"^27 A UNITED STATES DEPARTMENT OF COMMERCE PUBLICATION V THE ECONOMICS OF DEEPWATER TERMINALS U.S. DEPARTMENT OF COMMERCE Maritime Administration NISSEKI MARU At 367,000 deadweight tons, the Japanese-flag NISSEKI MARU is the largest vessel in the world fleet at present. This ship, capable of carrying nearly 3 mil- lion barrels of oil. highlights the increasing trend toward the use of super-sized ships in world bulk commerce to achieve greater transport economies. Such ships are at present barred from U.S. ocean commerce because of the lack of deepwater facilities to accom- modate them. THE ECONOMICS OF DEEPWATER TERMINALS 1972 U.S. DEPARTMENT OF COMMERCE Peter G. Peterson, Secretary James T. Lynn, Under Secretary Maritime Administration A. E. Gibson, Assistant Secretary for Maritime Affairs Prepared by Office of Ports and Intermodal Systems Division of Ports For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C., 20402 - Price 65 cents. Table of Contents List of Tables List of Figures and Maps List of Appendixes . . . INTRODUCTION I. SUMMARY/CONCLUSIONS/RECOMMENDATIONS NATURE OF SUPERSHIP DEVELOPMENT AND ITS RESULTING PORT REQUIREMENTS A. Impact of Rapid Bulk Vessel Size Growth , B. Economics of Larger Bulk Vessels C. Foreign Port Supership Terminal Developments EXISTING CONSTRAINTS TO DEEP DRAFT BULK CARRIERS SERVING U.S. NORTH ATLANTIC PORTS A. Inadequate Channel Depths and Widths B. Inadequate Terminal Transfer and Storage Capacity .... C. Lack of Available Waterfront Land Areas for Commitment to Bulk Cargo Faculties D. Risks of Vessel Collisions and Groundings E. Public Awareness of Oil Pollution and Concern for Environmental Protection NEED FOR PROVISION OF DEEP-DRAFT FACILITIES TO HANDLE LARGER BULK VESSELS IN U.S. FOREIGN TRADES AND POSSIBLE CONSEQUENCES OF INACTION A. U.S. Industrial Base Dependent Upon Low Cost Water Transport of Bulk Raw Materials B. Loss of Competitiveness in Overseas Export Markets C. Higher Costs of Raw Materials Imports D. Maximum Commercial Benefits of Constructing U.S. Flag Large Bulk Carrier Fleet Inhibited by Lack of Deepwater Terminals E. Impact of Industrial Relocation F. Balance of Payments Effects V. MAJOR OBSTACLES TO MULTIPLE CHANNEL DEEPENING A. Physical B. Environmental and Ecological C. Political D. Cost and Adequacy of Improvements VI. COMPARATIVE ANALYSIS OF ALTERNATIVE PROPOSALS TO HANDLE LARGE BULK VESSELS ON NORTH ATLANTIC COAST VII. MAJOR OBSTACLES TO OFFSHORE TERMINAL DEVELOPMENT A. Physical B. Financial C. Environmental and Ecological D. Public and Political Digitized by the Internet Archive in 2012 with funding from LYRASIS Members and Sloan Foundation http://archive.org/details/economicsofdeepwQOunit INTRODUCTION It is becoming increasingly apparent to those of us involved in providing for this Nation's future shipping needs that the United States today stands at a critical juncture at which it must determine whether or not it will be able to meet a large portion of its shipping requirements efficiently in the years ahead. Faced with a rapidly escalating demand for raw materials, much of which will have to be obtained from foreign sources, this Nation must decide whether it will make the investment in large ships and the facilities necessary to transport and handle these commodities economically. Compelling evidence is at hand today that mammoth bulk carriers and the deepwater terminals they require will have to be built if the United States is to maintain its status as a leading economic power in the world. This country is becoming a "have not" nation in terms of mineral and energy resources, requiring far more of these essential supplies than can be furnished domestically at reasonable cost. We must increasingly depend on foreign sources for these materials to meet our steadily burgeoning domestic demand, and this reliance will increase still further in the years to come. The situation with petroleum illustrates the quandary that faces us. Demand for energy in the United States is expected to double in the next 15 years, from the present 30 million equivalent barrels of petroleum daily to 60 million by 1985. All domestic sources— petroleum, natural gas, nuclear power, coal, and hydroelectric power— will only suffice to meet about half of this anticipated requirement. Foreign energy sources, principally petroleum, will have to be called upon to fill the gap. A similar situation exists with respect to iron ore, another commodity vital to the future growth of the American economy. Forecasts indicate that the annual demand for offshore iron ore imports will grow from about 30 million short tons today to about 40 million tons in ten years. This expansion will come about because of the growth in the U.S. economy and the steady depletion of domestic reserves of this ore. It is readily apparent that U.S. reliance on foreign countries to supply these commodities, as well as many others, will grow in coming years. Yet, we are far from the only nation actively pursuing these supplies. The other industrial economies of the world, Japan and those of Western Europe particularly, compete with the United States for these commodities. There is every reason to believe that this competition will become stiffer in future years as more nations become industrialized and seek a share of the world's limited natural resources. Under these circumstances, the cost of transporting these materials takes on great significance, affecting the delivered price of the raw materials we must purchase and sell on the world market. These costs can be considerably lessened through the introduction of larger and larger ships. This is reflected in the increasing usage of these vessels in world commerce. Ten years ago, there were virtually no ships in the world of more than 100,000 deadweight tons. Today, there are over 200; and this number is expected to quadruple to more than 800 in just the next three years. By 1980, the 200,000-300,000 ton-bulk carrier will become the world's standard, the backbone of the international bulk carrier fleet. Ships of these size offer significant economies in transportation costs. Increasing tanker size from 47,000 tons, today's average-sized tanker, to 250,000 tons results in lowering transport costs from $12.60 per ton to $5.70 per ton, almost $7; similarly, substituting a 250,000-ton vessel for an 80,000-ton ship, which is the largest that can use present U.S. Atlantic Coast ports, results in decreasing the per-ton cost of transportation by $5. Looked upon conversely, these cost savings can be viewed as the penalties for failing to utilize these larger vessels whenever possible. This study of the economics of offshore terminal facilities, which would permit the use of these large ships in our important bulk trades, indicates that by 1 980 the additional costs to this Nation of failing to provide the most economical form of deepwater terminal facility could exceed $650 million annually, in terms of increased domestic prices of imported iron ore and crude oil and lost competitiveness in the export-coal market. These costs are avoidable, if those concerned-the oil and steel industries, the coal industry, the maritime industry, and the Govern- ment-begin planning now to provide the ships and terminals necessary for the efficient ocean movement of these raw materials. A start has been made in this direction. Contracts to construct the large-size U.S.-flag ships that would form an important part of this transportation system currently are being negotiated. The user industries have indicated their interest in achieving more economical transportation. The major hurdle yet to be overcome lies in providing the deepwater facilities for these large-sized ships, particularly along the heavily industrialized North Atlantic coast, which accounts for 90 percent of U.S. coal exports, as well as 80 percent of iron-ore imports and 50 percent of crude-oil imports to this country. Despite the major role of U.S. North Atlantic ports in our shipping system, present facilities limit the size of ships they can accommodate fully loaded to about 80,000 deadweight tons— a size entirely too small to reap the potential economic benefits to be derived from larger bulk carriers. These considerations led directly to the undertaking of this study by the Maritime Administration's Office of Ports and Intermodal Systems in an effort to identify the most economical means of providing suitable ship terminal facilities on the North Atlantic coast for future requirements. The study was concentrated in six areas to explore the problem, its causes, and solutions: 1. The impact of the present continuing upward trend in the size of bulk carriers, the economic con- siderations underlying it, and the port-development projects undertaken throughout the world to meet it. 2. The major constraints to the use of large bulk carriers in present U.S. North Atlantic ports. 3. The need for providing deepwater terminal facilities in this region and the economic penalties for failing to do so. 4. The obstacles preventing multiple channel deepening on the North Atlantic coast. 5. The economics of alternative transshipment facilities located in deepwater harbors and the open sea along the North Atlantic coast. 6. The impediments to offshore terminal development projects in this area. This study is not meant to be the last word on this subject. It was intended, however, to provide a useful, comprehensive focal point for further research and discussion, which hopefully will lead to firm plans to provide deepwater terminals for U.S. foreign trade in the near future. 2*^ . E. GIBSO Assistant Secretary of Commerce for Maritime Affairs CHAPTER I SUMMARY/CONCLUSION/RECOMMENDATIONS SUMMARY World bulk shipping is in the midst of a revolution in size of ocean vessels transporting oil, coal, and iron ore essential for industrial and economic growth. Twenty years ago, world bulk tonnage was moving in 16,000 ton T-2 tankers and 10,800 dry bulk liberty vessels. In 1950, the largest ocean bulk carrier in opera- tion was Bethlehem Steel's Venore class, 24,500 tons. The emergence of the 100,000 tons plus capacity tanker and bulk carrier has all come about since the mid-sixties. As recently as 1966, there was only one ship in the world over 200,000 tons-the Idemitsu Maru. By 1974, the world fleet of bulk vessels in service over 100,000 tons will number approximately 800 of which over 400 will be in excess of 200,000 tons each. Thus, by 1980, the 200,000-300,000 ton tanker and combina- tion bulk carrier will each become standard workhorses of large scale, world bulk trade movements. Significant unit transport cost savings are made possible by these large bulk vessels. The savings in landed costs are the result of the substantial reduction in con- struction and operating costs per ton of ship as vessel size and voyage distance increase. These highly produc- tive vessels also require no greater time in port than smaller bulk ships because of faster loading and dis- charge equipment. The startling construction and trans- portation economies of scale of these supercarriers have already been dramatically proven, particularly on major bulk movements to Japan and Europe from distant supply sources. To operate at full load draft, these mammoth tankers and bulk carriers require water depths from 60 to 90 feet. The present U.S. port system, particularly on the North Atlantic, is wholly inadequate to accommodate these giant vessels. With a few exceptions on the West Coast, existing channel depths of 35 to 45 feet at the majority of U.S. ports severely limit bulk vessel sizes to about 80,000 tons. In addition, there are other signifi- cant constraints to the safe use of supersized bulk vessels in these port channels, namely; (a) the grave risks of collisions and strandings in congested inner harbors, (b) the strong public fear of oil spill pollution and resultant environmental damage, (c) the inadequacy of existing terminal transfer and storage facilities, and (d) the in- creasing cost and lack of waterfront land to expand terminal capacity. Our foreign port competitors, meanwhile, are taking impressive steps to meet the challenge of supersized vessels and reap the benefits. Deep water port facilities are being provided by all the world's major industrial nations while the U.S. remains the only exception. The economies of larger tanker and bulk carrier transporta- tion have already given rise to over 50 foreign port facilities in operation, under construction, or planned capable of handling 200,000 ton vessels and larger. It is indeed inconceivable that the largest industrial trading nation and consumer of energy in the world should forego the economics of large bulk ship construc- tion and operation. There is no question that there is a definite need to use larger vessels in our foreign bulk trades, particularly in the carriage of oil. An important prerequisite to sustained economic growth in this nation has been and will continue to be the improvement of our capability to handle oceanborne commerce and the vessels transporting it at the lowest possible cost. Since the end of World War II, a major share of the U.S.'s industrial base has become increasingly dependent on the movements of dry and liquid bulk commodities through ocean ports to supplement a diminishing supply of indigenous raw materials. These bulk commodities are the lifeblood of our economy. The U.S. North Atlantic region between the Ports of New York and Hampton Roads has fostered and devel- oped the greatest concentration of tidewater based in- dustries in the world. These bulk producing and using complexes simply cannot exist without the availability of low cost waterborne transportation to receive and ship raw materials. In 1970, for example, the North Atlantic port area handled over 90% of total U.S. ocean- borne coal exports and over 80% and 50% of total iron ore and crude oil imports respectively. From 1970 to 1980, total oceanborne foreign traffic through the North Atlantic ports is projected to increase by 1 35% for crude oil, 30% for coal and 22% for iron ore. If the U.S. does not take advantage of large bulk vessels by providing deep water transfer facilities in the North Atlantic to handle this bulk cargo increase, it will: (a) pay higher transport costs for crude oil and iron ore imports, (b) lose competitiveness in world markets for export coal by increasing delivery costs to foreign buyers, (c) increase smaller bulk vessel traffic density and lightering operations in already congested harbor channels, resulting in even greater potential risks of colli- sion and oil pollution damage, (d) minimize the com- mercial benefits of constructing large U.S. flag tankers and bulk carriers under the Merchant Marine Act of 1970, (e) risk the movement of critical processing in- dustries outside the U.S. for relocation or expansion, and (f) decrease our national trade balance and increase our balance of payments deficit. What then is the most economical means to provide deep draft vessel port capability in the North Atlantic- multiple channel deepening, offshore facilities in deep 1 water harbors, open sea terminals or transshipping at a foreign port? Are the physical, environmental, and political constraints to multiple channel improvements as great or even greater for offshore port terminal development? These are the major questions which are explored in the final chapters of this study. With the time lags involved with engineering, environ- mental studies, financing and construction, the late seventies is the earliest any of alternatives could be in full operation. As such, the entire economic comparison of various alternatives is based upon projecting unit transport costs, commodity throughout, annual trans- port savings, and total capital investment expenditures for the year 1980. Therefore, using 1980 as a planning basis, we believe the following conclusions and recommendations can be drawn from this study analysis. CONCLUSIONS 1. Multiple dredging in the North Atlantic is not the most economical long term solution. Given the physical and environmental constraints of underlying rock, subsurface vehicular tunnels and limited spoil disposal areas, the North Atlantic ship channel sys- tems at New York, Delaware Bay, Baltimore and Hampton Roads are capable of only minor deepening at an estimated 1980 cost in excess of $2 billion which would provide depths still inadequate for the bulk vessel sizes of today and tomorrow. 