AGENDA ITEM #14: PANAMA CANAL EXPANSION: VIRGINA PORT AUTHORITY SUBJECT: The Panama Canal Expansion – Third Set of Locks project BACKGROUND: The expansion of the Panama Canal (Third Set of Locks) is a project proposed by the Panama Canal Authority and will double the capacity of the Panama Canal by 2014 by allowing more and larger ships to transit. This project will create a new lane of traffic along the Canal by constructing two lock complexes – one on the Atlantic side and another on the Pacific side. According to the attached article published in September 2010 in the Commonwealth Contractor publication: “In 2014, the Canal expansion will be complete and its new set of locks will open allowing the latest breed of vessels to transit and possibly bypass west coast ports in favor of the east coast. Presently, 35 to 40 percent of the cargo coming into and leaving the Port of Virginia transits the Panama Canal and with Virginia being the only US east coast port with the necessary water depth to accommodate larger vessels, it is likely that number will considerably increase; and while the exact increase with the new locks is unclear today, there is no doubt that the expansion will compliment VPA’s assets and give Virginia the upper hand on the competition.” A representative from the Virginia Port Authority will brief the HRTPO Board on this item. Attachment 14 RECOMMENDED ACTION: None required; for informational purposes only. Hampton Roads Transportation Planning Organization Board Meeting – July 21, 2011 Issue 14 POLITICS AND INFORMATION Norfolk International Terminals’ Suez cranes By Charles R. de Cuir ThePanama Canal and ThePort of Virginia Intertwined Histories Lead to a Solid Future Photo provided by VPA Panama and Virginia maritime paths have been intertwined since the days when setting out to explore for new lands on open waters was commonplace; and for good reason, both regions feel comfortable staking claim to the title of the Gateway to the Americas. It was early explorers that recognized the potential Panama, a narrow stretch of land between North and South America, had as a plausible trading access between the Caribbean and Pacific; and it was also those explorers that decided Virginia was a good place to set up the first permanent English settlement in the New World. Both Panama and Virginia are gateways in their own right. Attachment 14 20 Commonwealth Contractor | September 2010 Issue 14 POLITICSIssue AND 1 COVERINFORMATION STORY A Quick History The first Canal expansion created three new locks; Fast forward several hundred years into the settled Americas and the Miraflores, Pedro Miguel and Gatun. Each new Panama Canal is vital to east-west trade, reducing a voyage from New chamber was 365.76m long, 42.67m wide and York to San Francisco by some 8,000 miles and roughly 30 days; while 13.72m deep. Virginia is on its way to being the east coast hub for maritime business. • In the late 1930s with Europe on the brink of its first World By comparison the 2014 edition of the Panama War, the need for the Canal to be wide enough for battleships Canal expansion will have the following capabilities; to easily transit takes front and center and the plan for its first 426.72m long, 54.86m wide and 18.28m deep. expansion takes shape. In early 1937 the United States Congress sets in motion a plan to expand the Canal and improve its defense capabilities. This first expansion creates three new locks and adds a single parallel lane to the Canal. A Promising Partnership • In the 1950s the Virginia Port Authority (VPA) has been created to manage the Virginia ports; and in 1957, by the efforts of the “Our partnership with VPA is more important than ever. As we Hampton Roads maritime community, the Craney Island Disposal embark on the next phase of the expansion project, data sharing and Area is completed. Today on Craney, VPA together with the U.S. market studies exchange will continue to be essential elements of our Army Corps of Engineers are constructing both a dredged material collaboration,” says Alberto Aleman Zubieta, administrator and CEO placement area and a new state of the art port facility for VPA. of the Autoridad del Canal de Panamá (ACP). • Presently and more specifically on July 6, 2010, VPA signed a 20-year lease with APM Terminals, the most technologically In April 2008 Zubieta and Jerry Bridges, executive director of VPA advanced marine cargo facility in the world, that gives VPA the signed a Memorandum of Understanding (MOU) signifying the part- operational responsibility over the APM facility in Portsmouth. nership between the ACP and VPA. A significant inclusion in the The additional 4,000 linear feet of berth and 3.3 miles of on-site MOU is an opening acknowledgment of the commitment to the future rail link the