Delaware port jobs, business at stake

Delaware's port business is in a race against time, with thousands of jobs and hundreds of millions in wages, business revenues and tax receipts at stake.

In less than 10 years, it needs to resolve the issue that the current port sits on the Christina River, where waters will soon be too shallow for the larger vessels stopping there now, and closed to a new wave of deeper-hulled cargo ships. If it can't resolve that problem in time, it would jeopardize the state's hold on North America's largest fresh fruit import business.

Plans are in the works to expand the port, moving it around onto the deeper Delaware River, but at this point, they are only plans on paper.

Two miles south, New Castle County, labor groups and a landowner are pushing what some warn is a long-shot attempt to build an entirely new port. Backers say it would create thousands of high-paying jobs by creating a "first-stop" container terminal that would be closer to the Atlantic than any of its competitors, with nearby access to interstates highway and rail lines.

But some experts warn that by the time either effort is complete, there will be little new container business left for Delaware, if any at all. Surely not enough to warrant the hundreds of millions of dollars that would have been invested.

"We're trying to make it a very fast track. We're trying to meet every week or twice a week," New Castle County Executive Tom Gordon said of the county- and labor-backed plan, which could cost $400 million to $600 million. "We have made some calls to Wall Street. We don't know how it's going to be funded yet. That's what we're working on."

Port interests and entrepreneurs along the river are fighting to hold their ground while grabbing at possible new opportunities from a nearly finished, $300 million river deepening and a potential shakeup in East Coast container traffic as bigger ships are able to move through bigger locks on the Panama Canal.

Several miles north, New Jersey officials are heavily underwriting development of a new port at Paulsboro that last year came uncomfortably close to wooing away Wilmington's largest customer.

In Philadelphia, the regional port authority recently received 16 proposals for pier, port and terminal developments at a 200-acre former Navy Yard property now called Southport, an effort many say would dwarf Delaware's longshot proposals.

"This is far-fetched. I don't see it, to be honest, by any abiding logic," said University of New Orleans professor Asaf Ashar, a maritime researcher and associate director of the university's National Ports & Waterways Initiative, of the Delaware ports being able to attract large amounts of new business.

Ashar said that Wilmington and Philadelphia long ago developed into "niche" ports – specializing in some cargoes and holding a share of container traffic but having relatively limited prospects for attracting the largest, world-class container vessel customers.

"The chance that a major player will come to Philadelphia or Wilmington, even with a 45-foot channel, is very slim. Maybe with a huge subsidy.

"The question is: Is it worthwhile?"

The struggle with silt

Those prospects have given new urgency to Wilmington's effort to settle its silt-removal quandary, dominated by the looming loss of nearby and cheaper but soon-to-be-full dredging disposal sites just north and south of the port.

Wilmington stands in the center of the Delaware River's muddiest water. Engineers are figuring on scooping away 750,000 cubic yards from the harbor and approaches a year just to stay ahead of the problem – enough to cover 140 football fields annually to a depth of 3 feet.

Although detailed plans have yet to be released, Corps officials last week proposed moving the spoils more than six miles north, to a federal disposal site in the Pedricktown, N.J., area opposite Claymont. Costs and methods for the chore, and the possibility of required local contributions, were not disclosed.

Even as the Corps was delivering its dredging and disposal scheme, Wilmington port officials were finalizing a still-unreleased request for a study of prospects for developing new cargo handling areas along the ports naturally deeper edge of the Delaware River. The request will seek options for reorganizing and reinvesting in operations at the existing 308-acre, 7-dock site along the Christina.

"This isn't 'If you build it, they will come,' " said Delaware Economic Development Office Director Alan Levin, who chairs the Diamond State Port Corporation, which directs the state-owned operation. "We need a customer to avail themselves of this, to make it worthwhile to go out on the river. We just do not have that kind of funding; we're estimating $250 million to $600 million."

Port Director Gene Bailey said some of the work could focus on extending and converting for container use part of an L-shaped pier built along the Delaware River for Wilmington's auto import and export business, which has declined in recent years.

Wilmington remains the world's top banana port, the nation's biggest fruit and juice concentrate importer and the operator of the country's largest dock-side refrigeration business.

"What you're trying to do is put a strategic plan together not only to retain the business you have and remain competitive, but to look at opportunities to expand," Bailey said.

New gamble

Backers of the proposed entirely new port to the south speak with greater confidence, although those involved have not identified potential investors.

Under the plan, the public would acquire a 176-acre riverside parcel at the Riveredge Industrial park, then issue a long-term lease for its development into a port, with eventual reversion to public ownership.

The former, now-unused General Motors plant at Boxwood Road and future development there would serve as an "anchor" for what has been dubbed the Greenfield port project.

It is an idea that faces high hurdles.

Much of the crane and container-handling area would have to be built on fill and structures extending well into the Delaware River, according to designer concepts presented to the public in October.