2. The most economical alternative of providing deep- draft bulk vessel handling capability in the North Atlantic is an offshore transfer terminal in a natural deep water harbor location. This alternative could produce a strong national incentive of approximately $700 million in potential 1980 annual transport savings resulting from the use of large U.S.-flag bulk vessels for only the export of coal and the import of iron ore and crude oil. These total savings can also be viewed as the addtional costs to the U.S. that will be incurred if port channels remain unchanged and the best deep water transfer facility alternative is not implemented. 3. For each combination coal and iron ore transfer terminal alternative examined in a natural deep water harbor, the annual transport savings projected for 1980 were significantly high that they would exceed total 1980 capital investment within three years or less. The magnitude of savings clearly indicates that the economics of coal and iron ore transshipment in the North Atlantic are greatly affected by the loca- tion of the transfer terminal. The more distant the deepwater harbor location from existing coal and iron ore handling ports, the more inferior its economics become because of higher feeder transport costs. 4. However, for each crude oil transfer alternative in a deep water harbor, the annual transport savings for 1980 were sufficiently high that they would surpass total 1980 investments costs within one year. The proximity of these results indicates that crude oil transshipment economics in North Atlantic are rela- tively independent of terminal locations. Because of its access to foreign-flag shuttle vessels and low capital construction costs, it is clear that a Canadian, crude oil transfer terminal is a very viable alternative to all comparable U.S. deepwater harbor locations. 5. Based on these 1980 total capital costs and annual savings, there is reason to believe that all North At- lantic deep water harbor terminal alternatives are within the financial capability of private industry. 6. Although there is considerable support for handling large tankers offshore in preference to congested North Atlantic ship channels, increased public and political awareness of oil's potential as a pollutant and its damaging effects on local ecology, natural resources and valuable recreational areas, is presently the most significant constraint to deep water harbor port development. 7. If strong North Atlantic environmental opposition, however, continues to block offshore construction in natural deepwater harbors, as evidenced in recent legislation passed by the State of Delaware, the devel- opment of a U.S. transfer terminal in the open sea becomes a more likely option. However, preliminary findings indicate that, while there are potential sig- nificant transport savings in an open sea terminal, it would be significantly more expensive to construct and operate, and may require some form of Federal assistance. 8. The overwhelming national interest argues for devel- oping ways of constructing deep water transfer facil- ities that are consistent with the integrity of both our natural and human environment. In lieu of outright prohibition, major emphasis should be concentrated on formulating comprehensive plans which would balance environmental protection with economic requirements and public rights with private goals. Given the state of present technology, there is no reason why adequate, deep draft transfer facilities cannot be provided and in the process, completely protect adjacent land and water areas from the dangers of pollution. Similar facilities which provide such protection already do exist in other parts of the world. 9. Any undue delay in developing deep draft capability for large bulk carriers in the U.S. North Atlantic will more than likely permit Canada, and possibly the Bahamas, to secure the necessary U.S. industry/ customer support to build a deep water, redistribu- tion terminal. Once established, such a project, which would probably be based on long term contracts, would substantially preclude the development of a competitive U.S. based transfer facility. That such a vital transportation terminal be owned and controlled by foreign interests and not subject to U.S. juris- diction would be distinctly inferior, particularly from a national security standpoint, and would have a deleterious impact upon our world trade posture. RECOMMENDATIONS It is recommended that the Maritime Administration in cooperation with all concerned interests— Federal and non-Federal, public and private: 1. Pursue greater refinement of the economics of trans- shipping bulk cargoes at offshore transfer terminals in natural deep water harbors on the North Atlantic. For the most part, feeder voyage and terminal trans- fer costs per ton affect the economics of transship- ping coal, iron ore and oil at these deepwater harbor locations more significantly than ocean freight costs. Therefore, in terms of both economic and environ- mental desirability, additional study is needed to determine: (a) the most effective means of trans- shipment, i.e., by tug/barges, pipelines, or small vessels, and (b) confirmation of capital cost estimates of constructing and operating terminal facilities and equipment at potential offshore sites. 2. Prepare preliminary comparative economic analyses of alternative means to handle large tankers and bulk carriers on the Gulf and West Coasts. In view of the more severe bulk vessel size limitations imposed by existing port channel depths in the Gulf, this geographical area has a more immediate study requirement than the West Coast for deep water, port development capability. These brief studies would determine the most economical means of providing this deep draft capability— major channel deepening, offshore facilities in protected harbors, open sea terminals, or transshipping at a nearby foreign port. Similar to the study of deep draft vessel port capabil- ity on the North Atlantic, these Gulf and West Coast surveys would provide useful preliminary economic data pending completion of the more detailed anal- yses that will be incorporated in the major research studies to be competed over the next two years. 3. Explore ways of making the economics of open sea transfer terminals more viable. For the most part, the high construction and operat- ing costs of open sea transfer facilities for large bulk vessels are attributable to significant wave action which increases in proportion to depth. Therefore, advanced technological innovations in offshore con- struction techniques and materials need to be identi- fied which will minimize the effect, and hence lower the cost of overcoming strong wave action, on both the terminal structures built in the open sea and the equipment used in their construction. 4. Work to secure as clear an assessment of the probable environmental effects of construction and operating off- shore port facilities for large tankers and bulk carriers as there are of the economic benefits. Regardless of whether private or public interests finance offshore bulk vessel port development, they would have to comply with the requirements of the National Environmental Policy Act of 1969 relating to preparation of a detailed examination of the alter- natives to and the environmental impacts of such facilities. Thus, evaluation of these facilities, no matter who constructs them, must go beyond investi- gation of economic and technical factors alone. Final recommended sites must represent an optimum choice from an economic, engineering, ecological, environmental, and national security standpoint be- fore the Corps of Engineers can issue a construction permit. 5. Continue exploring ways to overcome serious reserva- tions held by segments of the public regarding employ- ing large tankers and bulk carriers in U.S. foreign trades and constructing supporting offshore facilities. Since the considerable local resistance stems primarily from fear of potential oil pollution resulting from accidental spills, it must be shown that to handle the projected increased volume of imported oil, larger tankers held offshore pose less of a potential pollu- tion threat than a fleet of smaller tankers entering congested harbors under varying conditions of traffic and visibility. It must also be demonstrated that com- mercially viable offshore transfer facilities can be built incorporating the most advanced safeguards in con- struction design, operating techniques and control equipment to satisfy the most stringent environ- mental protection requirements. 6. Work to support accelerated funding and completion of Corps of Engineers regional, deep-draft vessel port studies, recently authorized by Congress for the North Atlantic, Gulf and West Coasts. The implications of existing U.S. port channel depth limitations on the President's long-range maritime shipbuilding program, as it relates to larger, more economical bulk carriers, strongly underscores the urgent need to initiate these regional studies as soon as possible. Early completion of these surveys within the next two years would help to ensure that the national objectives for a competitive U.S. flag bulk vessel fleet and modern, deep water port facilities to accommodate it are realized. 7. Explore the need for establishing national policy guidelines in delineating the role of Government vis-a-vis private interests in providing deep water port facilities. Traditionally, private industrial interests have pro- vided their own terminal handling facilities in existing port channels to handle bulk vessels. The problems involved, however, in providing deep draft bulk trans- fer facilities at offshore locations with regional service capability are broader and more complex which may be beyond the scope of private interests to resolve alone. While the financing and technical know-how to construct offshore terminals in protected harbors are within the capacity of the private sector, obtaining necessary public and political acceptance appears increasingly doubtful. Therefore, it is pertinent to consider the question: Should there be a public body involved in the planning, construction, operation, vessel port development, where such facilities would supervision and control of a regional, offshore bulk be considered a "channel" in itself, since it would transfer port? And if so, how should it be consti- exist as the most economical alternative to deepening tuted? Should it be a single or multi-state authority, many harbors at tremendous Federal cost? And or a broader-based regional organization comprising lastly, does the Federal role require the designation of Federal, state and local agencies? Or possibly should a lead agency to serve as a focal point of contact for the historical, Federal responsibility for improving the many divergent interests involved in deep water channels be extended to include financing deep draft port development? CHAPTER II NATURE OF SUPERSHIP DEVELOPMENT AND ITS RESULTING PORT REQUIREMENTS There is no reason to dispute that dry and liquid bulk cargoes are moving and will continue to move worldwide in larger vessels. By 1980, the 200,000-300,000 dead- weight ton (d.w.t.) tanker and combination bulk carrier will each become standard workhorses of large scale, world bulk trade movements. Ten years ago, only three vessels in the world fleet had a draft of over 50 feet. Today, there are hundreds; by 1980 there will be thou- sands. A. Impact of Rapid Bulk Vessel Size Growth As shown in Table 1 , the emergence of the 1 00,000 d.w.t. plus capacity vessel has all come about since the mid-sixties. At the end of 1965, prior to the second closure of the Suez Canal, there were only 1 9 vessels (all tankers) over 100,000 d.w.t. in operation. By the end of 1970, the upward bulk vessel size trend produced no fewer than 275 tankers, and 44 pure dry bulk and com- bination dry /liquid bulk vessels in service over 100,000 d.w.t. Thus, from 1966 to 1970, the number of bulk vessels in operation over 100,000 d.w.t. increased at a fantastic average annual rate of approximately 350 per- cent. The growth of tankers and bulk carriers exceeding 100,000 d.w.t. placed under construction or on order has also been phenomenal. At the end of 1970, as shown in Table 2, there were in the over 100,000 d.w.t. class some 279 tankers under construction or on order averag- ing 240,000 d.w.t. and 181 straight dry bulk and com- bination bulk carriers averaging 150,000 d.w.t. Thus, by 1974, the 100,000 d.w.t. and over world fleet of bulk vessels will have grown to 779 ships in operation. Of this total, as illustrated in Figure 1, over 400 will be in excess of 200,000 d.w.t. -some 371 tankers and 34 bulk car- riers. By 1980, this massive fleet of bulk ships over 100,000 d.w.t. is expected to easily exceed 1,000 vessels. The largest vessel type in the world fleet has been the crude oil tanker which has increased in size significantly since 1963. By 1975, over 60% of world crude tanker tonnage capacity, alone, is expected to be in tankers in Table 1. -DEADWEIGHT DISTRIBUTION OF LARGE BULK SHIPS IN OPERATION OVER 100,000 DWT AS OF DECEMBER 31, 1970 Year built 1959 1960 1962 1963 1964 1965 1966 1967 1968 1969 1970 Total Type of ship: Bulk Carrier .... Bulk/Oil Ore Carrier Ore/Oil Ore/Bulk/Oil ... Tanker Total 100,000 125,000 150,000 Total 124,999 149,999 199,999 Source: Division of Statistics, Maritime Administration. Number of Ships 300 273 250 - 200 " 150 132 - 