These ports have an extremely bright future as significant international transportation hubs. Even though much container port development had bypassed the Gulf Coast, changes in the Panama Canal and an increase in activity throughout Latin America may provide a new wave of this activity, and this activity will likely want to end up in Gulf Coast ports.
When the Panama Canal first opened in 1914, it represented the culmination of a dream for bringing the East and West Coasts of the United States logistically closer together, cutting ship travel from New York to San Francisco from 14,000 miles down to 6,000. The canal is about to once again make a quantum change in American transport, but this time with an even more global reach. And this time, the immediate beneficiary is the Gulf Coast. A new, parallel canal will open in 2015, marking the start of a new era for the region. This new capacity will not only mean more ships will be able to traverse the isthmus of Panama annually, but that newer, larger ships will be able to make the journey as well.
Until now, ships crossing the canal could only carry about the equivalent of 2,400 40-foot containers. The new locks will be able to accommodate vessels capable of carrying 6,300. This fact, combined with increasing regulation, congestion, and costs to operate in California, could drive significant container traffic to the U.S. Gulf Coast. Gulf ports would not only be able to directly accept these trans-Pacific shipments, but might - through water and rail connections - be able to move them more efficiently and cleanly to the population centers of the South and Midwest. Couple this with the importance and growth of Brazil and other Latin American countries as trading partners, and the size of the opportunity becomes apparent.
The ports of Biloxi, Mississippi, and Houston, New Orleans, and Mobile, are all gearing up to pick up this increased traffic. For example, the state of Louisiana has recently passed a new law offering a tax break of $5 for every ton of general cargo a Louisiana company imports or exports through a state port. The savings can ultimately make it more affordable for businesses to move products through Louisiana instead of competing ports. Louisiana is considering several new port developments in the Mississippi Delta to accommodate this increased flow.
While the country as a whole continues to try to find a way forward out of the recession, the ports along the U.S. Gulf Coast are well-positioned for growth that both builds on traditional area strengths and moves into emerging technologies and trade streams. While there is still considerable work to be done and risks to be overcome, the area serves as a good example of how the strengths of the past can be repurposed to catch future success.
Christopher Steele is president of CWS Consulting Group, a business consulting firm specializing in location strategy, site selection, industrial development, and business attraction. He previously served as president of the Real Estate Line of Business at TranSystems and as a senior manager in Ernst & Young's Real Estate Advisory Services Group. Contact him via his company's website at www.cwsgrp.com