An interesting look at Wilmington area ports

[Irv]

NoPort News
A newsletter of the North Carolina International Terminal
All the news that prints to fit.
November 4, 2009
The Cost of Dredging
In these difficult times, we should consider what the US Army Corps of
Engineers,
Wilmington District, has been spending and intends to spend for
dredging the Cape Fear River
for ever larger container ships to bring us more products from Asia:
! In 1996, the Corps of Engineers concluded that increasing the depth
of the channel in the
Cape Fear River from 38 to 42 feet, to permit navigation by vessels of
40-foot draft,
would yield benefits in transportation cost savings of 1.2 times the
cost of the dredging.
That cost was then estimated to be $249,539,000. On that basis, the
project was funded
by Congress and the North Carolina Assembly, and begun in 2000.
! The cost of the project had risen to $533,000,000 by April of 2009.
It is not complete.
! Thirty-five percent of the cost, $186,550,000, was paid by the State
of North Carolina.
! Amortizing the cost of the dredging over 50 years, using an interest
rate of 4.625% (the
rate used by the Corps of Engineers for such calculations in 2009),
the annual cost is
$27,521,000.
! The channel was opened at a depth of 42 feet in early 2004. In 2006,
the peak year for
vessel movements in the river, 60 vessels of 38-foot draft navigated
the river to
Wilmington harbor. There were no vessels of deeper draft. All other
vessels drew 36
feet or less, and could have navigated the river at the shallower
depth prevailing before
the deepening project.
! The use of the vessels of 38-foot draft instead of slightly smaller
vessels (or vessels
loaded to less than capacity) to move the goods carried by those 60
vessels in 2006 saved
shippers approximately $3.6 million–about 13% of the annual cost of
the dredging. Thus
the benefit/cost ratio went from the estimated 1.2 to an actual 0.13.
Half a billion dollars
appears to have been wasted. The environmental cost has not been
reckoned.
! There is no assurance that even those benefits were passed through
to consumers. All
deep-draft vessels calling at Wilmington harbor are foreign owned and
operated.
The cost of a new channel for the North Carolina International
Terminal would be
approximately $1.5 billion, based on the amount of material to be
removed (68.3 million cubic
yards) compared to the material removed in the recent channel
deepening project (25 million
cubic yards). Because the depth would be more than 45 feet, a
different rule for Federal/state
cost sharing prevails. The State of North Carolina would pay 60%–that
is $900,000,000.
NO PORT Southport NC, Inc. Post Office Box 10062 Southport, NC 28461
www.noportsouthport.org.