The Wrongologist

Wrongo traversed the Panama Canal last Wednesday night. Here is a photo of Panama’s Miraflores Locks (Pacific side) taken from our ship at 7:00pm:

Ownership of the canal was transferred by the US to Panama in 1999. At the time, there was real concern whether the Panamanians would be up to the task of managing the canal. It turns out that they were:

• The Canal’s income has increased from US$769 million in 2000, the first year under Panamanian control, to US$1.4 billion in 2006
• The number of accidents has gone down from an average of 28 per year in the late-1990s to 12 accidents in 2005

There is a $5+ billion canal expansion program underway that will allow post-Panamax ships to traverse the canal. Post-Panamax vessels are projected to represent 62% of total container ship capacity by 2030. These ships can carry more than twice the amount of cargo (12,500 TEUs or 20-foot containers) compared to today’s Panamax ships that hold no more than 4,800 TEU. Bigger ships and more cargo can result in economic windfall for Panama.

All this brought to mind the costs (and how we pay) for modernizing infrastructure in the US. Early in 2016, Panama will start sending these huge ships through the Canal to US East Coast ports. US harbor size limits where these largest container ships can dock. A port is considered “post-Panamax ready” if it has a channel depth of 50 feet, sufficient channel width and turning basin, and larger dock/crane compatibility.

Miami, New Orleans, Baltimore have spent the funds to accommodate these super carriers, and will be ready when the canal is ready, but New Jersey and Pennsylvania are still trying to get there. Consider NJ, where, at high tide, 151 feet of empty air lies between the waters of the Kill Van Kull and the deck of the Bayonne Bridge. The Kill, a narrow tidal strait between Staten Island, NY and Bayonne, NJ, is one of the busiest shipping channels in the country. When the Bayonne Bridge opened, in 1931, 151 feet easily accommodated the world’s largest vessels. But the new ships won’t fit, so, the roadway will be elevated 64 feet, to 215 feet, more than enough to let these big ships pass underneath. The five-year Bayonne Bridge project costs $1.3 billion. Its estimated completion date has been pushed back to 2017.

By contrast, the entire canal expansion project will cost Panama $5.25 billion, and the return in increased canal transit fees will go to the citizens of Panama.

But in NJ, there will be no return from bigger cargo vessels for the taxpayers, or for the Port Authority of NY & NJ. Why? In January, 2014, NJ Gov. Chris Christie (R), signed a bill that ended the collection of any cargo facility charge by the Port Authority of New York and New Jersey. The charge was imposed on cargo facility users, ocean and rail carriers and marine terminal operators. The old fee was $4.95 for 20-foot containers, $9.90 for 40-containers, and $1.11 per unit for vehicle cargo. The new bill was bi-partisan, as State Sen. Bob Gordon, (D-Bergen) said:

By imposing a tax on ocean carriers, the Authority has driven up the cost of doing business locally and driven freight to other ports along the East Coast…

So, not only will the taxpayers of NY & NJ pay for allowing Post-Panamax ships under the Bayonne Bridge, no ocean-going vessel will have ANY stake in paying the costs of that bridge expansion.

And for NJ, it gets worse: it didn’t have the money to rebuild the Goethals Bridge, which would cost just one year’s worth of toll revenue. Instead, it set up a private financing, pitched to the public as the region’s largest public-private partnership. For the Goethals Bridge, (ironically, named for the Army General who built the Panama Canal for Teddy Roosevelt), the private firms who took part in the financing get a share of the increased tolls paid by cars, buses and trucks crossing the bridge for a 35-year period.

So, today’s wake-up is for politicians who think no fees will make their port competitive, and who favor “Public-Private Partnership” financing of infrastructure projects. And since we can see light at the end of the igloo here in the Northeast, here is U2 with “Beautiful Day”:

Sample lyrics:
The heart is a bloom
Shoots up through the stony ground
There’s no room
No space to rent in this town

You’re out of luck
And the reason that you had to care
The traffic is stuck
And you’re not movin’ anywhere

You thought you’d found a friend
To take you out of this place
Someone you could lend a hand
In return for grace