Widespread confusion over economic rationale for Savannah harbor deepening

The wrangling over the Savannah Harbor Expansion Project (SHEP) continues.

The public comment period on the Corps of Engineers’ final reports (the General Re-evaluation Report and the Environmental Impact Statement) ended just yesterday, but it seems pretty clear that the Corps will not back off from its authorization to deepen the long Savannah River channel to 47 feet. That’s 5 feet deeper than the current depth of 42 feet, but it’s a foot less than the 48 feet that the Georgia Ports Authority originally sought — and 3 feet shallower than other East Coast ports will likely be after planned projects are completed.

There’s considerable resistance to SHEP from South Carolina politicians (with the notable exception of Governor Nikki Haley), but it remains unclear whether those objections — some of which seem well-founded and some of which are completely irrational — could possibly trump the Corps’ approval.

And expect a lot more wrangling over funding. Despite repeated insistence that the federal government should cover most of the $653 million cost, Governor Deal said in April that Georgia “will accommodate accordingly” if the federal funds don’t come through. If I’m working on the federal budget, that sure sounds to me like Georgia can pay for this line item on its own.

My guess it that all of these debates would be playing out differently if there were better understanding of the Corps’ economic analysis.

A few key points from that exhaustive analysis:

  • Whether the harbor is deepened or not, the amount of cargo passing through the Georgia ports will increase at the same rate until landside capacity is maxed out in about two decades.
  • If the harbor is deepened, the same amount of cargo will be carried by fewer and, on average, larger ships that will spend less time waiting for favorable tides, will be more fully loaded, and will be able to move more efficiently through the long river channel.
  • If the harbor is deepened to 47 feet, there will be an annual benefit of $174 million to the nation as a whole because of the savings in private transportation spending.
  • The Corps did not study the benefits of SHEP as part of a broader national strategy, but clearly the analysis points to increased cargo in coming years at all East Coast ports and the subsequent need to increase capacity and improve infrastructure pretty much everywhere.

Even after so much study and discussion, it’s obvious that many local and state leaders (esp. those in South Carolina) do not understand — or have simply decided to reject — these key conclusions.

How will that $174 million per year in savings actually be felt in the broader national economy?

Well, if the ports will transport the same amount of cargo either way, then the benefits will probably not be felt in increased employment for those who are actually lugging the cargo around.

The Corps specifically mentions the likelihood of cheaper consumer goods here in the U.S. (even cheaper imports?), but we might also see more competitive exports. We might see higher wages and higher profits for manufacturers — but those might accrue in other countries in addition to the U.S.

A small portion of that $174 million might be eaten away by potentially higher fees for larger vessels once the newly-expanded Panama Canal opens in 2014 (the fee structure has not been set and remains a huge wild card).

In terms of the regional Savannah economy, the best rationale for deepening might be that manufacturers would be more likely to settle here or to expand if shipping costs are reduced. That’s just conjecture at this point, although fairly compelling.

At the same time, there are serious environmental issues — ones that have many Savannahians across the political spectrum deeply concerned despite the united front of political and business leaders. The final plan has nearly $300 million in environmental mitigation, but there are still some big question marks about the full impacts of additional saltwater intrusion, of changes to fish habitats, and of other known impacts of further dredging.

When people raise legitimate questions about deepening, the response is often a true but illogical one:  “Georgia’s deepwater ports support 352,146 full- and part-time jobs across the state.”

I’ve seen no reason to doubt that assertion, which is based on a study by the Selig Center for Economic Growth at UGA’s Terry College of Business. I’ve also seen no reason to think that any of those jobs would be imperiled if the Savannah River remains at its current depth.

There are strong arguments for a deeper harbor, but the do-or-die rhetoric from proponents has obscured relevant issues and spawned irrational fears.

Georgians deserve a reasoned discussion of SHEP rather than the constant hyperhole — that’s especially true if Georgia taxpayers are going to be asked to foot the entire bill.


  1. Max Power says:

    [i]Whether the harbor is deepened or not, the amount of cargo passing through the Georgia ports will increase at the same rate until landside capacity is maxed out in about two decades.[/i]

    And I’ve already got an issue with the report. If the SHEP does not go through and other East Coast harbor projects do, Savannah will no doubt see a drop in shipping as carriers favor harbors that can take the bigger more cost efficient ships. Yes there are environmental issues but they’ve been carefully examined and shouldn’t obscure the fact that not deepening the harbor will cost Georgia jobs.