facility to rail giants, Norfolk Southern and CSX. The of both ACP and VPA. “The Parties hereto believe it is in their mutual operations are highly automated and can currently accommodate interest to establish an alliance of cooperation for information sharing 1.4 million 20-foot equivalent units (TEUs) annually. VPA will aimed at generating new business by promoting the all water route be- manage the terminal through its private operating company, Vir- tween Asia and the North American East Coast of the Port of Virginia ginia International Terminals, Inc. (VIT). via the Panama Canal.” "In my experience this is the biggest deal of my career and I am “While the expansion of the Canal is vital to world commerce, the very proud to have been part of it," says Joseph A. Dorto, VIT's Virginia Port Authority is also positioning itself for increased demand by general manager and CEO. "I believe this cements a very bright building infrastructure and incorporating the necessary enhancements future for The Port of Virginia and our customers." to accommodate the growth that is to come,” confirms Bridges. Build It and They Will Come The Craney Island Dredged Material Management “…between Austria and Italy, there is a section of the Alps called the Area is a 2,500 acre confined dredged material Semmering. It is an impossibly steep, very high part of the mountains. disposal site located close to Norfolk, Virginia. The They built a train track over these Alps to connect Vienna and Venice. area is designed to be a long-term disposal area They built these tracks even before there was a train in existence that could make the trip. They built it because they knew some day, the for material dredged from Hampton Roads channels train would come.” ~Frances Mayes and ports. Prior to World War II, dredged material for the most part was disposed of in open water sites. Currently the world’s shipping companies are gearing up for the future The development of the Craney Island Disposal Area with the next generation of vessels. These new builds will provide greater capacity for manufacturers to move more product and increase was passed by Congress under the River and Har- transit revenue as they pass through the new Panama Canal. bour Act of 1946 in response to the need to have a designated area for dredged material. So if the ships are bigger and the Canal is bigger—what about the ports? Attachment 14 Commonwealth Contractor | September 2010 21 Issue 14 POLITICS AND INFORMATION Provided by Charles de Cuir of $13.5 billion of employee compensation and $41.1 billion in total state revenue. In February the biggest vessel to ever come to The Port of Virginia arrived without incident; this vessel was too big to transit the Panama Canal, so it sailed to Virginia via the Suez Canal. When the new locks open, we will see more and more of this class of vessel but they will reach Virginia via Panama. In 2014, the Canal expansion will be complete and its new set of locks will open allowing the latest breed of vessels to transit and possibly bypass west coast ports in favor of the east Miraflores locks andmules coast. Presently, 35 to 40 percent of the cargo coming into and leaving the Port of Virginia Thanks to the ever-focused vision of the VPA, Virginia’s Port Advantage transits the Panama Canal and with Virginia the ports of Virginia are technologically and being the only U.S. east coast port with the logistically prepared. Even before the Canal Based on the 2006 Virginia Economic and Fis- necessary water depth to accommodate Expansion Resolution was passed VPA had cal Impacts of Virginia Port Authority Opera- larger vessels, it is likely that number will designed, constructed and delivered Suez- tions report undertaken by the Mason School considerably increase; and while the exact class cranes with the ability to service vessels of Business Compete Center and the College increase with the new locks is unclear today, not yet built, in addition to keeping the ports of William and Mary, issued in January 2008, there is no doubt that the expansion will deep water entrances accessible to these yet- the VPA’s economic engine creates 9 percent compliment VPA’s assets and give Virginia to-be-built-class vessels. of the Commonwealth’s workforce to the tune the upper hand on the competition. Distribution Facilities in Virginia Attachment 14 22 Commonwealth Contractor | September 2010 Issue 14 POLITICSIssue AND 1 COVERINFORMATION STORY Panamax and New Panamax are terms used to define the size limits for ships traveling through the Canal. Ships that do not meet the specified Panamax-sizes are referred to as Post Panamax. The size is limited by the width and length of the available lock chambers, by the depth of the water in the canal and by the height of the Bridge of the Americas.