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SWUTC Research Project Description

Use of Containers to Carry Bulk and Breakbulk Commodities and Its Impact on Gulf Region Ports and International Trade

University:  University of New Orleans

Principal Investigator:
James Amdal
Gulf Coast Research Center for Evacuation and Transportation Resiliency
(504) 913-9159

Project Monitor:
Sharon Balfour
Louisiana Department of Transportation
Baton Rouge, LA

Funding Source:  USDOT

Total Project Cost: $60,000

Project Number: 600451-00105

Date Started: 11/1/12

Estimated Completion Date: 10/31/13

Project Summary

Project Abstract:
Since its introduction in the 1950s, the use of the container now represents roughly 90% of world trade. Its acceptance as the common denominator in international shipping is having profound impacts throughout the shipping industry: significantly larger vessels with 50’ minimum draft are routinely entering service (+12,500 TEU); terminals are being redesigned and reequipped to serve mega ships with up to 22 container rows across; more and more commodities are now being shipped by container; the sheer number of empties is presenting a new logistic challenge. Into this dynamic situation, particularly in the Gulf of Mexico, ports are confronting a changed world given the Expansion of the Panama Canal and the all water Asian service it provides. This project will affect ports not only the Gulf but on both coasts of the US, Canada, Central America, as well as Latin America. The significance of the Panama Canal Expansion cannot be overestimated however its individual and collective impact has yet to be determined. The proposed research project has several major concentrations: 1) determine the implications of all water Asian services to Gulf Coast ports: 2) determine how new bulk and breakbulk commodities can use containers as their primary transport mode: 3) determine what physical improvements, intermodal linkages and/or market incentives will be required to maximize the use of Louisiana ports for container exports. Successfully answering these three unknowns will have untold benefits for the United States as an export nation, the 26 states that use the Mississippi River and its tributaries for transportation arteries for their export commodities, and for the countless Gulf Coast ports that have potentially the most to gain from the new all water Asian services and the resultant growth in international trade.

Project Objectives:
The overall objective of this study is to assess the impact of all water Asian service to the ports along the US Gulf Coast due to the expansion of the Panama Canal, scheduled for completion in 2015, with an emphasis on ports in Louisiana. However, to put this specific expansion in context, UNOTI will investigate its ramifications on shipping services and coastal ports along both the East and West coasts of North, Central and South America as well as the Gulf ports. Impacts by port and by commodity will also be assessed based on historic performance and informed speculation to the year 2020.

Secondly, UNOTI will assess the impact of these new all water Asian services on export commodities and determine which exports can grow in LA ports and/or what measures must be taken in order for this growth to occur. This is of critical importance to the nation as a whole and more specifically the agricultural growers in states abutting the Mississippi River and its tributaries.

Proposed market-driven incentives will be “tested” by our Advisory Board for implementation. Recent history in LA has shown that well-meaning laws (Import/Export Tax Credit Program) are meaningless if they cannot be implemented. Having two of LA’s foremost economists as members of the Advisory Board as well as a Senator from LA will be extremely valuable as we investigate the feasibility of various incentive programs. Only those with a reasonable chance of success will be recommended.

Task Descriptions:
Task 1: Review Professional Literature
UNOTI intends to compile and review only relevant studies on the impact of all water Asian services made possible by the Panama Canal Expansion that have been recently conducted by recognized experts in international shipping. We also intend to conduct an exhaustive search of academic journals, industry publications and trade journals (TRB, Brookings, Global Insight, The Financial Times, The Economist, Port World, Journal of Commerce, Port Technology, Containerization International) from 2005 thru 2012. (July – August, 2012)

Task 2: Infrastructure Assessment and Project Timeline
UNOTI will compile a detailed list of specific infrastructure projects and associated project timelines for significant port enhancements along the coasts of North, Central and South American that ports are planning and/or building at their individual locations: terminal upgrades, access channel deepening, enhanced intermodal connections etc. in anticipation of the completion of the Panama Canal Expansion. This will enable the project team and our Advisory Board to establish a baseline of proposed infrastructure improvements that will impact international shipping. UNOTI will also assess these projects for their potential impact on US import and export trade with particular attention given to Gulf ports. We will also obtain from these same sources existing and projected container trade volumes by commodity for years 2010 thru 2020. The data will be organized by geographic locale as well as commodity and volume. For Gulf ports we will concentrate on Houston, New Orleans, Gulfport, Mobile and Tampa. For the State of LA, we will also compile data from the Port of Lake Charles, Port of South Louisiana and the Port of Greater Ouachita. In essence, this will enable the project team to define the what, the where, and the projected impact of significant infrastructure improvements being made in response to the Panama Canal Expansion. (September – November, 2012)