    There was a time not so long ago you could float a barge from Augusta to Savannah. The Corps stopped maintaining the channel and the rivers probably healthier for it, but Augusta isn’t.

    • Bill Dawers says:

      That’s just not what’s in the economic analysis. The shipping companies are not going to suddenly mothball their existing fleets and start using the bigger ships exclusively. Ships of the size currently coming to Savannah and other East Coast ports are predicted to be used in increasing numbers as world shipping increases.

      One nagging question among many concerned Savannahians: if we throw out the Corps’ economic analysis, then why should we trust the environmental impact analysis?

  2. John Konop says:

    A very good post on a topic we should focus on as part of maintaining and or growing our economy. Obviously it is only a matter of time before we must deal with this issue. And the kick the can down the road approach usually cost us we more at the end of the day. This port is key component for the south east for many reason from companies moving here, and growing because of the port, to the economics of having goods transported through the south east via having the port. The real questions should centered around how we make it happen, not if we need it. In this current environment especially, we cannot afford to turn our back on this opportunity.

  3. Calypso says:

    “…authorization to deepen the long Savannah River channel to 47 feet. That’s 5 feet deeper than the current depth of 42 feet, but it’s a foot less than the 48 feet that the Georgia Ports Authority originally sought — and 3 feet shallower than other East Coast ports will likely be after planned projects are completed.”

    If the deepening is going to be done, why do it half-assed? It reminds me of homes built with three sides brick, yet siding (which still needs to be cleaned, painted, maintained, replaced) in the back.

    For a few bucks more do the thing right the first time.

    • Bill Dawers says:

      The 47-foot depth has also emerged as a key reason why some South Carolina politicians are trying harder than ever to stop the project. Some believe the proposed Jasper Port (also on the Savannah River but closer to the open ocean and on the S.C. side) should be 50 feet, but they fear that that depth will not be allowed if SHEP moves ahead as currently planned.

  4. GTKay says:

    This has been a many years long process, and I think to try to dig any deeper would send everything back to square one. Isn’t the 47 foot depth at low tide?

    • Calypso says:

      I was under the impression that the plan all along had been 48′ and it was scaled back to 47′ during the recent brouhaha of several months ago.

      Bill Dawers, can you please shed some light on this? Thanks.

      • Bill Dawers says:

        Any attempt to go deeper would certainly result in years (and years and years) of further study.

        The Georgia Ports Authority originally asked for a depth of 48 feet, and the Corps’ analysis did a cost/benefit analysis for every depth from the current 42 feet up to 48 feet.

        The Corps found that the cost of dredging to 48 feet combined with the considerably greater environmental mitigation required at that depth plus the marginal gain in efficiency all together resulted in 47 feet having the greatest net economic gain to the nation. Georgia continued to push for 48 feet and said the state would fund the difference entirely, but in its final report a couple of months ago the Corps did not authorize anything beyond 47 feet.

        The depth is measured from mean low water. Savannah has fairly extreme tides, so at 47 feet there would be periods when the channel is well over 50 feet. Of course, it’s those tidal delays that are part of the rationale for the project.

        Perhaps I’ll discuss the environmental impacts more in a subsequent post, but they are pretty dramatic. The Savannah River channel extends well out into the open ocean, so SHEP would actually cover 38 miles. Each added foot will allow additional saltwater to work its way into brackish and freshwater areas, destroying marshland, raising salinity levels beyond acceptable levels for current uses, and reducing oxygen in the water.

        • Calypso says:

          Thanks much for such a detailed reply, Bill. I know you’re a new front-pager here, but don’t let us commenters drive you to distraction with our incessant questions.

          • Bill Dawers says:

            It’s a really tricky question — and I guess the issue comes back to that word “know”. I know the Corps’ economic analysis, but many believe (even if they won’t say it aloud) that key elements of that analysis are wrong and understate the risks to the Georgia economy if the harbor is not expanded. At the same time, others think that the analysis is likely overstating the impacts of the Panama Canal expansion.

            Just thinking from a purely economic perspective and putting aside environmental concerns for a moment, the best course for both Georgia and South Carolina would be to work together aggressively on creating the Jasper Port. If the amount of cargo coming in and out of the existing Georgia ports will max out in twenty years, then the addition of new port facilities closer to the open ocean seems like the best long-term strategy.

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