100 63 - 50 1 2 ' ■ 18 n Order 12-31-70 Source: Maritime Administration U.S. Department of Commerce Figure 1 excess of 150,000 d.w.t.; by 1980, 70% will be in tankers larger than 200,000 d.w.t. The mammoth size of these vessels, in terms of ship characteristics, is most strikingly illustrated when compared to the standard World War II T-2 tanker as set out below: Deadweight (tons) . Overall length (ft.) . Beam (ft.) Draft (ft.) Deadweight (tons) . Overall length (ft.) . Beam (ft.) Draft (ft.) Nisseki Universe Maru Ireland 477,000 372,400 326,600 1,243 1,243 1,133 203 177 175 92 89 81 Idemitsu Maru T-2 206,000 16,600 1,222 524 The largest tankers now in service, the six Gulf Oil 326,600 d.w.t. vessels, were displaced by the delivery of the above 372,400-ton tanker to Tokyo Tanker Co. in September 1971. However, the Nisseki Maru will not hold the record too long as the construction of two 477,000-ton tankers in Japan is scheduled to begin in early 1972 for Globtik Tankers, Ltd. The latter also has a tanker of 500,000/700,000 d.w.t. in the planning - stage. These large scale increases, however, in individual tanker size obviously can not continue indefinitely. While there appear to be no present technical constraints precluding the construction of a 1,000,000-ton tanker, physical, economic and environmental factors are expected to limit the number of leviathan crude oil vessels over 300,000 tons appearing on the international scene in the future. These very large crude carriers (VLCC) over 300,000 tons are designed primarily to operate on specific routes from the Middle East to Europe and Japan and will continue to be severely limited to a few specialized ports having adequate, deepwater berthing, handling and storage facilities. Much more operational flexibility is normally required by other major tanker operators. Another major development which would have a profound influence on the future construction of VLCC's over 300,000 d.w.t. would be international adoption of a current IMCO proposal that the very large tanks now being incorporated in these vessels should be materially reduced in size, mainly for anti-pollution reasons. Probable effects of implementing this proposal would include the use of much more steel and hence would further increase construction costs which have already virtually doubled in the last 4-5 years. Higher construction costs coupled with recent increased operating costs, particularly steadily rising insurance premiums, could mean a significant erosion of the economic advantages of the VLCC and a major limitation to its future construction. Therefore, it appears that the spiraling trend to ever larger tankers will level off in the future and stabilize in the 200,000 to 300,000 d.w.t. range. This tanker size class is expected to become as common in worldwide trading by 1980 as the T-2 tanker was thirty years ago. Within this class, however, the new popular size range for general crude oil movements has become 250,000-300,000 d.w.t. For the first time as indicated in Table 2, there are now more vessels on order in this size class than for tankers in the 200,000 to 250,000-ton range. Whereas the number of tankers in the 250,000/300,000-ton class had increased from 56 in June 1969 to 123 in December 1970, tankers in the 200,000/250,000-ton range declined steadily over the same period from a high of 131 to 106. J. H. Kirby, managing director of Shell International, put it quite categorically in a London speech when he stated, "No matter what, there can be no thought of abandoning big tankers and returning to 50,000 tonners now. If 200,000 to 300,000 tonners are not used, the demand for crude oil is growing at such a rate that it would be impossible to build all the 50,000 tonners that would be required. It would also be impossible to provide sufficient trained crews for them even if they could be built. The ports of the world would become hopelessly congested with them. Thus, the 200,000 to 300,000 tonners are before us and here to stay." Table 2. -DEADWEIGHT DISTRIBUTION OF LARGE BULK SHIPS OVER 100,000 DWT UNDER CONSTRUCTION OR ON ORDER AS OF DECEMBER 31, 1970 Type of ship Bulk Carrier 44 34 7 3 Ore Carrier 4 2 1 1 Ore/Oil 62 1 16 11 22 12 - Ore/Bulk/Oil 71 33 5 33 Tankers 279 13 20 7 106 123 9 1 Total 460 83 49 55 128 135 9 1 Source: John I. Jacobs and Co. Ltd., World Tanker Fleet Review, December 31, 1970. Fairplay International Shipping Journal, World Ships on Order, February 25, 1971. Similarly, the influence of the increasing size of combination bulk carriers, such as the ore/bulk/oil and ore/oil vessels on present bulk cargo trade patterns is already pronounced and will continue to be a strong force for many years to come. To handle the expected increase in world trade of dry and liquid bulk commodities, today's standard bulk carriers under 100,000 d.w.t. are being replaced by these more versatile combination bulk carriers between 1 50,000 and 300,000 tons. Presently, as shown in Table 2, the popular size range for combination ore/oil carriers under construction is between 200,000 and 300,000 d.w.t. while the ore/bulk/oii vessels orders are concentrated between 150,000 and 200,000 d.w.t. By 1975, the average size of all combination bulk carriers in service will exceed 150,000 d.w.t. -doubling the existing average size. By 1 980, it is expected, however, that the 200,000-300,000 d.w.t. combination bulk carrier will become the backbone of worldwide bulk commodity transportation particularly in the large scale, major movements of coal, iron ore, and oil to Japan and Europe. This vessel size class, therefore, will set the ocean freight rates of these major trade patterns which others will have to meet. B. Economies of Larger Bulk Vessels The transport savings of large tankers and bulk carriers have long since been proven. Not only have housewives found that there is economy in bigger packages, but also the large volume bulk shippers, led by the oil industry, have and will continue to utilize large vessels for bulk movements to reduce transportation costs. These vessels are the product of greatly advanced marine technology, designed both to cope with the increasing volumes of bulk cargoes that must be transported and to carry them at lower unit cost. Thus, the economies of supersized bulk carriers have enabled the major industrial nations, particularly Japan and Europe, to depend increasingly on more distant sources for raw materials. As a result, the annual average length of haul for major bulk commodities essential for industrial and economic growth has increased steadily during the last decade. . Figure 2 illustrates the startling economies attainable in the unit costs of petroleum transportation made possible by increases in vessel size and route distance. These are approximate transport costs per barrel of petroleum at 7.5 barrels/long ton for hypothetical voyages. Marked savings in unit delivered costs are the result of the substantial reduction in capital and operating costs per ton of vessel deadweight as vessel size and voyage distance increase. The rate of savings, however, tends to decrease at a declining rate as tanker size and distance increases. A specific and now the classic example of the unit transport savings made possible by mammoth tankers is Gulf Oil's movement of crude oil from Kuwait to Bantry Bay, Ireland, via the Cape of Good Hope, using 326,000 d.w.t. tankers and then transshipping to 100,000-ton shuttle tankers for final delivery to its major West European refinery centers. Although the route is 13,000 miles longer than the Suez Canal route the operating cost per barrel of crude is estimated to be half the unit cost of transporting the oil through the Suez Canal in 50,000 d.w.t. ships. This redistribution or transshipment terminal concept for the movement of crude oil has come very much to the fore with the completion of Bantry Bay in 1 968 and the more recent transfer terminals at Okinawa, Nova Scotia, and Spain. The economics of the transshipment terminal is based on the ability of using large vessels for the long sea haul and smaller feeder ships for the shorter pickup or final delivery. In such an operation, the greater part of the total voyage distance is covered in large ship tonnage, thereby achieving large ocean freight rate reductions sufficient enough to more than offset the additional transshipment terminal cost. Table 3 illustrates the order of savings that could be achieved through the use of these deepwater redistribu- tion terminals employing mammoth size tankers to carry crude oil from Kuwait to the Mediterranean, North America, and Japan. For example, the cost of using 100,000 d.w.t. tankers in direct shipments from Kuwait to North America would be $0.40/bbl. This compares to transshipment using 300,000 d.w.t. tankers to a redistribution terminal and 100,000 d.w.t. for final distribution where the total cost would be $0,262 plus $0,064 or $0.326/bbl which would amount to over COST PER BARREL OF OIL TRANSPORTED (DOLLARS) 2.00 : Cooke, Robert. A can Society of Mechanical Engini Figure 2 Table 3.-ECONOMICS OF DEEPWATER REDISTRIBUTION TERMINALS COST $/BBL. SIZE OF TANKER x 1,000 D.W.T. 500 300 200 100 50 Kuwait-Mediterranean via Cape of Good Hope 11,086 .242 .305 .374 .576 .835 Kuwait-North America via Cape of Good Hope 11,856 .259 .326 .400 .616 .894 Kuwait-Japan 6,615 .160 .202 .248 .381 .552 Distribution 500 .064 .079 Source: McPhee, W. S., Crude Oil Transshipment Terminals, presented at Society of Marine Port Engineers, Fort Schuyler, N.Y., March 1969. $600,000 in savings per voyage of the 300,000 d.w.t. tanker. The economies to be gained from the use of larger vessels in U.S. tanker trades would be significant particularly from the Middle East and Africa. In the movement of crude oil from Kuwait to the East Coast of the U.S., for example, the cost of transporting a barrel in a 200,000-ton tanker has been estimated at less than one-third of the equivalent cost in a 20,000-ton tanker, less than one-half in a 50,000 tonner and less than two-thirds in an 80,000 tonner. 1 With over a million barrels of crude oil on a 200,000 d.w.t. tanker, total savings would be significant. The economies of large vessels are also applicable to the dry bulk trades particularly with use of large ore-bulk-oil (OBO) and ore/oil vessels. The economies of these versatile combination carriers are very attractive. 1 Litton Systems Inc., Oceanborne Shipping: Demand and Technology Forecast, June 1 968. They are capable of carrying a wide variety of dry /liquid bulk cargoes in triangular voyages which minimize ballast backhauls and give their owners the freedom to choose between the oil or dry bulk charter markets. Thus, they have an important advantage over standard bulk carriers which normally haul cargo in one direction and are in ballast on the return voyage. For example, Japan is now using 150,000 d.w.t. OBO vessels to transport combined coal and ore cargoes from the U.S. and Brazil to Japan via the Cape of Good Hope at a considerable savings over the cost of transport of these same commodities in 65,000 d.w.t. vessels via the much shorter Panama Canal route. The savings are estimated to be 30% greater than the cost of Panama Canal tolls, indicating that economies of scale rather than tolls are the determining factor in the choice of the longer route. 2 The Vanguard class of 1 30,000-ton ore/oil vessels also illustrates the economies of large combination bulk carriers. The cost of carrying ore exclusively from Peru to Japan and return in ballast is approximately $3.50 per gross ton. Using the same vessels with ore from Peru to Japan, ballast to Persian Gulf, then loaded with oil to Europe, ballast to Libya to load oil for Los Angeles, thence ballast to Peru, the cost factor for ore is only 78 2 Report of the Study Group on Interoceanic and Intercoastal Shipping, submitted to the Atlantic-Pacific Interoceanic Canal Study Commission, April 1970. cents per gross ton or a 77.7% reduction. This is, of course, only one of many possible triangular routes. Thus it is not only sheer size but size coupled with versatility and utilization which provide favorable cost economies for the combination carriers. It is for these reasons that most of the very largest ships in the 1970's capable of carrying dry bulk commodities will be of the combination dry/liquid type geared to some form of triangular movements. C. Foreign Port Supership Terminal Developments The economies of large ship transportation- particularly the low value bulk commodities such as coal, oil and iron ore— have already given rise to over 50 foreign deep water port facilities in operation, under construction, or planned capable of accommodating 200,000 d.w.t. vessels and larger. The U.S. is the only exception among the world's major industrial powers. Twelve years ago, the U.S. East and Gulf Coast ports were the world leaders in bulk terminal facilities capable of receiving the few 60,000 to 70,000 d.w.t. bulk carriers then in service. Japanese and European ports twelve years ago could not take the large carriers of that era-they were still handling 35,000 to 45,000-ton vessels as maximum sizes. Today, however, the U.S. is virtually surrounded by foreign countries with ports having the capabilities of accepting tankers and bulk carriers exceeding 100,000 The UNIVERSE IRELAND, one of six 326,000-deadweight-ton UNIVERSE-class tankers, is moved into position at the deepwater pier at Bantry Bay, Ireland, with a cargo of Persian Gulf crude oil. Smaller tankers will deliver the oil from Bantry Bay to refining centers around Northern Europe. The UNIVERSE-class ships draw 79 feet of water when fully loaded. d.w.t. into their harbors. Where natural harbor and channel depths were not available at these foreign ports, transfer terminals have been constructed often several miles offshore to attain the necessary deep water. Many foreign countries adhere strongly to the premise that the port which expands the fastest will get the bulk cargo business of the future. Following this assumption, numerous foreign nations dealing in the iron ore, coal, and crude oil trades have readied or are developing the capacity to receive the supersized tankers and bulk carriers that are now coming from world shipyards. In order to illustrate how far behind other foreign nations the U.S. has become in planning and providing deep draft terminal capability to accommodate large bulk vessels, a survey of world ports loading or unloading iron ore, coal or crude oil was conducted and is summarized in the following Tables 4-9. As a result those ports which are or will be capable of handling 150,000 d.w.t. vessels or larger were identified and are geographically illustrated on Map 1 . Iron Ore The major world iron ore exporting countries of South America, Africa, Australia, Canada and Norway are developing their ports and harbors to accept the deep draft ore carriers of today and tomorrow. Long term agreements are being consummated