Ready for our ships to come in - $300 Million Expansion

Ships used in global transportation of goods keep getting bigger and faster — and Philadelphia’s port is hoping to grow with them.

The Delaware River shipping channel is already being deepened, from 40 to 45 feet, allowing for ships with far more carrying capacity. Local officials hope to convince shipping companies to use their faster and larger ships to take advantage of a wider Panama Canal to bypass West Coast ports and sail directly from Asia to Philadelphia. They also hope to take advantage of overcapacity at the port of New York.

To capitalize on changes in the shipping industry, the Southport Marine Terminal in South Philadelphia is planned at a cost of $300 million. It will consist of shipping piers, storage areas, rail yards and easy access to nearby I-95 and I-76. While parts of the 275-acre facility are already receiving shipments of ethanol and other products, most of it won’t come online for another two to three years.

It could more than triple the number of jobs at Philadelphia Regional Port Authority facilities from 5,000 to as many as 17,000. It is the first major expansion of the port in more than 50 years.

“If all goes well, 2017 will be the magic year,” said Charles G. Kopp, chairman of the Philadelphia Regional Port Authority and a lawyer in Cozen O’Connor’s business-law department. “The development of Southport will have a tremendous impact on the port’s future, especially the employment and economic development it will generate. … We believe Southport will be one of the major, if not the most major, engine to stimulate the economy and produce jobs for the Philadelphia region in the next 5 to 10 years.”

Philadelphia’s port network already handles 80 million tons of cargo each year (see chart). Other investments are already being made to upgrade the port.

At the Tioga Marine Terminal in Port Richmond, a mix of public and private money is being used to build a 300,000-square-foot receiving center for the imports of eucalyptus pulpwood from Brazil, which is shipped in by a company called Fibria. To allow for larger train cars to get the pulpwood from the port to paper towel factories owned by Kimberly-Clark and other manufacturers, the Corbett administration earmarked money to improve rail beds leaving from the Tioga terminal.

Yet much of the future growth is pinned on the Southport facility, which is situated south of the Walt Whitman Bridge and other port facilities and north of the Navy Yard.

Sean E. Mahoney, PRPA director of marketing, said the idea for the Southport facility was triggered in 2007, when the Port of New York started to hit capacity.

“We were always trying to get shipping lines to expand into Philadelphia,” said Mahoney. “With the Port of New York congestion and cost, in 2007 the shipping lines started calling us, which was a refreshing change.”

With the expansion of the Panama Canal — the short-cut between the Pacific and Atlantic oceans — ports are quickly making adjustments.

“Most of the major ports on the East Coast are working like crazy to get deeper water in advance of the Panama Canal project completion,” said Mark Miller, director of corporate communications for Crowley, a major shipping line based in Jacksonville, Fla.

John Martin, a strategic consultant and principal at Lancaster-based Martin Associates, works with ports around the world. He said New York, Baltimore and Norfolk, Va., all have deeper channels — at 50 feet, versus 45 in Philadelphia — and at least a half-dozen other ports are in the process of deepening shipping channels.

“Ships will continue to get bigger, but there are a lot of other factors that go into whether a port is competitive — labor costs, railroad pricing, how efficiently ships can be unloaded ... The terminals have to be extraordinarily productive,” Martin said. “I don’t know whether one port is doing better than another. I don’t think you can rank the ports.”

While most of Southport is three years from completion, adjacent facilities at Piers 122 and 124 are already being leased as an intermediate stop for ethanol. The ethanol comes by rail from the Midwest, is housed in holding tanks and then moved by barge from the port to the refineries of Philadelphia Energy Solutions (the joint venture between Sunoco Inc. and the Carlyle Group LP) in South Philadelphia.

Southport is under construction on 120 acres south of Packer Avenue and north of the Navy Yard, a portion of a larger, 275-acre site that is ripe for port expansion. It is estimated to cost $300 million, with some state funding but also a major investment from the port’s private operator, Delaware River Stevedores Inc., which already operates the Tioga Marine Terminal.

The site has been cleared of former Navy housing, at a cost of $25 million.

Proponents say Southport is long overdue. “The Southport expansion project once completed will be a big plus for the region,” said Manuel N. Stamatakis, a past chairman of the Delaware River Port Authority.

At one time there were 13 major shipbuilding facilities on the Delaware River in and around Philadelphia. Now the Aker Shipyard in the Navy Yard is the only major shipbuilding facility. Stamatakis, who is also chairman of VisitPhiladelphia, said this is a chance to revitalize the shipping industry here.

“When the Base Realignment and Closure Committee recommended the closure of the Philadelphia Naval Shipyard it was the last of 13 major shipyards to close. I believe when the Navy Yard finally closed in 1995 there was a loss of over 7,000 jobs,” Stamatakis said. “It was shortly thereafter when work began to replace those jobs by re-utilizing the entire Navy Yard. Twenty years later the region has done pretty well.”

Stamatakis was one of the early proponents of deepening the channel.

“One of the big opportunities associated with the deepening of the channel was that it could generate more private-sector port business for the region. Southport, with its [projection of] 8,000 to 12,000 jobs is the perfect example of that. The fact that the private sector will invest between $250 million and $300 million dollars to build Southport is a real testament to the hard work that has taken place in the last 20 years to make up for the closure of the Philadelphia Naval Shipyard.”

While the Navy Yard is being developed as an office park, its fortunes are to some extent intertwined with Southport.

“According to the PRPA’s plans for fully electrified container operation, [Southport] will require significant electric capacity, and, that there will likely be a very interesting opportunity to provide clean energy and natural gas based generation alternatives as part of the overall plan,” said Will Agate, an official at Philadelphia Industrial Development Corp. and senior vice president of management and development at the Navy Yard. “Finally, the west end of the PRPA footprint could likely serve as a large distribution center, which will require coordination between PIDC and the PRPA in order to maximize this potential.”

Source: Philadelphia Business Journal