Can the Port of Philadelphia Remain Relevant?

Despite its modest role in the nation's maritime trade, it may well succeed—and that's important for the local economy.

Port officials in cities up and down the East Coast are scrambling to grab a piece of what’s projected to be a surge in maritime trade once the expansion of the Panama Canal is complete about two years from now.

It was with this in mind that former Gov. Ed Rendell, the co-chair of Building America’s Future; Jay Timmons, head of the National Association of Manufacturers; and Philadelphia Regional Port Authority Executive Director James McDermott gathered at Packer Avenue Marine Terminal on Tuesday to urge stepped-up investment in the nation’s ports and other transportation facilities.

And it was also with this in mind that Philadelphia’s port community fought hard over the last decade to dredge the Delaware River shipping channel to a depth of 45 feet. Without the dredging, backers said, the ports of Philadelphia and Camden would slip into irrelevance.

That fight may have been one of the reasons a planned unification of port operations on both sides of the Delaware fell apart — and it’s good that it did, said McDermott, for New Jersey officials steadfastly opposed the dredging even after Pennsylvania agreed to take the spoils.

The dredging is now a little more than 60 percent complete with a projected completion date of 2017. Along with a planned expansion of the city’s container cargo terminal onto land where the Delaware and Schuylkill meet, the deeper shipping channel should enable the Port of Philadelphia to grab a piece of that “post-Panamax” traffic for itself.

But will all this be worth it? Will it enable the Port of Philadelphia to remain relevant to both the regional and the national economy?

After all, 45 feet isn’t deep enough to handle the biggest ships that will begin steaming through the Panama Canal in 2015. What’s more, the two East Coast ports closest to us—New York and Baltimore—have assets that put Philly at a disadvantage: Baltimore is closer to the canal and has connections to the interior as good as Philadelphia’s, and New York is in the center of the largest local market in the country; it can generate its own business close to home while we must depend on our railroad connections to compete.

These two facts already make the port less important to the nation’s commerce than it once was: In terms of tonnage handled, it’s only the 26th-largest port in the country, and all those planned improvements aren’t likely to raise its ranking all that much.

But there’s a difference between “less important” and “unimportant.” McDermott defended the dredging this way: “The deeper channel will allow us to handle 98 percent of all ocean-going vessels.” And that’s a lot of potential traffic right there.

In addition, the port has been very successful in going after and holding onto niche traffic in several categories. Maritime industry observers note that Philadelphia has a virtual lock on shipments of stone fruit and seasonal fruits from South America, all of which comes on ships smaller than the current “Panamax” limits. Motor vehicles, a currently growing market, could present another opportunity for the port to gain traffic.

And the traffic the port gets now is even more important to the regional economy than it is to the national one. “There are hundreds of jobs this facility creates on an everyday basis,” McDermott said at the conference. And as Rendell pointed out, the port is now the largest single generator of “well paying, blue collar jobs” in the region—jobs that do not require a college degree yet can support a middle-class lifestyle. “Without the dredging, those jobs would have disappeared,” he said.

Rendell’s successor, Tom Corbett, has cited studies showing that dredging and port expansion will generate 8,000 to 12,000 jobs directly and another 38,000 indirectly in continuing to support the port projects, which are two-thirds paid for by the Federal government. (The state of Pennsylvania is picking up the remaining third. The State of Delaware, which had also initially opposed the dredging, has since switched its position on the project; New Jersey remains opposed.)

With the middle class besieged from all sides in the current uneven recovery, anything that protects and expands such jobs cannot be dismissed as wasteful or irrelevant. The planned Southport expansion will add 270 acres to the container port and hundreds more of those jobs with it, and with traffic in all categories projected to continue to grow after the Panama Canal expansion is complete, there’s a good chance that Philadelphia can grab enough to keep those 270 acres as full as those now used by the Packer Avenue and Tioga terminals.

As the 26th-biggest port in the country, Philadelphia may not be much more than a blip on the global maritime trade radar screen. As a pillar of a truly diversified metropolitan economy, however, it’s huge.