between interested countries such as South Africa and Japan for the shipment of ore in 1 50,000 d.w.t. vessels with the provision for using 300,000 d.w.t. carriers when the facilities are ready to handle them. Advanced iron ore unloading supership terminals are offered hi numerous ports of Europe and Japan. In addition, several deep water terminals in the United Kingdom, Italy, Holland, France and West Germany are in various stages of development. Many, such as those being constructed at Fos in France, will supply large industrial developments located immediately adjacent to the port facilities. Japan is now receiving its iron ore in 100,000 to 150,000 d.w.t. carriers, but facilities like those at Nippon Steel's Oita terminal are being constructed to handle ore carriers in the 300,000-ton category. Coal Roberts Bank, a deepwater port near Vancouver, British Colombia, is now capable of loading 250,000 d.w.t. vessels with coal. Australia's exports of coal are expected to increase tremendously in the next few years. Their deepwater ports of New South Wales are indicative of their intentions to meet the demand for loading large coal carriers destined for Japan and Europe. Another Table 4. -REPRESENTATIVE IRON ORE LOADING PORTS OF THE WORLD Existing berthing depth (MLW) Estimated maximum vessel size (DWT) Future developments Canada Seven Islands Canada Port Cartier Canada Pointe Noire Canada Texada Island Canada Toquart Bay Brazil Tubarao Brazil Sepetiba Bay Chile Guayacan Chile Huasco (Guacolda) U.S.A. Long Beach U.S.A. Los Angeles Liberia Buchanan (offshore) Liberia Monrovia Peru San Nicolas Venezuela Palua-Low water High water season Venezuela Puerto Ordaz-LWS HWS Australia Port Latta Australia Dampier Australia Port Hedlund Norway Narvik S. Africa Port Elizabeth 150,000 100,000 80,000 80,000 80,000 100,000 250,000 40,000 200,000 80,000 90,000 300,000 90,000 150,000 30,000 200,000 30,000 200,000 90,000 90,000 90,000 90,000 250,000 Planned new offshore berth for 300,000 tonners (Javelin by 1974). Expansion for 250,000 tonners by 1973; depth of 90' provided for. Under construction until 1973. Expansion to a depth of 58' in 1971. Expansion for 250,000 tonners by 1975. Dredging to 55' planned. Expansion for 150,000-250,000 in 1972; 250,000 in 1975. Expansion program under way to accommodate 300,000 tonners. Expansion of existing port to depth of 92' and 350,000 tonners. In planning stage. Source: Division of Ports, Maritime Administration, March 1971. L Table 5. -REPRESENTATIVE IRON ORE UNLOADING PORTS OF THE WORLD Country Port Existing berthing depth (MLW) U.S.A. U.S.A. Belgium Holland Baltimore Philadelphia Antwerp Amsterdam 40' 40' 45' 49' Holland Rotterdam (Europort) 65' Japan Japan Japan Japan U.K. Oita Mizushima Kure Tsurusaki (Ohita) Port Talbot 89' 59' 66' 72' 51' U.K. Tees-port 42' U.K. U.K. Immingham Clyde Port 55' 40' W. Germany Hamburg 42' W. Germany Italy France France Bremerhaven Taranto Fos (Marseilles) Dunkirk 48' 52' 52' 46' Estimated maximum vessel size (DWT) 53,000 40,000 80,000 90,000 200,000 300,000 150,000 200,000 250,000 100,000 50,000 60,000 90,000 120,000 120,000 80,000 Future developments Possible dredging to 50'. Possible dredging to 50'. New outer port at Ijmuiden planned depth 62'04". Maasvlakte being construction for 250,000 tonners with 75' of water. Now under construction in the Beppu Bay. Expansion underway. Provision for 63' of water for vessels of 150,000-175,000 d.w.t. Expansion by 1973 for 150,000 tonners (final stage 200,000 tonners). Construction of newer facilities. Intention of having an ore terminal to handle 200,000 tonners. Outer port of Elbe planned for 300,000 tonners by 1975. Planned for a depth of 80'. Depth up to 77' expected. Expansion for large vessels underway (plan 1971-75) for 300,000 tonners. Source: Division of Ports, Maritime Administration, March 1971. Table 6.-REPRESENTATIVE COAL LOADING PORTS OF THE WORLD Country Port Existing berthing depth (MLW) U.S.A. U.S.A. Canada Norfolk Baltimore Roberts Bank 45' 40' 75' Canada Canada Australia Australia Australia Austraba Australia Port Moody Vancouver Hay Point Caves Beach Clutha New Castle Port Kembla 48' 50' 60' 60' 60' 38' 38' Australia Sydney 36' S. Africa S. Africa Richards Bay Algoa Bay 75' 80' England Immingham 45' Poland Poland Gdansk Swinoujscie 36' 39' Estimated maximum vessel size (DWT) Future developments 80,000 53,000 250,000 80,000 100,000 150,000 150,000 150,000 45,000 45,000 40,000 250,000 250,000- 350,000 80,000 40,000 40,000 Possible dredging to 58'. Possible dredging to 50'. Anticipated dredging to 80' for 300,000 d.w.t. vessels. Draft of 50' expected in near future. Under Construction for completion by 1972. Under Construction (outer port of Port Kembla). A $13.5 million development plan should be completed by 1973. Project new under construction with 70' depth for 200,000 tonners. Source: Division of Ports, Maritime Administration, March 1971. Table 7.-REPRESENTATIVE COAL UNLOADING PORTS OF THE WORLD Existing berthing depth (MLW) Estimated maximum vessel size (DWT) Future developments Japan Oita Japan Kawasaki Japan Kimitsu Japan Wakayama Japan Mizushima Japan Kashima Japan Chiba Japan Tsurusaki Italy Bagnoli Italy Taranto W. Germany Hamburg (Elbe) W. Germany Bremerhaven Holland Amsterdam Holland Rotterdam (Europort) France Le Havre France Dunkirk France Fos Belgium Antwerp Spain Gijon 300,000 70,000 150,000- 200,000 80,000 150,000 200,000 130,000 150,000 80,000 120,000 50,000 80,000 90,000 200,000 80,000 80,000 120,000 80,000 75,000 Now under construction in the Beppu Bay. Expansion of depth to 58' in 1971; 77' in 1973. Expansion underway. Expansion underway. Expansion of depth to 78' by 1973. Expansion of depth to 65' by 1974. Planned for a depth of 80'. Outer port being planned for 300,000 formers by 1975. Future depth to 50'. New outer port at Ijmuiden planned depth 62'04". Maasvlakte being constructed for 250,000 tonners with 75' depth. Expansion underway for 250,000-300,000 tonners. Expansion underway for 300,000 tonners 80' depth. Depth up to 77' in the near future. Source: Division of Ports, Maritime Administration, March 1971. relatively new major exporting country of coal is South Africa. Transfer terminals being made ready there have depths up to 80 feet for the reception of 300,000-ton bulk carriers. The islands of Japan have as many as eight deep-draft terminals for the reception of coal. Within a few years, Japan should be receiving a large amount of their imported coking coal at their selected supership sites in 250,000-300,000 d.w.t. coal carriers. Ports of Holland, West Germany, France, Italy and Spain are likewise developing expanded faculties for the unloading of coal carrying vessels in the 200,000 ton and over category. Crude Oil Crude petroleum supership terminals throughout the world are in a much more advanced state than those of the dry bulk handling variety. Facilities either planned or under construction in many major oil importing countries include some terminals with depth potentials able to accommodate a million-ton tanker. European countries are developing large transshipment terminals to meet not only their own internal needs, but also to hopefully supply a major portion of the continental oil market. A transshipment terminal off the coast of Ireland in Bantry Bay regularly receives 326,600-ton tankers from the Persian Gulf and loads smaller tankers destined for refineries in the United Kingdom and the mainland of Europe. Ports of Holland, West Germany, United Kingdom, France, Spain, Italy, and Sweden all have or are planning to have similar facilities to those at Bantry Bay with water depths around the 100 foot range. Japan has been a frontrunner in developing large tanker receiving facilities. The offshore crude oil terminal at Kiire in Kagoshima Bay will host the largest transshipment point and tanker vessel in the world by 1972. Already servicing 200,000 d.w.t. tankers, this completely computerized facility expects to unload 500,000-ton tankers at a rate of 120,000 bbl./hr. Other large tanker facilities available in Japan are located in Tokyo Bay, Niigata, and Yokkaichi. On the Eastern coast of North America, Canada has developed deep water discharge oil terminals at Point Tupper, Nova Scotia; Come-by-Chance, Newfoundland; and St. John, New Brunswick. These terminals will serve as transshipment sites for crude oil arriving in 300,000-ton tankers from the Middle East. These Canadian crude oil terminals have natural depths more than twice that of existing U.S. North Atlantic crude oil ports located only a few hundred miles to the south. Similarly, crude oil exporting countries have met the demands for loading deep-draft tankers. Since the advent of these vessels, crude oil ports of the Middle East and Africa have furnished deep water terminals to load the largest of tankers. The Persian Gulf countries of Kuwait, Saudi Arabia, Neutral Zone, Iran, Iraq, and Abu Dhabi offer incoming vessels the most modern of crude oil loading facilities. The African states of Libya and Nigeria also have similar crude oil loading facilities at Marsa El Table 8. -REPRESENTATIVE CRUDE PETROLEUM UNLOADING PORTS OF THE WORLD Existing berthing depth (MLW) Estimated maximum vessel size (DWT) Future developments U.S.A. U.S.A. U.S.A. Philadelphia Portland, Maine New York U.S.A. U.S.A. Holland Los Angeles Long Beach Rotterdam Belgium W. Germany Antwerp Hamburg W. Germany W. Germany France Heligoland Wilhelmshaven Le Havre 50,000 80,000 40,000 150,000 150,000 200,000 800,000 80,000 250,000 France Spain Spain U.K. Marseille Algeciras Bilbao Milford Haven 70' 85' 40' 63' 250,000 325,000 50,000 190,000 U.K. U.K. Foulness Liverpool 90' 60' 400,000 150,000 U.K. Glasgow 65' 200,000 U.K. Tetney Haven 56' 110,000 Ireland Italy Bantry Bay Trieste 90' 61' 326,000 160,000 Italy Genoa SIVi 100,000 Sweden Japan Goteborg Kiire 68' 100' 200,000 500,000 Japan Japan Japan Canada Canada New Foundland Okinawa Bahamas Tokyo Bay Niigata Yokkaichi Point Tupper St. John (Canaport) Come-by-Chance Heianza Freeport 65' 70' 70' 90' 85' 85' 100' 80' 200,000 250,000 250,000 326,000 350,000 326,000 500,000 300,000 Dredging to 62' will be completed in 1971. To be completed in 1972 is the outer port Maasvlakte to accommodate 500,000 d.w.t. tankers. Plans a terminal on the island of Scharhorn with a depth of 82'. In the planning stage. Dredging in process for 250,000 d.w.t. tankers. Plans for an artificial island 1 7 miles off coast with 100' depths. Planned island terminal (by 1975) to accommodate vessels of 500,000-750,000 d.w.t. (8 miles off coast). Iberport planned and approved with 100' depths. Shoreside being dredged to accommodate 250,000- 300,000 tonners. In the feasibility study state. Plans island terminal 1 1 miles off coast in Liverpool Bay with 100' depth. Depths have the potential to accommodate 500,000 tonners. This single point mooring system will eventually handle 200,000 d.w.t. tankers. Dredging to accommodate 200,000 d.w.t. tankers under study. An island terminal under construction to handle 500,000 tonners. Will handle 372,000 d.w.t. tanker expected in service by 1972 and 470,000 d.w.t. under con- struction for delivery in early 1973. Planned for construction. Source: Division of Ports, Maritime Administration, March 1971. Brega and in the Gulf of Guinea, respectively, ready to accept 500,000-ton tankers. Most ports in the crude oil exporting countries of South America and Indonesia have not developed deep water loading facilities due to the fact that their demand comes mainly from the United States where port depths severely limit tanker size to under 100,000 d.w.t. Table 9. -REPRESENTATIVE CRUDE PETROLEUM LOADING PORTS OF THE WORLD Existing berthing depth (MLW) Estimated maximum vessel size (DWT) Future developments Venezuela Lake Maracaibo Ports. Venezuela Puerto LaCruz Colombia Buenaventura Indonesia Palembang-Pladju Kuwait Mina Al Ahmadi Libya Marsa El Brega Nigeria Forcados Saudi Arabia Ras Tanura Iran Kharg Island Abu Dhabi Das Island Iraq Khor AlAmya Egypt Port Said Neutral Zone Ras Al Khafji 70,000 150,000 40,000 40,000 500,000 500,000 250,000 250,000 250,000 175,000 150,000 Depths within the lake are adequate for large vessels but the Canal entrance is 44' deep. New single point mooring in 140' of water expected. Offshore facility in Gulf of Guinea with the potential for 500,000 d.w.t. tankers. Source: Division of Ports, Maritime Administration, March 1971. CHAPTER /// EXISTING CONSTRAINTS TO DEEP DRAFT BULK CARRIERS SERVING U.S. NORTH ATLANTIC PORTS Existing depths and widths of entrance channels and harbors are the most significant physical constraints preventing large, fully-laden, tankers and bulk carriers from entering and berthing at U.S. North Atlantic ports. However, there are other significant restrictions to the safe use of these vessels in U.S. North Atlantic channels. These are: (1) the grave risks of ship collisions or groundings in congested inner harbors, (2) the strong public concern with environmental damage resulting from oil spills, (3) the inadequacy of existing port terminal transfer and storage facilities to handle large bulk cargo carriers, and lastly, (4) the increasing cost and lack of waterfront land for expanding present port terminal capacity. A. Inadequate Channel Depths and Widths The use of tankers and bulk carriers over 80,000 d.w.t. in U.S. foreign trades is virtually non-existent because U.S. port channel depth capacity is grossly inadequate to accommodate these vessels with drafts in excess of 45 feet. This inadequacy is illustrated in Tables 10 and 11 which identify the principal U.S. ports handling over one million tons of dry and liquid bulk commodities in our foreign trade. Such commodities are amenable to carriage on large tankers and bulk carriers. It is clear from the data in these tables that the majority of U.S. ports, particularly on the Atlantic and Gulf Coasts, presently have water depths, both in their main ship channel and alongside their berthing facilities, sufficient to accept fully-loaded bulk vessel drafts ranging from only 35 to 40 feet. As shown in Figure 3, these drafts correspond to vessel sizes ranging from approximately 30,000 to 55,000 d.w.t. On the Atlantic and Gulf Coasts, relatively few ports presently have sufficient channel depths and tidal levels to handle at berth fully-laden bulk vessels up to about 80,000 d.w.t. Therefore, it can be seen that the massive fleet expected in service by 1974 of some 779 tankers and bulk carriers over 1 00,000 tons, requiring depths in excess of 55 feet, will be unable to arrive or depart fully-loaded from any existing terminal on the Atlantic or Gulf Coast. On the West Coast, however, the Port of Seattle can now fully load 250,000 ton bulk carriers with grain alongside its new 73-foot deep elevator terminal and the Port of Los Angeles can discharge tankers up to 120,000 tons. When the Port of Long Beach completes deepening of its main ship channel to 62 feet at mean low water, it will become the only U.S. port capable of unloading a 200,000-ton tanker at berth. Thus, it is clear that bulk vessels exceeding 1 00,000 d.w.t. can presently enter and berth safely at their full loaded design drafts at only three U.S. ports-all on the West Coast. The greatest bulk vessel size pressures, however, are presently concentrated on the North Atlantic between the Ports of New York and Hampton Roads where existmg channel depths and widths range from 35 to 45 feet and from 1,400 to 400 feet respectively. These channel dimensions impose major size limitations on tankers and bulk carriers transporting iron ore, petroleum and coal. For example, because a deep draft, oceangoing vessel operating on U.S. North Atlantic port channels normally requires for safety purposes a Design Draft (Summer Salt Water) - Feet 1/ ^ ^"c,ee ^ / y / 10 40 70 100 130 160 190 220 250 280 310 Tanker Size — Thousands of Deadweight Tons NOTE: 1. For Safety purposes required channel depths must generally be 5 to 10 feet greater than the maximum draft of vessels using the channel. 