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Panama Canal expansion brings competition for East Coast ports

A container ship off the New York shore. The Panama Canal is getting a makeover, and it could be a gamechanger for Atlantic coast ports -- that is, if those ports are ready in time.

David Brancaccio: You may have heard, the Panama Canal is getting a makeover. In two years, it'll be able to handle ships big enough to carry twice the cargo. Yesterday we told you the expansion could hurt West Coast ports that currently serve ships too big to squeeze through the canal. Today, we look at how East Coast ports are playing this.

From New York, Janet Babin reports.


Janet Babin: If you're at the New York Container Terminal yard in Staten Island, you do not want to be walking around without a hard hat and some neon clothing. Up to eight cargo ships dock here each week. After they arrive, longshoremen use a crane to drop the 40-foot containers onto waiting trucks lined up next to the ship, that then whiz off with their new cargo.

Babin: What's coming in?
Joe Cordero: Your boots, your coat, the hard hats, my shirt, everything.

That's New York Container Terminal's Joe Cordero. The ship is more than three football fields long, and looks enormous. But it's tiny compared to ships that could sail here after the Panama Canal expansion.

Bob Silverman is a supply chain analyst with Jones Lang LaSalle.

Bob Silverman: The canal expansion is going to allow bigger ships to go through the canal and essentially reduce the cost of moving an ocean container from Asia to the East Coast ports.

Silverman says that'll put the Midwest in play. For the first time, it could be cheaper to get stuff to the heartland from the East Coast. Port operators from Florida up are deepening harbors, preparing for an onslaught of new customers.

But Rick Larrabee with the Port Authority of New York and New Jersey says it'll be a battle.

Rick Larrabee: The West Coast ports are not going to sit by idly and watch this. So between the West Coast ports and their partners in the rail business, for instance, or the trucking business, they're going to continue to compete for the business.

Railroad and gas prices will also be a factor in which coast wins.

In New York and New Jersey, there's another issue, too. The supersized freighters won't fit under the Bayonne Bridge that connects Staten Island and New Jersey. Larrabee says the region will spend a billion dollars to lift the bridge.

Larrabee: We're kind of playing a little bit of catch-up here.

If Panama Canal construction remains on schedule, the monster ships will be able to sail up the Atlantic coast by 2014. Unfortunately for the longshoremen working these New York docks, the supersize ships won't fit under the Bayonne Bridge, or into this harbor, until two years after that.

In New York, I'm Janet Babin for Marketplace.

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