016

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26 THE JOURNAL OF COMMERCE www.joc.com MAY 16.2016 TOP 25 NORTH AMERICAN PORTS SPECIAL REPORT FOOTING MORE FOR DREDGING THE OUTLOOK FOR federal funding of major U.S. port-deepening projects this year and over the longer term is very much up in the air. President Obama's 2017 budget proposal cut the targeted amount to $1.1 billion for federal spending on port construction projects that the U.S. Army Corps of Engineers will undertake in the fiscal year starting Oct. 1, funding some ongoing projects but leaving other proposed projects out. Both houses of Congress already have moved to make up for the port funding shortfall in the Obama budget, as they have in past years. Still, state governments, which have allocated substantial amounts to ports within their borders in recent years as a spur to economic development, likely will have to ramp up their spending. "Transportation is not a priority for the administration," said Walter Kemmsies, managing director, economist and chief strategist for Jones, Lang LaSalle's U.S. Ports, Airports, and Global Infrastructure Group. "The ports will have to turn to state governments to get the funding, and it's worth it because the ports generate a positive eco- nomic return." The Savannah Harbor Expansion project, which is deepening the port's 39-mile river channel from 42 feet to 47 feet, is a prime exam- ple of the shortfall in port funding. The Obama budget proposal for 2017 includes more than $42 million in federal funding for the project, but that's less than half of the $90 million Georgia state officials say they'll need to keep it on track. Concurrent $6 billion bills advanced in the Senate and House in late April, both of which surpass previous years' appropriation levels, President Obama's budget request for fiscal 2017 and appropriations targets outlined in the Water Resources Reform and Development Act of 2014. Both bills are an increase of roughly $11 million above the funds enacted for fiscal 2016, as well as nearly $1.4 million above the president's budget request. Obama's fiscal 2017 budget requested a record $951 million for maintaining the country's deep-draft harbors, but it was still 22 per- cent less than the $1.2 billion appropriated by Congress for fiscal 2016. The budget request for the corps' coastal navigation construction program is also significantly less than the congressionally approved fiscal 2016 budget. The president proposed $4.6 billion for the corps' civil works pro- gram, a 29.8 percent cut from the roughly $6 billion appropriation for the fiscal 2016 program. It also would provide $1.1 billion for the corps' con- struction account, a 41.5 percent reduction from the fiscal 2016 budget. The corps pointed out that it was able to get more money allo- cated for fiscal 2016 through discretionary funds, boosting the year's sum from $20 million to $45 million. Congress in December approved approximately $1.2 billion to send to ports and $2.6 billion for Army Corps coastal navigation projects and studies for fiscal 2016, which ends Sept. 30. The increase to the Harbor Maintenance Trust Fund and Army Corps coastal navigation projects and studies is 7.1 percent more than the $1.1 billion approved by Congress a year earlier. Although the Savannah River deepening project will require at least $80 million to $100 million a year to be completed on time, the recent budget short- fall doesn't mean the project schedule will have to be reca- librated, the Army Corps said. For fiscal 2016, the corps noted, it was able to get more money allocated through discretionary funds, boost- ing the year's sum from $20 million to $45 million. The state of Georgia already has committed its entire $266 million share of the harbor project upfront, and that money has essentially been spent, making federal funding critical for avoid- ing future delays, according to Georgia Gov. Nathan Deal. The Georgia Ports Authority is advancing its 50 percent share, more than $300 million, to accelerate the Army Corps' dredging work, but that project received just $21 million from Congress in the current fiscal year. The project has received all required state and federal permits. The GPA said it remains confident the project will stay on sched- ule. Still, Georgia state officials say the president's proposal "will result in delays and threaten to increase the cost." Over the longer term, a shortfall in federal funding over the next five years could delay completion of several major East Coast port- deepening projects, according to a recent survey by the American Association of Port Authorities. U.S. port authorities expect federal funding to fall nearly $130 billion short of the necessary investment in land- and waterside infrastructure over the next five years, according to the survey. By 2020, they expect a $15.8 billion investment gap between annual federal funding on goods movement infrastructure and what's needed to maintain the current system, the AAPA said, citing figures from the American Society of Civil Engineers. — Peter T. Leach "Transportation is not a priority for the administration." The APM terminal is expanding its annual container capacity under Phase 2 to 500,000 to 600,000 TEUs from the cur- rent 350,000 TEUs. When demand builds, it plans to launch Phase 3, which will bring capacity up to 750,000 TEUs. Mobile will open a new intermodal container transfer facility in June near the APM terminal, which will operate it. APMT is importing secondhand gantry cranes from its overseas terminals for use at the rail ramp. The port plans to build a connector bridge that will make it an on- dock rail terminal at some point when demand warrants. The Port of Tampa, which has an operational depth of 43 feet, doesn't plan further deepening. "We are suited to serve the 8,600- to 9,000-TEU ships that will be coming through the canal," said Raul Alfonso, executive vice president and chief commercial officer of the Tampa Port Authority. "We're not targeting the 10,000- to 13,000-TEU ships." The port has acquired two new post- Panamax cranes that will be installed at Ports America's Hookers Point container

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