2. Beyond 100,000 dwt data available indicates a range of possible drafts depending upon the design characteristics of the vessels involved. Source: Corps of Engineers Table 10. -PRINCIPAL U.S. PORTS HANDLING EXPORTS OF MAJOR BULK COMMODITIES IN U.S. FOREIGN TRADE FOR 1969 (Millions of S/T) Deepest alongside berth depth 1 (ft.) Controlling depth 1 main approach channel (ft.) Mean tidal range (ft.) New Orleans, La. Houston, Tex. Baton Rouge, La. Portland, Oreg. Corpus Christi, Tex. Hampton Roads, Va. Pascagoula, Miss. Longview, Wash. Seattle, Wash. Long Beach, Calif. Los Angeles, Calif. Long Beach, Calif. New Orleans, La. GRAINS 35-55 PHOSPHATE ROCK FERTILIZERS PETROLEUM COKE DRY SULPHUR *Chart datum plane for Atlantic and Gulf Coast ports is Mean Low Water (MLW) and for Pacific Coast Ports, it is Mean L Water (MLLW). 2 Diurnal tidal range. Source: Office of Ports and Intermodal Systems, Maritime Administration. five-foot minimum depth clearance under the keel in addition to its draft, the 35 and 40-foot mean low water depths in the New York/New Jersey and the Delaware River channels can efficiently accommodate fully-laden tankers at all stages of tide no larger than 25,000 d.w.t. and 35,000 d.w.t. respectively. Baltimore's 42-foot channel depth restricts iron ore carriers to no larger than 40,000 d.w.t. while Hampton Roads 45-foot channel can load coal carrying vessels up to about 80,000 d.w.t. Even with maximum tidal assistance, existing North Atlantic channel depths and widths limit the cargo capacity of tankers and bulk carriers entering and berthing fully loaded in New York/New Jersey to approximately 35,000 tons; Delaware River to 53,000 tons; Baltimore to 50,000 tons; and Hampton Roads to 100,000 tons. Costly delays, however, are incurred when bulk vessels must await higher tides before proceeding to berth. Therefore, the continued inability of the U.S. North Atlantic port channels to accept at their full cargo deadweight deeper draft vessels is forcing more and more bulk ship operators to carry less than capacity loads or to lighter at anchorage thus reducing their potential earning capability, increasing their cost of transportation and enhancing the risks of water pollution from accidental oil spillage. -PRINCIPAL U.S. PORTS HANDLING IMPORTS OF MAJOR BULK COMMODITES IN U.S. FOREIGN TRADE FOR 1969 (Millions of S/T) Deepest full-loaded draft of tanker han- dled alongside berth (ft.) CRUDE PETROLEUM Controlling depth * main approach channel (ft.) Mean tidal range (ft.) Delaware River Ports 28.2 40 Portland, Maine 21.1 48 New York, N.Y. 8.7 38 San Francisco Bay Ports 3.4 35 Los Angelses, Calif. 2.4 52 San Juan, P.R. 2.3 35 Brownsville, Tex. 1.9 35 Long Beach, Calif. 1.7 51 RESIDUAL FUEL OIL New York, N.Y. 25.6 36 Delaware River Ports 7.9 39 Boston, Mass. 7.5 41 Hampton Roads, Va. 3.6 41 Baltimore, Md. 3.4 35 Jacksonville, Fla. 2.7 34 Providence, R.I. 2.0 37 New Haven, Conn. 1.9 38 Port Everglades, Fla. 1.3 38 Portland, Maine 1.1 48 Charleston, S.C. 1.1 36 IRON ORE Delaware River Ports 12.5 40 Baltimore, Md. 10.6 40 Mobile, Ala. 4.6 40 ALUMINUM ORES/CONCENTRATES Baton Rouge, La. 4.3 40 Corpus Christi, Tex. 3.3 40 Mobile, Ala. 2.3 40 SUGAR New York, N.Y. 1.2 30 New Orleans, La. 1.0 30 Delaware River Ports 1.0 30 38. for Atlantic and Gulf Coast ports is Mean Low Water (MLW) and for Pacific Coast ports, it is Mean Lower Low 1 Chart datum plane Water (MLLW). 2 Diurnal tidal range. Source: Office of Ports and Intermodal Systems, Maritime Administration. B. Inadequate Terminal Transfer and Storage Capacity In addition to the need for deepwater access to ports, large tankers and bulk carriers also require efficient terminal handling equipment and storage faculties to decrease vessel turnaround time and thus reduce port costs to a minimum. Even if their ship channels were capable of receiving supersized vessels, none of the U.S. North Atlantic ports are presently equipped to adequately service them. U.S. North Atlantic bulk commodity terminal operators lack the necessary berthing, handling and storage capacity required to efficiently load and unload large volume movements of supersized bulk carriers. Existing capacity is limited to the handling and distribution of smaller bulk vessel cargo tonnages. Without a quantum increase in terminal transfer and storage capacity at East Coast ports, coupled with adequate deep water access, the economic advantages of large bulk carriers would be substantially reduced because of the larger percentage of time and cost spent in port. Therefore, if the U.S. North Atlantic ports were to accommodate the tremendous single trip capacities of large tankers and bulk carriers, a significant expansion in supporting terminal structures, such as berthing facilities, cargo handling equipment, tank farms and storage areas would be required in addition to adequate deep water. Similarly, existing inland feeder transport system by rail, pipeline and barge would also possibly require considerable modification to insure prompt distribution and receipt of huge bulk commodity tonnages associated with supersized vessels. C. Lack of Available Waterfront Land Areas for Commitment to Bulk Cargo Facilities The most significant restriction to the provision of adequate handling and storage facilities in U.S. North Atlantic ports to service supersized vessels is the lack of available waterfront land. Bulk products, both dry and liquid, require considerable waterfront land, something that is scarce in almost all U.S. North Atlantic ports. Most of these ports which are candidates for development to accommodate deep draft bulk carriers are located in large urban areas. The extensive commercial and industrial developments that exist in these areas have utilized almost all of the available waterfront land. What remains are, for the most part, smaller parcels which are not particularly suited for bulk cargo facilities. The deep draft bulkers of the future will require considerably larger facilities than those currently in use at North Atlantic ports. The reason for this, in addition to the projected increase in cargoes, is the vastly increased size of the bulk carriers themselves which means that terminal facilities must be capable of handling much greater volumes at any one time. For example, the lack of adequate waterfront land at Hampton Roads presently inhibits the railroads from providing an efficient export coal ground storage system which would provide adequate buffer and blending capacity between production and ocean shipping. As a result, the existing, congested system of storing and blending export coal in hopper cars prior to the arrival of the ocean vessel would be most difficult to expand to service larger coal ships. Assembling existing shiploads of 60,000 to 80,000 tons is a logistics feat which merits tribute to the administrative talents of both the railroads and exporters. To marshal 250,000 ton shipments would appear to go beyond the realm of the possible as thousands of hopper cars would be required to service such a vessel and hundreds of acres of yard area to hold the rail cars. Another problem which has compounded the lack of available waterfront land is the fantastic growth of U.S. North Atlantic container trade and its attendant development of modern, expansive container terminals. These facilities with their large open marshalling yards have already consummed much of the short supply of waterfront land. Thus some U.S. ports are being forced to create additional terminal space by reclaiming shallow areas. But this method also poses problems because it is expensive and is incurring increasing opposition from environmental and conservation interests. An an alternative, some industries might benefit by the relocation of their production facilities to new sites as close to deep water as possible in order to reduce transport costs. Unless their present facilities are inadequate or obsolete it is unlikely that the cost of replacing these elsewhere would be justified except if a major expansion program was envisioned. Many industries, however, currently require additional space for the expansion of production facilities and the installation of extensive pollution control equipment, but are now surrounded by urban development with elevated land costs. The possible relocation of their storage facilities could permit a more economic utilization of their present land holdings. For these industries new storage facilities of sufficient capacity to receive the cargo tonnages of large bulk carriers could be developed remotely from their production facilities and closer to offshore berthing terminals. The many grades of each commodity could be stored in segregated stockpiles or tankage and would be blended as required at the storage area and shipped to their plant sites on a more or less uniform, continual basis with resulting economies in this stage of their transportation. Thus, while the problem of inadequate waterfront land is not insurmountable, it is nevertheless a significant constraint to deep draft bulk carriers serving the North Atlantic. D. Risks of Vessel Collisions and Groundings Another significant constraint limiting large tanker and bulk carrier employment in existing U.S. North Atlantic port channels is the serious risk of collisions and groundings. Not only has the total volume of waterborne commerce moving through North Atlantic ports increased in the last decade, but also the number of vessels required to transport it. The increasing density of vessel traffic movements in these ports poses the constant risk of collisions and groundings. In particular, collisions and groundings involving oil tankers and other chemical carriers, carrying flammable, explosive, or toxic cargoes, in North Atlantic ship channels can result not only in the loss of life and property but also pollution of valuable adjacent land and water areas. U.S. Coast Guard statistics reveal that within the last ten years, there have been over 500 tanker collisions worldwide with 80 percent occuring while these vessels were entering or leaving ports. It has also reported that oil spills from tanker collisions average at least a million tons annually causing some $40 million in damage. With the continued absence of any Federal regulations prescribing mandatory marine traffic control systems in major U.S. ports and harbors, the prospect of even greater human tragedies and massive L 77;e wxe of deepwater terminals with modern navigational aids would considerably lessen the danger of tankers running aground or colliding with other ships, thus lessening the risk of polluting the U.S. coastline. pollution disasters occuring as a result of vessel collisions and groundings becomes increasingly more ominous. Legislation has been reintroduced in the current session of Congress which would give the Coast Guard broad authority in controlling the flow of marine traffic and establish the requirement of radio-telephone communi- cation between vessels in the navigable waters of the U.S. Thus, it is evident that without some form of control and regulation of marine traffic patterns in U.S. ports and harbors, the continued dependence upon voluntary compliance with rules of the road and recommended traffic separation schemes will not be adequate to prevent future vessel collisions and groundings. It is also evident that, under existing conditions, the deep drafts of the mammoth tankers in operation have one compensating feature with regard to their potential operation in U.S. North Atlantic ports. Because of their somewhat limited maneuverability and the distance required for them to stop, the use of large tankers in these existing port channels would be extremely unsafe. The most important factor in connection with collisions and groundings is the "crash-stop" ability. Unfor- tunately, the ability of the mammoth tankers to come to a "crash-stop" as compared with smaller tankers has decreased as their size increased. Since the energy to be absorbed in stopping a ship is directly proportional to her displacement and many of the large ships are underpowered in relation to their size, the distance and time required to bring large tankers to a "crash-stop" from full ahead has increased tremendously. For example, a T-2 tanker of 16,000 tons can come to "crash-stop" within a Vi mile in 5 minutes while the straight line stopping distance for a 200,000-ton tanker is about 2V2 miles requiring about 21 minutes. The only viable means of providing facilities capable of safely handling these large tankers in the North Atlantic range of ports is an offshore transfer terminal, designed in such a manner which will provide inherent spill protection through the use of an all weather oil barrier system and safe vessel passage through installation of modern traffic control devices and navigational aids covering the approaches and maneuver- ing areas of the offshore deepwater site. The use of larger, more efficient tankers at protected offshore terminals would mean that fewer vessels would be needed to carry the large-scale projected increase of U.S. oceanborne crude oil imports by 1980. Thus, the propensity for collision and accident exposure would likely be less with larger tankers serving offshore terminals than for the movement of the same volume of oil via more numerous and smaller tankers using existing North Atlantic port channels and terminals. E. Public Awareness of Oil Pollution and Concern for Environmental Protection In recent years there has been substantial devel- opment of public concern for the environment. Public awareness of all forms of pollution— air, land and water— has increased substantially. Although most of the interest in water pollution has previously been focused on inland lakes and rivers, increased attention has been paid to pollution of the world's oceans since the Torrey Canyon disaster. The prospect of a large supertanker