The site occupies an area known as the New Castle Flats, a wide shallows between the shoreline and the channel and naturally deeper areas. The same waters are occupied by juvenile, endangered Atlantic sturgeon, according to a 2012 technical report published by the Partnership for the Delaware Estuary.

Dredging and maintenance expenses to carve out and keep open a long connection to the main channel, meanwhile, would be far greater than Wilmington's but would be ineligible for any federal subsidies. Fights are likely over wetland disruptions caused by rail and truck access plans.

DEDO's Levin also expressed surprise that the concept depicted major road and rail facilities crossing land and buildings at the Atlas Point site of Croda Inc., an international specialty chemical maker that recently proposed a $170 million investment at its Delaware facility.

"That's a whole different matter," Levin said, noting that he was unaware of the rail and road access impacts until recently.

Late Friday, Croda site manager Robert Stewart said in an email only that the company is "aware of the county's interest in expanding the port, and we are currently evaluating how we may be able to assist with this economic development initiative."

Dave Carter, Delaware Audubon's conservation chairman and a former Department of Natural Resources and Environmental Control Coastal Program manager, said the state worked at significant expense in the past to enhance and protect the Lukens Marsh wetland that would be crossed by the port's road and rail.

"This will be a big battle from our end, and I doubt they will get much support from either DNREC or the Corps of Engineers on permits for this wetland project," Carter said.

Capacity debate

Another daunting factor: Federal observations from as recently as 2010 show that the Philadelphia-Wilmington port complex already has ample container capacity for its traffic, now limited by a 40-foot channel.

Other big ports are at 50 feet and deeper, critics said, leaving little hope that everyone, or anyone, along the Delaware River can make huge gains from arrivals of monster "Post-Panamax" ships built to use the Panama Canal's new capacity.

Panama's upgrade is expected to increase movements of super-large ships between Asia and the East Coast, a development that could mean fewer container ship calls overall, although some larger and medium-sized vessels capable of traveling the Delaware's shipping channel could relocate to local ports from larger complexes.

"Reserve capacity in the North Atlantic is substantial, in part because of the sheer size of NY-NJ and Virginia and in part because Boston, Philadelphia and Baltimore are under-utilized," a 2010 container port capacity report commissioned for Corps of Engineers use said. "Philadelphia, Baltimore, and Portland also have the competitive disadvantage of being located some distance from the open ocean."

Contractors for the Corps are now about 80 percent finished with a deepening of the 103-mile Delaware River channel to 45 feet between Philadelphia and the sea. About $100 million in work remains, with costly rock-blasting in the Marcus Hook area accounting for much of the remaining expense.

Dennis Rochford, president of the Maritime Exchange for the Delaware River and Bay, said that interest in and enthusiasm for river development projects is high.

"Expanding and improving ports and creating jobs: That's a good thing," he said. "The devil is in the details. You have to get investors to want to participate. It's up to the people behind that specific project to make the case."

Keeping jobs

Even without a Post-Panamax boom, stakes could hardly be higher for Delaware and the Wilmington area.

Port tonnages at Wilmington have increased for seven straight fiscal years after plummeting 18 percent in just two years during the start of the recession, according to annual audits filed with the state. Cargo totals rose from about 3.86 million tons in the year ending June 30, 2008 to 5.5 million tons for the year ended on June 30, 2014.

Imports of bananas and other fruits and juices, an area where Wilmington dominates, have contributed mightily to the performance, which ran counter to an overall 39 percent drop in waterborne freight movements between Philadelphia and the sea between 2004 and 2012, according to Corps of Engineers statistics.

Competition remains tight, with both New Jersey and Philadelphia coveting Wilmington's lock on fruit deliveries. Crude oil shipments to all sites along the Delaware fell 52 percent over the period, and have continued to decline since rail-delivered North American crude replaces imported, water traffic.

Nonpetroleum cargo movements have been recovering along the Delaware since 2009, but remained more than 25 percent lower in 2012 compared with 2004.

Yet even with the economic recovery, Wilmington has lost money on operations every year since at least 2002, with last year's $4.4 million operating deficit the largest in recent years despite record business.

Concern about losses and high-dollar investment needs led to a bitter debate over privatizing the port in 2013 and 2014, with the plan dropped even as losses continued.

"I'm not sure that will ever change," DEDO's Levin said of Wilmington's subsidy needs. "This is a very capital- and labor-intensive business, but we get an awful lot back into the community."

"The General Assembly believes its worth subsidizing the port in this manner for the creation of jobs and for the economic development opportunities that come out of it."

More than 2,000 are employed directly in port activities, with spinoff business pushing the total for port and related employment to an estimated 5,200. Many are hard-to-find "blue collar" jobs requiring skills but not necessarily formal education. Over the last three years, about 470 people a year have worked in solid if temporary day-laborer jobs created by cargo movements.

