Though the completion of the $5.2 billion Panama Canal widening project has been pushed back to 2016, the Port of Los Angeles is pushing to speed infrastructure and modernization projects in an effort to retain business that could shift to East Coast ports after the improved canal is open.
The port announced earlier this month that the $58 million Yusen Terminal upgrade project had gone into environmental review, with construction expected to start next year for completion in 2017.
The project would make the wharves at the terminal, which covers berths 214 to 216, 17 percent deeper. At the proposed 53 feet, the depth would be the same as the main channel, allowing operator Yusen Terminal Inc. to receive the next generation of larger ships. The port is also deepening several nearby berths, making room for 100-foot cranes and adding an on-dock rail yard.
“Generally, there is a tendency in the shipping industry to go for larger vessels,” said Stuart Fricke, the port’s harbor engineer. “So by providing deeper water, YTI will remain competitive. It will be able to accommodate larger vessels, up to 13,000-container ships.”
Yusen, a subsidiary of Japanese shipping company Nippon Yusen Kabushiki Kaisha, provides stevedore services for container ships that carry various cargo. Yusen’s terminal can now only accommodate ships carrying between 8,000 and 9,000 containers. It is one of three terminal operators at the port where the depth of the wharves is less than 53 feet at the dock. The other two are Yang Ming and Evergreen, whose wharves are being considering for deepening projects.
The expenditures are by the port, largely funded internally through port-generated revenue. They represent a small portion of the port’s significantly increased capital improvement spending this year.
In addition to the Yusen Terminal upgrades, the port is in the middle of building the West Basin rail yard; extending the TraPac terminal; and working on a series of transportation improvement programs, such as improving the 110 freeway as well as nearby streets in San Pedro and Wilmington.
The projects are expected to increase the port’s capability as well as efficiency significantly, said Fricke.
“We are basically spending more than $1 million a day in construction costs at the port in this fiscal year,” said Phillip Sanfield, the port’s director of media relations.
Aggressive spending
The port has become aggressive this year, raising its capital expenditures to $400 million from $248 million last year. Infrastructure spending this year will be twice as great as in 2009. Proposed spending next year is about $374 million.
Sanfield said the port is in the second year of a $1.2 billion five-year plan, which includes a variety of terminal improvement projects.
While its capital improvement program has been ongoing for years, he said it’s rare to see such significant moves.
“We are always spending on improving the port,” he said. “That’s just what we need to do to remain the nation’s premier trade gateway. Now there is a lot more competition out there, it’s one of the many reasons that we are doing this.”
The Port of L.A.’s five-year upgrade plan comes in response to moves made by East Coast ports to accommodate larger ships, known as Super Post Panamax megaships, that will be able to pass through the Panama Canal once its deepening program is completed. Ports in New York; Charleston, Va.; Miami; and Houston are in the midst of or have on the books projects of $8.2 billion, $1.3 billion, $150 million and $325 million, respectively, to accommodate the megaships.
Facing such competition, L.A. port officials announced an outline of business strategies earlier this year during a harbor commissioner meeting, aiming to increase the container business by 3 percent annually; boost cruise ship passenger numbers by 15 percent in three years; encourage exports; and increase revenue from trucking, warehousing and rail by 10 percent.
“This container terminal improvement project is just another step in the port’s competitive positioning,” said Sanfield. “What we are trying to do is that terminal by terminal, transportation project by project, going through and making sure that our infrastructure is state of the art.”