breaking in two off the North Atlantic coast of the United States is a spectre that haunts many Americans. Although most of these people have been largely unaware of the ever increasing volume of petroleum shipments that have been arriving in U.S. ports since World War II, the fact that much of this petroleum could in the future be handled by supertankers is viewed with alarm. Although supertankers do not necessarily comprise any greater overall threat of oil spillage, and probably less, the concentration of potentially harmful substances in fewer but larger ships makes any future mishap more likely to have catastrophic consequences. For example, a 200,000-ton tanker is viewed by some as more of a pollution threat than ten 20,000-ton tankers. Nowhere is there a greater recognition of this than for deep draft bulk carriers entering North Atlantic port channels. All of the existing major North Atlantic ports are amid large population concentrations. In addition, these ports are also quite limited in area. Consequently, any pollution-causing accidents in such ports will have a much greater impact than if they occured in mid-ocean or even in sparsely settled coastal areas. Although these confined water areas tend to concentrate the harmful effects of any pollution, it also, in many cases, facilitates the remedial actions taken to clean up the spillage. However, in terms of public awareness, the concentration of potential pollution probably over- shadows the fact that only a more limited area is affected. In addition, the fact that the pollution in a port area is in the "backyard" of great numbers of people also heightens public awareness. Furthermore, the idea of deep draft bulk carriers in these harbors tends to constitute a threat that transcends the potential physical damage they can cause. Although this fear is largely psychological in origin, it nevertheless constitutes a significant factor that would have to be dealt with in any plan for deep draft bulk carriers entering North Atlantic ports. CHAPTER IV NEED FOR PROVISION OF DEEP-DRAFT FACILITIES TO HANDLE LARGER BULK VESSELS IN U.S. FOREIGN TRADES AND POSSIBLE CONSEQUENCES OF INACTION As pointed out earlier, the increasing dependence of foreign industrial nations on shipments of bulk raw materials in larger vessels has given rise to widespread deep draft port development. Is it really essential then if the largest industrial trading nation and consumer of energy in the world cannot handle supersized tankers and bulk carriers in its ports? What would be the major consequences for the U.S., if no deep water faculties are provided for the reception of these vessels? A. U.S. Industrial Base Dependent Upon Low Cost Water Transport of Bulk Raw Materials It is indeed inconceivable that the U.S. should forego the economies of superships which must bypass our ports because of insufficient channel depths and ter- minal facilities. There is no question that there is a definite need to utilize larger vessels in our bulk trades. An important prerequisite to sustained economic growth in the country has been and will continue to be the improvement of our capability to handle our oceanborne commerce and the vessels transporting it at the lowest possible cost. Since the end of World War II, a major share of the U.S.'s industrial base has become increasingly dependent on the movements of dry and liquid bulk commodities through ocean ports to supplement its diminishing supply of indigenous raw materials. These raw materials are the lifeblood of our economy. At the time the Merchant Marine Act of 1936 was passed, bulk cargoes made up only 15 percent of our foreign trade, while merchandise cargoes carried by liner vessels comprised 85 percent. Presently, these proportions have been reversed with nearly 90 percent of our international oceanborne tonnage consisting of bulk cargoes which move in significant volume through U.S. North Atlantic ports. Total bulk movements in 1 969 amounted to more than 380 million tons. By 1982, MarAd trade projec- tions indicate bulk tonnages will reach some 570 million tons for a growth rate of nearly 50 percent during this period. The U.S. North Atlantic region, comprising the vast hinterland between the Ports of New York/New Jersey and Hampton Roads has fostered and developed the greatest concentration of tidewater-based industries in the world. These industries simply cannot exist without the availability of low cost waterborne transportation to receive and ship vital raw materials. For example, the second largest concentration of refining capacity for any single port in the U.S. is located in the Delaware River estuary. Coupled with the four oil refineries on the New York /New Jersey chan- nels, the seven Delaware River refineries constitute over 90% of the total refining capacity on the East Coast. In 1970, these 11 refineries received some 36 million tons or over 50% of the total oceanborne imports of crude oil in the U.S. By 1980, we project this volume of crude oil imports into New York and Delaware River will have increased to approximately 85 million tons or 13V2% per year. The Ports of Baltimore and Delaware River together received over 80 percent of the total 27 million tons of U.S. oceanborne iron ore imports in 1970. In addition to supplying the major steel mills at Fairless, Pa. and Sparrows Point, Md., these ports also serve as transship- ment centers for the movement of imported iron ore overland to major steel plants as far west as Pittsburg. By 1980, we project that the total oceanborne iron ore import traffic through Baltimore and Delaware River will have grown to about 28 million tons or 2.2% per year. The Ports of Norfolk and Newport News in Hampton Roads are the leading port interfaces for U.S. ocean- borne exports of high grade coking coal. In 1970, the Norfolk and Western and Cheasapeake and Ohio rail loading terminals handled some 46 million tons or over 90% of total U.S. oceanborne coal exports. By 1980, we project total coal export tonnage through Hampton Roads will have increased to about 58 million tons or 3% per year. Without deep water terminal facilities, the tremen- dous concentration of industrial activity in the North Atlantic region will not be able to take full advantage of the lower unit transport costs of larger tankers and bulk carriers to move these projected volumes of oil, ore and coal. If by 1980 entry into these major East Coast ports is still limited to only smaller bulk vessels, these industries will become locked into the use of these less efficient carriers. The inevitable results will be that the bulk using and producing industries in the North Atlantic region will suffer serious competitive handicaps in their coal exports and incur higher transport costs in their oil and ore imports. This would certainly have a far reaching economic impact not only at the regional and national levels, but also on individual consumers. B. Loss of Competitiveness in Overseas Export Markets Historically, once a major competitive advantage in overseas export commodity markets has been lost, it becomes exceedingly more difficult to recapture. The U.S. coal and rail industries, for example, are presently accustomed to a seller's market for exporting high quality, metallurgical coal. Under these favorable market conditions, all U.S. coking coal exports will be sold regardless of the higher transport costs incurred in using smaller vessels. For the remainder of this decade this situation is expected to prevail primarily because of Japan's unparallel demand for coking coal to supply its rapidly expanding steel industry. The Japanese, however, appear quite determined to become considerably less dependent on American coal exports in order to diversify their supply sources and assure uninterrupted coal deliveries. Because of im- proved technology in their blast furnaces, Japan is already receiving substantial coking coal, although less desirable than U.S. grades, from alternate sources in Australia, Canada and South Africa. For these reasons, some industry sources are predicting that by 1980 only about a third of Japan's imported coking coal may come from the U.S., as compared with over 50 percent in the last five years as shown in Figure 4. Furthermore, they also project that by the same year Canada and Australia may become Japan's leading coal suppliers with each providing from 30 to 35 percent of total Japanese imports. These countries could hold a significant competitive edge over the U.S. in the major world export markets of Japan and Europe because of their ability to load larger coal vessels and thus reduce transport costs. Since foreign coal buyers specify the vessels for overseas movement, U.S. coal exporters will be handicapped in bidding successfully on future coal contracts for larger ships unless deeper draft facilities are provided. This inability to load larger coal vessels also impairs options on present contracts with American suppliers with regard to longer-term duration and larger tonnages. The consequences of these vessel size limitations will be to increase the delivered cost of U.S. coal to foreign buyers, which will materially reduce, in the long run, its export market and foreign exchange earning potential. This could result in a leveling in U.S. coal export tonnage after 1980 instead of a sustained growth which an improved coal export transport system would permit. If the U.S. coal industry is to continue to participate and maintain a competitive position in the profitable export market and at the same time have adequate rail transportation capacity for domestic deliveries of steam coal to power plants, it will require major modification of the existing, congested coal export system at Hamp- ton Roads which uses expensive rail hopper cars for storage and blending and smaller, less economical ocean vessels for overseas deliveries. In order to resolve this situation a new export system is needed which will provide deep water to load larger coal carriers and sufficient ground storage for adequate buffer capacity, blending, and more rapid rail car turnaround time. The lack of available land and deepwater access at Hampton Roads, however, severely impairs the implementation of such an optimum system and makes the development of an offshore terminal a more attractive solution to overcome these limitations. ANNUAL U.S. SHARE OF TOTAL JAPANESE COKING COAL IMPORTS (1966-1970) MILLIONS OF SHORT TONS I I U. S. SHARE ■J TOTAL JAPAN 1966 1967 1968 1969 1970 Figure 4 C. Higher Costs of Raw Material Imports During the 1950's the British iron and steel industry made a decision to gear their raw material import programs entirely to small vessels because they didn't think their ports could be economically modified to accommodate larger ships. Their competitors, meanwhile on the Continent were taking action to handle vessels up to 100,000 tons with near disasterous results for the English steel industry. History could repeat itself— only this time it appears that the U.S. steel and oil industries will be paying the raw material premium. /. Iron Ore Imports In the worldwide production of steel, for example, a major requirement for success is the ability to purchase, transport and receive basic raw materials at the lowest possible cost. Relating this to the needs of the U.S. steel industry, which has sufficient domestic coal available, but declining domestic sources of ore, requires the development of adequate capability to receive iron ore from foreign sources of supply at the lowest cost. A significant portion of current U.S. iron ore supply to North Atlantic steel mills is committed to captive production and importation from Canada and Vene- zuela. There would be little or no benefit in using large vessels to transport this iron ore from these short-haul sources of supply. The transport cost savings, however, become more substantial from long distance sources such as Australia and West Africa. By 1980, the high grade, low cost ores produced in these countries could represent the most economic sources of raw material for the North Atlantic steel industry provided the Ports of Baltimore and Philadelphia could receive 250,000 ton vessels. With Australian iron ore reserves estimated by the Department of Interior as high as 1 00 trillion tons, it is clear that the U.S. steel manufacturers have a significant economic interest in a deepwater terminal facility on the North Atlantic to tap this vast natural resource at the most economic levels through the use of large ore carriers. While it is relatively unlikely that there will be any major future expansion of steel production on the East Coast, the competitive position of existing plant capac- ity is of vital importance to both the steel industry and the Federal Government. With the exception of Vene- zuela, all the major ore loading ports from which East Coast steel producers currently receive iron ore have deeper water than the Ports of Baltimore and Philadel- phia. Thus, ore shipments to the U.S. in large vessels cannot be made without wasting loading capacity. This puts U.S. steel producers at a competitive disadvantage as compared to other major steel producing nations, such as Japan and Europe, who can receive larger ore vessels and thus benefit from lower delivered costs of iron ore. Consequently, any sustained price deterioration in the competitive position of the North Atlantic steel industry resulting primarily from higher raw material and labor costs will lead to increasing domestic market penetration by foreign steel suppliers and subsequent balance of payments pressure. A guarantor, therefore, of a long term competitive posture for the U.S. steel industry would be access to low cost, premium quality, foreign ores provided by developing deep-draft unload- ing capacity in the North Atlantic to handle large ore 2. Crude Petroleum Imports Probably the most important bulk commodity for which there is the strongest, economic requirement to use large vessels on our North Atlantic bulk trades is crude petroleum. While overall demand for energy in the U.S. continues relentlessly upward, the use of coal is hobbled by air quality standards, natural gas is in increasingly short supply and the contribution of nuclear power will be limited until well past 1980. Meanwhile, the bulk of unsatisfied demands for energy which would ordinarily be met by these three fuels is being transferred to oil. But with domestic crude oil production expected to reach capacity by 1973, a very substantial portion of these supplemental demands for energy of all kinds will have to be met in the future by imported crude oil. This will be true even counting the production expected from the North Slope of Alaska between 1975 and 1980. The net effect of all these developments is that the U.S. North Atlantic region will become more and more dependent upon foreign sources of crude oil for its energy supply and particularly upon Persian Gulf and North African countries. As shown