A House-Senate committee report released last year included an estimate connecting about $36 million in state and local income tax receipts with port operations in 2013, along with $384 million in business revenues.

"We need to protect and expand and rebuild the middle class in Delaware," said Ronald "Kimokoh" Harris, business agent with International Longshoremen's Association Clerks and Checkers Local 1883, which represents cargo handlers at the port.

"God knows the jobs are needed for these young people in Wilmington and the county," said Harris, whose union actively supports the new port south of the Memorial Bridge. "Every child is not going to go to college. We feel the best way to fight crime is to create jobs."

Bananas rule

On a cold day last week, Wilmington's two 50-metric ton port cranes yo-yo'd continuously alongside the nine-year-old containership Helene, cabling up Chiquita containers filled with paperboard for boxes after cabling down and perching onto truck trailers hundreds of matching containers filled with boxed-up bananas.

Nearby, a clam-shell scoop-equipped mobile crane grabbed steaming loads of petroleum coke, a refining byproduct with little domestic value but used as fuel offshore, and dropped it into the hold of a Greek-flagged bulk carrier.

Another 150 yards west, workers on the Bahamas-flagged refrigerated cargo ship Green Honduras used the ship's own cranes to lift out block after block of boxed clementines, setting them onto a wharf where they lingered only seconds before forklifts whisked them into a refrigerated warehouse.

When fully loaded, the Helene's bottom rides about 30 feet below the surface, the Greene Honduras about 29 feet. At Wilmington, those kind of ship drafts aren't always an easy fit.

Vessels calling on Wilmington can expect a 35- to 38-foot channel, on paper. But silt in the Christina and Delaware tends to drop out in shoals at Wilmington and New Castle, forcing the Corps to re-deepen parts of Wilmington's port multiple times a year to keep it clear. Sometimes vessels "plow" at times across the soft bottom.

In fact, Wilmington occupies a spot along the muddiest stretch of the entire Delaware Estuary, owing to its location along a part of the watershed where salt and freshwater mixing and land-uses create conditions that encourage sediment to drop.

"We've had ships go aground as a result of it. You just have to be aware of your surroundings," Levin said. "The ideal thing would be to be on the Delaware River, to have the auto-berth converted in some way so we could use it for deepwater vessels."

In 2012, Superstorm Sandy unleashed a flood of silt that covered up to 10 feet of the port-area riverbottom in places over just a few months, triggering an emergency dredging just to keep the port open. Taxpayers spent more than $1.3 million to have the harbor and port channels cleared from that single incident.

No such troubles affected the auto pier, a symbol of the fickle fortunes confronting public port authorities.

Lawmakers approved $25 million to build the L-shaped pier along a naturally deep edge of the Delaware for $25 million in 2002, part of a years-long effort to retain a major Volkswagen import contract. The company moved elsewhere in 2008.

Auto exports and imports at Wilmington have continued since, but vehicle tonnage in Fiscal Year 2013 was less than half 2009 levels.

Uncertain needs

In 2010, a Corps of Engineers consultant released a national report on container shipping port capacity concluding that East Coast and Gulf Coast ports were generally operating at below 50 percent of their crane, land, ship berth and cargo loading and discharge capacity, even with ample allowances for big but temporary surges and peaks in traffic.

Ports on the Delaware, the consultant found, were using only 68 percent of the area available for containers, 29 percent of crane capacity and less than half the available ship berth capacity. Wilmington's container crane use was higher than the port complex average, but still below 50 percent.

Even so, the Maritime Exchange's Rochford, sees a different and busier picture.

"I'm among the school of people who think that the Delaware is in the process of becoming a major, net energy exporting port, and that's being driven by the Marcellus shale, by the Bakken crude deals up in North Dakota and also Canadian curde that's coming down into the U.S.," he said.

Shipbuilders in China and elsewhere already are building very large ethane carriers to meet Sunoco Logistics' plans to pipe natural gas across Pennsylvania to Marcus Hook, both for export and to feed a potential new petrochemical industry center. Similar ambitions have surfaced in proposals for Philadelphia's Southport project.

"I think it complements all the other shipping activity here, containers, steel, break bulk. It adds another significant cargo to the river, which will help sustain us," Rochford said.

The University of New Orleans' Ashar said that secondary ports like Philadelphia might have a chance for a container surge if a "feeder system" emerges targeting Atlantic ports, with mega-ships discharging some of their cargo to smaller ships while also servicing ports themselves.

While more-efficient, Ashar said he sees little sign of a move in that direction.

"I would suggest that I don't see a profound change in the status of the ports of the Delaware River," Ashar said. "The question is: What has changed? Unfortunately, the reality is that Philadelphia and Delaware became niche ports, more or less."

Contact Jeff Montgomery at 463-3344 or jmontgomery@delawareonline.com.