Task 3: Define New or Altered Trade Lanes and Projected Commodity Volumes
UNOTI will solicit from knowledgeable professionals directly involved in international trade their estimate of the impact of the new all water Asian route using the Panama Canal on selected US ports (LA Long Beach; Prince Rupert, BC; NY/NJ; Charleston, SC; Port of Virginia; Houston, TX; Port of New Orleans; Port of South Louisiana) and significant international port projects in the Americas. Primary import and export cargoes will be identified. We will utilize our pre-existing network of freight forwarders, shipping agents, terminal operators, marketing directors at selected ports, industry and transportation leaders as well as state and regional officials with Louisiana Economic Development, LA’s Department of Agriculture, LSU’s Ag Extension Program and the state growers associations as principal resources. Similar efforts will be made in other US Coastal states and states bordering the Mississippi River and its tributaries.
(November – December, 2012)

Task 4: Commodity Identification and Growth Projections
UNOTI will identify the commodities and anticipated volumes destined for export and/or may be subject to a modal shift at key LA ports (coastal, river and inland) or at other US Gulf Coast ports. Then a comparison can be made to the existing infrastructure available at these ports and identify gaps that need to be addressed (new rail or road connections, debottlenecking, new equipment required for transport, etc.) and the means available to meet these impediments. In particular, we would look at the unique challenges faced in New Orleans, the Port of South Louisiana, Lake Charles and the Port of Greater Ouachita.
(January – April, 2013)

Task 5: Propose Incentive Programs or State Inducements
UNOTI in collaboration with our Project Advisory Board will determine whether and if so, what specific incentives need to be established in Louisiana to enhance both trade with Asia and to entice export cargoes not using LA’s ports to reconsider their logistic decision. Existing incentive programs will be assessed and potential programs investigated for their impact and their likelihood for implementation. (May – September, 2013)

Task 6: Final Report
UNOTI will produce a Final Report with all baseline infrastructure assessments, support data, project timelines, trade flows and projected volumes by commodity thru 2020, proposed incentive programs and related implementation strategies. (October – December, 2013)

Implementation of Research Outcomes:

This research expanded the focus of another LTRC research effort, which reviewed the role of the Panama Canal Expansion (PCE) on the container trade along the Gulf Coast and on Lower Mississippi River (LMR) ports, to include the probable impacts of the PCE on the ports and industries along the Lower Mississippi River as well as along the Gulf Coast and its ports, particularly the Port of Houston Authority.  For Louisiana, traditional bulk cargoes in agriculture, energy and chemical will see the greatest increase in tonnage. Currently, largely due to the influence of liquid natural gas (LNG) as a chemical feedstock and an energy source, over $90 billion is being expended in either industrial development or new plant development along the LMR and in the Lake Charles region. Equally important, this research confirmed the rationale for new LNG export terminals currently being built in southwest LA and new facilities within the Port of New Orleans to accommodate growth in the shipping of plastic resins and related products.

Products developed by this research:

Poster Presentation:  Beyond Container Volumes: Panama Canal Expansion, Bulk Commodity Exports and the U.S. Gulf Coast presented as an all day poster session at the Transportation Research Board’s Annual Meeting, Washington, D.C.  January, 2014.

Results Presented:  Study results presented to the Project Advisory Committee, representing both public and private sector leaders of the maritime industry in New Orleans and along the Lower Mississippi River and members of the Louisiana Transportation Research Center. As well, special presentations were made to students, staff and faculty affiliated with the UNO Transportation Institute and the Department of Planning and Urban Affairs.

Impacts/Benefits of Implementation:
The Panama Canal expansion coupled with the impact of LNG are changing the industrial landscape of the State of Louisiana and the Lower Mississippi River. We in the state are witnessing the rebirth of the chemical industry and the emergence of a new energy landscape being upended by LNG.

The results of this project reinforced decisions made in both the public and private sector regarding strategic investments at the Port of New Orleans, the Port of Baton Rouge as well as long-term development decisions by the newly formed Port of Plaquemines Parish.

The study results may reinforce or contribute to the findings of pending projects that will analyze the economic impact of deepening the Mississippi River to 50’ from Head of Passes to Baton Rouge.

Web Links:
Final Technical Report