in Figure 5, crude oil imports comprised about 23 percent of total U.S. demand in 1970. By 1975, North Slope production will have the effect of reducing the share of imports from 28 to 25 percent. By 1980, total imports in the absence of Alaskan production would be 44 percent. With it, the share of imports would drop to 35 percent. Current crude oil imports through North Atlantic ports make up over 50% of the total refinery inputs in the region but the Delaware River refineries expect imported crude oil to provide its entire inputs by 1980. Furthermore, the North Atlantic region's dependence on imported residual fuel now exceeds 90 percent which supplies nearly half its industrial energy. The U.S., however, is the only major world refining nation which lacks a deep water transfer terminal to unload large supertankers. The current leading sources of crude and residual oils imported by vessel into the North Atlantic are located in South America and the Caribbean. Even considering the distance, considerable transport savings could be achieved in these trades using 150,000 ton tankers. The most substantial benefits, however, are available from more distant crude oil sources, such as the Persian Gulf and Africa, where existing and future U.S. crude demand could easily support a fleet of large tankers exceeding 200,000 tons if deepwater terminals were available in the North Atlantic. Of major significance, however, is the impact of Alaskan crude oil on the share of total supply provided by Eastern Hemisphere sources. Because the ability of Western Hemisphere sources to expand crude production is limited, most of the incremental supply from foreign sources will be provided by Eastern Hemisphere nations, particularly those of the Persian Gulf and North Africa. As illustrated in Figure 5, the Department of Interior estimates that the share of our total crude oil supply provided by Eastern Hemisphere sources in the absence of North Slope production would expand from a modest 2 percent in 1970 to some 22 percent by 1980. This could be reduced to 13 percent by 1980 if Alaskan oil supplies reach a flow of 2 million barrels per day. Thirteen percent, from Eastern Hemisphere sources, of our total 1980 crude oil supply would be nearly three million barrels a day or just about 400,000 tons per day. 25 FIGURE 5 ESTIMATED UNITED STATES OIL DEMAND/SUPPLY © 15.1 O.W.H. - CAN. © NORTH SLOPE U.S. PRODUCTION - NOTE. NORTH SLOPE POTENTIAL ESTIMATED AT: 0.5 IN 1975 AND 2.0 IN 1980 Source: U.S. Department of Interio At least 50% of this latter volume of imports would be handled at North Atlantic ports. Thus, it is evident that the 30,000 to 70,000 ton tankers presently delivering Eastern Hemisphere oil at North Atlantic ports would be hopelessly inadequate to accommodate these projected 1980 crude oil import requirements. Without adequate deep water port capability to accommodate supersized tankers between 200,000 and 250,000 tons, the North Atlantic ports will become increasingly more congested with smaller tankers posing even greater risks of collision and pollution. Therefore, considering the enormous and growing requirements of this Nation for energy, heat, trans- portation and steel, the additional costs we will pay for our channel depth limitations in the North Atlantic will be significant. D. Maximum Commercial Benefits of Constructing U.S. Flag Large Bulk Carrier Fleet Inhibited by Lack of Deepwater Terminals The recently enacted Merchant Marine Act of 1970 clearly recognizes the need for an American-flag bulk vessel fleet to protect our commercial and defense interests both in peace and war by assuring that the U.S. has sufficient bulk carriers capable of efficiently carrying a significant percentage of our total bulk commodity foreign commerce. Indeed, a major part of President Nixon's new Maritime Program is the availability of federal subsidy to assit U.S. bulk carrier shipowners in building and operating a modern fleet of competitive U.S. flag bulk ships. U.S. shipowners have already expressed a willingness to build tankers in the 200,000-250,000 ton class and combination bulk carriers in the 150,000-200,000 ton range because these are the vessel sizes which would make them competitive with foreign flag operators and offer reasonable opportunity to carry a creditable proportion of our foreign bulk cargo trade. Because of the inadequacy of U.S. port channel depths, these shipowners have been understandably reluctant to invest their capital in these bulk vessel sizes unless granted greater operating flexibility between foreign deepwater ports. In an effort to attract private capital for investment in these large tankers and bulk carriers, notwithstanding existing U.S. port limitations, the Maritime Adminis- tration has issued proposed regulations, which in effect, would authorize construction subsidy to U.S. ship- owners for vessel operation and permit some degree of foreign to foreign trade until sufficient U.S. port faculties are deemed available. Hence, while it appears that contractual agreements will be signed this year for the construction of large U.S. flag tankers and bulk t m 3 *i ■ i A 230,000-deadweight-ton tanker under construction at Seatrain Shipbuilding Corporation's Brooklyn shipyard, the site of the former Brooklyn Navy Yard. To be registered under the American flag and manned by an American crew, this ship will be largest in the U.S. fleet when it is delivered in late 1972. 27 carriers, maximum commercial transportation benefits will not accrue to the U.S. until adequate deepwater terminal facilities are provided because these vessels will have to operate at less than full capacity and/or transship into smaller vessels at anchorages in U.S. ports. Therefore, the impact of present U.S. channel depth restrictions on the new maritime shipbuilding program as it relates to larger bulk carriers strongly underscores the urgent need to develop sufficient deep-draft terminal capability in the U.S. particularly in the North Atlantic region. E. Impact of Industrial Relocation The inability of the U.S. North Atlantic region to accept deep draft bulk vessels also introduces the risks of severe disruption to its regional economy resulting from the possible movement of existing critical processing industries to other areas of the U.S. or to other countries for relocation or expansion. The U.S. consumes at least half of the world's raw materials. Heavy industry goes where raw materials are cheapest. Making the unit transport savings of larger tankers and bulk carriers available to bulk producing and using industries located in the North Atlantic region is therefore essential. If denied these economics, they may incur significant competitive disadvantages which could in the long run encourage these industries to seek more favorable locations inside or outside the U.S. where they can be served by larger, bulk vessels. For example, the oil industry could decide to build new refinery capacity in Canada or in some other Western Hemisphere location where deep draft facilities are available. U.S. East Coast refinery operators, in fact, This recently completed shipbuilding basin at Bethlehem Steel Corporation's Sparrows Point, Md., shipyard is the largest such facility in the U.S., capable of building vessels up to 300,000 deadweight tons in size. At present, the yard is building two 70,000-ton tankers in the basin. These types of improvements, coupled with the increasing automation of shipyard functions, will allow U.S. shipbuilders to compete for the construction of the large ships required for U.S. commerce. 28 claim they can phase out an existing plant over a five year period without excessive loss. Thus, North Atlantic petroleum port functions could be reduced in the future to simply storage and distribution of finished products. Another significant factor which could influence bulk industries to relocate their existing or new plant faculties outside the U.S. is the growing tide of environmental and ecological public opposition. This has made new plant siting all but impossible in some North Atlantic areas, particularly in the coastal zone of the state of Delaware where legislation has been recently enacted prohibiting all future expansion of heavy industrial capacity. As a result, a virtual moratorium on construc- tion of new U.S. refinery capacity has continued for over a year. A recent Oil and Gas Journal survey revealed that not a single major new refinery was contracted in 1970. In addition, no new crude oil capacity is sched- uled to come on stream in 1973 based on currently known projects and only 14,000 barrels per day in 1974. This situation currently exists when demand for oil products is moving steadily upward, thus giving further rise to increased dependency upon foreign refining capacity to meet U.S. energy needs. It is well known that Canada is ready to welcome new U.S. industrial development in its Eastern Provinces which are already being served by large bulk cargo carriers. Any major U.S. industrial plant relocation to Canada or other Western Hemispheric countries would not only undermine the industrial base and future economic well-being of both the North Atlantic region and the entire Nation, but also would have serious national security implications. Although the economic impact on the North Atlantic region of a ton of bulk cargo is substantially lower than that of higher value package cargo, the larger volumes of dry and liquid bulk cargoes handled at its ports make the direct economic value to the region several times greater than merchan- dise cargo. Thus, any significant change to the present pattern of industrial activity in the North Atlantic, brought about through relocation of U.S. bulk proc- essing industries, would clearly have an adverse effect on the continued employment of thousands of workers who receive millions of payroll dollars and contribute billions to the regional and national economy. F. Balance of Payments Effects Relocation of industry outside the U.S. and the concommitant multiplier effects from loss of U.S. markets are likely to result in massive outflows of U.S. capital. The exact amounts are not capable of calcula- tion, but it appears safe to estimate that many billions of dollars would ultimately be involved. Such capital movements would, of course, be re- flected in the U.S. balance of payments, with resulting damage to the value of the dollar. Of equally serious significance in balance of payments calculations would be the increases to be expected in imports of finished goods produced overseas by these relocated industries, rather than imports of raw materials as are carried in bulk. Finished goods imports are normally higher priced and more damaging to the balance of payments than are imports of raw materials. Also of major significance to the Nation's favorable trade balance are our higher quality exports of coal and coke. The total value of coal and coke exports in 1970, for example, topped the billion dollar mark at $1,044 million and represented more than 2.4% of the total national export value (excluding defense shipments). Thus, in 1970, one dollar of every $42.70 value of all the goods and services exported from the U.S. (except defense shipments) was derived from coal. The average value of exported coal rose from $10.44 per ton in 1969 to $13.40 per ton in 1970. The additional $450 million value derived from increased coal exports in 1970 represented 16.7 percent of the national trade surplus of approximately $2.7 billion reported for the year. If there were any doubts of the place of coal in the U.S. export trade, there were surely dispelled in 1970 as coal emerged as one of the major single commodities making an important positive contribution to the na- tional balance of payments. Any significant loss of competitiveness in overseas coal markets incurred as an inevitable result of not providing essential, deepwater loading facilities for larger coal carrying vessels would certainly have a detrimental effect on our Nation's trade balance and increase our balance of payments deficit. It is of vital interest, therefore, to the federal government, as well as our commercial interests, to maintain this important foreign trade surplus. CHAPTER V MAJOR OBSTACLES TO MULTIPLE CHANNEL DEEPENING In order to accommodate the drafts of the large tankers and combination bulk carriers in operation and under construction, the North Atlantic ports of New York, Delaware River, Baltimore, and Hampton Roads all have one common need— deep water channels. This chapter presents some of the major constraints that would be encountered in providing these required channel depths through the traditional Federal channel deepening process. To remain competitive with world bulk shipping technology and supporting port development in this decade and beyond, channel depth increases of 30 to 40 feet would be required at these four North Atlantic ports to provide the 75-foot or more depths necessary to handle 250,000-ton and larger tankers and bulk carriers. It has become increasingly evident that the dredging of these four major ports to attain such depths is not an economical, long term solution to the deep water problem in the U.S. North Atlantic. Primarily because of underlying rock, subsurface vehicular tunnels and myriad environmental and ecolog- ical problems, the existing 35 to 45-foot channel depths in North Atlantic ports are capable of only minor increases of about 10 feet at a projected 1980 Federal first cost greater than $2 billion. Such an undertaking, however, would still not provide the depths required for the bulk vessel sizes of today and tomorrow. In short, any major channel deepening to depths of 65-feet or more appears infeasible— physically, economically, en- vironmentally or politically in the U.S. North Atlantic channel systems to accept large bulk carriers. Attempt- ing to overcome these numerous obstacles through a major channel deepening program can be compared to peeling an onion, "each problem solved removes a layer but reveals other significant problems beneath it, result- ing in many tears in between." A. Physical Obstacles As indicated in Table 12, the most significant physical constraint to major deepening of the Delaware River and New York/New Jersey channels to accom- modate supersized crude oil tankers is that a large portion of the required dredging would take place in the bedrock of the Continental Shelf. Blasting and removal of impervious rock is an expensive undertaking com- pared to dredging soft overburden which results in major increases in unit construction costs. Unit costs will vary between regions of the Nation, depending on the type of material encountered, but the general cost range esti- mated by the U.S. Army Corps of Engineers for removing overburden is from $.40 to $2.50 per cubic yard, while the cost of cutting through rock normally ranges from $15.00 to $25.00 per cubic yard. In short, "remodelling the face of the earth can be very expensive business, once you go beyond the application of cosmetics to surface features and begin plastic surgery on the underlying structures of the Continental Shelf. "^ In addition, extensive deepening and widening of the New York/New Jersey channels would likely require the costly relocation or removal of some waterfront in- dustrial terminal facilities. Similarly, any major modifi- cation of the Delaware River channel above Philadelphia to enable large ore-carrying vessels to reach U.S. Steel's Fairless Works would encounter significant relocation problems involving existing bridges and underwater cables. The Ports of Baltimore and Hampton Roads also face formidable relocation constraints to major channel deepening for large combination bulk carriers trans- porting ore and coal. To attain the 65-feet or more channel depths required by these vessels at Baltimore and Hampton Roads is not physically feasible because of the 55-foot depth limitation imposed by the Chesapeake Bay tunnels across the Thimble Shoal and Chesapeake entrance channels and the Hampton Roads tunnel across the Norfolk and Newport News Harbor channels. The Port of Baltimore is, in fact, further limited in its inner harbor areas to a maximum water depth of 50-feet by the existing Harbor Tunnel in the Fort McHenry channel. Thus, in summary, the major physical obstacles of bedrock and vehicular tunnels significantly limit the channel deepening capacity of the U.S. North Atlantic ports to a depth no greater than 55-feet in the Hampton Roads and Baltimore channels and 50-feet in the Delaware River and New York/New Jersey channels. B. Environmental and Ecological Obstacles Adoption of a multiple channel deepening program for U.S. North Atlantic ports would involve considerable environmental and ecological problems. The existing channels would, in every case, require considerable dredging in order to accommodate even moderately 3 Major General R. G. MacDonnell, U.S. Army Corps of Engineers, Supporting National Growth, May 2, 1962. Table 12.