When the gleaming, blue Regina Maersk--her deck the size of three football fields--sailed into New York Harbor in July, a crowd gathered to see the megaship, one of a new class of giant cargo vessels. But the welcome was marred when the Regina's prop churned up mud and the crew had to scramble to lower an antenna before it smacked into the Bayonne Bridge. The harbor was too shallow, and the bridge too low. It was an omen: The future of shipping had come to call--but alas, the harbor was found wanting.
The Regina is soon to be followed by even larger cargo ships that are generating an upheaval in the maritime industry, especially in the North Atlantic, where outdated ports can't meet the needs of the new vessels. With their contracts at the Port Authority of New York & New Jersey set to expire, two of the world's biggest container shippers--Sea-Land Services Inc. and Maersk Inc.--are seeking an East Coast port that can host the big ships. Roads and rails would then be used to deliver goods throughout the Northeast and Midwest.
Sea-Land and Maersk, which account for 20% of the global market and 25% of the traffic in New York Harbor, have set off a bidding war between New York and ports from Halifax, Nova Scotia, to Norfolk, Va., each of which is trying to offer a better-equipped port.
The stakes are enormous--not just for the East Coast but for the shipping industry worldwide. With booming exports expected to lead to a surge in North Atlantic maritime traffic from Europe and Southeast Asia, bagging Sea-Land and Maersk would cement the winning port's position as the premiere North Atlantic hub.
DREADED DREDGING. "We're looking at a port that's going to accommodate us for the next 45 to 50 years....If we come up with the right economics, we're going to move," says Anthony A. Scioscia, Sea-Land's senior vice-president for North American operations.
A downside for the winning port is that it will have to take the costly and environmentally sensitive step of dredging its channels for the new ships. Therein lies New York's problem. New York Harbor has a natural depth of 18 feet, but its channels and ports have been dredged to 40 feet--down to the bedrock. Going any deeper requires blasting away at the harbor floor with explosives.
In 1986, Congress authorized dredging to deepen the New York channel. The Army Corps of Engineers is set to begin the dredging this winter, in a project that will cost $732 million and take five to nine years to complete. When it is finished, the harbor's channels will be 45 feet deep--still too shallow for the likes of the Regina, which will require a 50-foot draw.
When Congress authorized the dredging 12 years ago, no one could guess that container ships would require such depths. By the time the studies, permits, and funding for the dredging were in place, the project had already become obsolete. With at least a 10-year lead time on any dredging project, the corps is now fast-tracking a study to determine whether it can take some New York Harbor channels to 50 feet.
Yet another problem for New York is what to do with all that dredged material, which is salted with toxins that must be treated before it can be dumped on land or used as construction fill.
Compare that to the climate at the Port of Virginia in Norfolk, the top contender for Sea-Land and Maersk's business. The main channels are already 50 feet deep, and berthside dredging is in the works. Rail comes right into the terminal, which is undergoing a $400 million expansion and already has the big cranes needed to unload big ships.
The carriers' decision is expected this fall. If they pull up stakes, the Northeast might see higher prices for consumer goods because they likely will be brought in from a distant hub port by truck or rail. Jobs could be affected, too. The New York-New Jersey port pumps $20 billion a year into the regional economy, creating, directly and indirectly, 180,000 jobs.
In the meantime, carriers have already begun diverting some of their business north to the deeper waters of Halifax. That could be a sign of bigger things to come.