-PHYSICAL OBSTACLES TO HARBOR DEEPENING 1 North Atlantic Harbors Authorized depth 2 1. New York/New Jersey Channels 4. Baltimore Harbor 5. Hampton Roads Thimble Shoal Channel Norfolk Harbor Channel Newport News Channel 45 (Beginning depth of problem -In feet) 60 'The problems identified reflect only physical obstacles that may be encountered and which can be measured in rather specific terms. There are less tangible problems related to spoil disposal and ecology which are also highly significant with respect to future deepening but which are difficult to identify and adequately represent in the above table. 2 Maximum depth for outer harbor. Lesser depths are often authorized for inner harbors. 3 Major relocations include relocation or replacement of major bridges, highway and railway tunnels, utilities or in-harbor structures such as breakwaters or jetties. 4 Dislocations include relocation, replacement or loss of port facilities (piers, terminals, etc.) or industrial commercial and residential structures, which are located adjacent to existing channels. Data Source: Corps of Engineers. sized bulk carriers, and thus would cause the greatest environmental and ecological problems merely because dredging affects such a great area. One of the major problems with channel dredging is spoil disposal. Merely to deepen the existing 40-foot channel to 50-feet to the Port of Philadelphia would require the removal of a significant volume of silt and rock. The problem of finding sufficient, easily accessable disposal areas within the Delaware River/Bay region to accommodate these spoils is critical. If deposited along- side the channel, the normal currents of the river and the bay might be interrupted. The very act of dredging might stir up and recirculate pollutants that have settled to the bottom and reduce, thereby, the quality of water and the area where the dredged spoil is deposited. Even dumping in the ocean, it is feared, is resulting in the creation of dead seas. The vast stretches of tidal marshes in the Bay, which would appear to be ideal areas for the deposit of this fill also happen to be essential breeding and feeding grounds for fish and wildlife. A great part of these areas have already been lost along the East Coast. Once filled, they are lost forever as sanctuaries, and the resultant damage to fish and wildlife is often irreversible. If, instead of filling marsh areas entirely, the spoils are scattered over a much greater area, there are other serious environmental consequences. Oysters and other shellfish in the affected areas will be seriously injured by the dumping. Shellfish in Delaware and Chesapeake Bays, particu- larly oysters, might also be affected by oyster drills, a type of marine snail which comes in from the sea to feed on the shellfish. The oyster drills are currently prevented from penetrating too far into the bay by the heavy volume of fresh water coming downstream. However, a deeper channel would allow more extensive intrusion of salt water into Delaware and Chesapeake Bays, and would have an effect on the critical saline balance of this area. The altered salinity along with the deposit of the dredging spoils in these estuaries could dramatically alt£r the entire ecology. Such an event would have a serious, but yet unmeasured, effect on the commercial seafood industry along the East Coast. Similarly, the very substantial recreational activities of milhons of East Coast residents would be affected. The deeper channels would also threaten the water supplies of the region. The greater salinity penetration, particularly in the Delaware River, would increase the salt content of municipal and industrial water supplies. Perhaps more importantly would be the potential threat to the entire regions' aquifers. Along much of the East Coast these underground water bearing strata pass under river beds and bays with their existing channels. If these channels are deepened substantially, there is a potential danger that is by no means inconsequential. One other danger from channel deepening is the possible alteration of shoaling patterns in both the rivers and estuaries of the East Coast. Although detailed studies of the above problem areas can be useful in determining their magnitude, the fact is that they do constitute significant obstacles to adopting a major channel deepening pro- gram. C. Political The historical legislative approach to channel im- provement projects in the U.S. does not appear to be the most economical solution to the future deepwater needs of North Atlantic ports. Under this process, incremental channel depth increases in the North Atlantic have taken on the average of some seven to ten years between the original indication of the need for an improvement and its ultimate completion. Any proposed large scale deepening of one U.S. North Atlantic port would certainly lead to considerable political debate. Each of the major North Atlantic ports are virtually concerned about maintaining the economic growth of its hinterland area based upon its waterborne commerce. The political framework and fierce competi- tion between the North Atlantic ports are such that any attempt to dredge a deepwater channel for one port would certainly unlease strong political pressures to deepen the others. Whatever U.S. North Atlantic port obtained the deepwater channel would gain considerable long term economic advantages over other ports in the region in handling bulk commodities. Industries requiring low cost raw materials would tend to locate new plant capacity as close to the deepwater port channel as possible. Thus, the increased industrial activity, with its multiplier effects, would constitute considerable economic benefit to that particular port area. There is another political factor with economic overtones that will have to be reckoned with; namely, the opposition of many citizens to what they consider another "pork barrel" project. Large public work proj- ects, whether they merit it or not, often are labeled "pork barrel." Increased concern with human needs has led a growing body of citizens to maintain that there are other areas of need where this expenditure could bring about greater benefit. Arguments about the economic advantages which would accrue from such projects will not necessarily prevail. The recent denial of additional funds for continued development of the supersonic transport attests to the fact that the promise of economic progress might not be enough to obtain the support required for such a project. The movement for a reassessment of economic priorities in this country with an accompany- ing reallocation of funds is probably greater today than it has been at any time in the past. Although the likely opposition of environmentalists and conservationists to a multi-channel deepening pro- gram has already been covered in the previous section, some discussion of what this opposition means politi- cally is included here because of the increasing political power being wielded by this group. Protection of the natural environment has become a more popular cause in recent years, with increasing "clout" on major issues. The trans-Florida sea level canal, for example, has recently been cancelled because of environmental opposition. Additional political opposition to multi-channel dredging is likely to be generated by the ever increasing numbers of Americans who use these same waterways for recreational puiposes. Anything which might inter- fere with or is perceived as likely to interfere with pleasure boating, sport fishing, etc., is going to incur the enmity of this group which, like the conservationists, is beginning to exercise considerable political muscle. The myriad political obstacles that are likely to be raised by various interested parties would constitute a formidable barrier to adopting a multiple channel deepening program for North Atlantic ports from New York to Norfolk. D. Cost and Adequacy of Improvements In addition to the numerous physical, environmental, and political problems involved, the attendant costs of deepening existing channels in New York/New Jersey, Delaware River, Baltimore, and Hampton Roads to depths adequate to accept the required drafts of large tankers and bulk carriers appear to be prohibitive and uneconomical. 1. New York/New Jersey and Delaware River Existing bedrock conditions in the New York/New Jersey and the Delaware River channels illustrate the magnitude of cost and inadequacy of large scale dredg- ing. U.S. Army Corps of Engineers studies have con- tinued intermittantly since the 1950's regarding the feasibility of deepening the New York/New Jersey channels from 35 to 45 feet and the Delaware River below Philadelphia from 40 to 50 feet. The Corps studies on improving the New York/New Jersey channels to 45 feet have revealed that provision of a one way tanker traffic system entering the New York/New Jersey channels via Kill Van Kull and departing in ballast by Raritan Bay was considered the best alternative plan. Based on 1967 prices, the first cost of this improvement was estimated at approximately $187 million. Escalated to 1980, based on a conservative annual inflation rate of 5%, the estimated project cost would reach about $318 million. The cost problem in the Delaware River is even more severe. Corps surveys have indicated that deepening the existing 40-foot channel below Philadelphia to only 50 feet would require the removal of some 330 million cubic yards of silt and rock at a 1969 price of approximately $713 million. By 1980, it is estimated that the project cost would easily exceed $1 billion. It is important to note that these estimated Corps of En- gineers' prices of improving the New York/New Jersey and Delaware River channels are based on the assump- tion that suitable disposal areas are available and other environmental problems could be solved. This is doubt- ful. Even if they could be solved, it is certain that, because of environmental concern, future requirements for disposal of spoil will greatly add to the costs. Thus, there appears to be little if any justification for deepening the New York/New Jersey and Delaware River channels to 45 and 50 feet respectively. Such depths would be sufficient only for handling the 80,000 ton product tankers expected to be operating in U.S. coastal trades, but grossly inadequate for supersized crude oil tankers over 200,000 tons in our foreign trades. These vessels would require no less than 65-foot water depths. To attain such depths, total dredging costs would reach the multi-billion dollar level, which is already far beyond the scope of any Federal navigation project previously undertaken. Thus, it does not take much imagination to realize that dredging the Delaware River and the New York/New Jersey channels to these depths would be highly impractical and prohibitive. 2. Baltimore and Hampton Roads The Ports of Baltimore and Hampton Roads are in need of deepwater channels principally to handle dry cargo vessels carrying coal and iron ore. Both of these ports are more capable of minor deepening— with a physical limitation of 55 feet— than either New York or the Delaware River ports. However, their channel deep- ening costs would be substantial also. Congress has authorized but not appropriated an initial $40 million of an estimated 1969 cost of $100 million to deepen the approach channels to Baltimore from 42 to 50 feet. Completion of work is not expected before the late 1970's. By then, total project costs may reach an estimated $160 million. Because a 50-foot channel will only accept fully loaded ore carriers at berth no larger than about 80,000 tons, it is expected that competitive pressures will force the Port of Balti- more to seek further deepening to their maximum attainable depth of 55 feet during the 1980's. If feasible and provided suitable spoil disposal areas were available, the cost of a 55-foot channel to Baltimore would easily exceed another $100 million. However, neither 50 or 55-foot channels serving Baltimore are adequate long term solutions to handle the large ore carrying vessels in operation and under construction worldwide, many of which are in the 200,000-300,000-ton range drawing more than 65 feet of water. At Hampton Roads, the Corps of Engineers is presently studying the feasibility of deepening the Thimble Shoal entrance channel and the Norfolk and Newport News main ship channels to their maximum attainable controlling depths of 55 feet. Competitive pressures from foreign purchasers-primarily Japan-of U.S. coking coal exports, who wish to use large combination bulk carriers, have forced U.S. coal shippers and railroads to request further deepening of Hampton Roads or incur the loss of competitiveness in world markets. Preliminary cost estimates by the Corps indicate that the dredging of Hampton Roads to 55 feet would involve the removal of roughly 180,000,000 cubic yards of silt at a 1969 price of $1.00 per cubic yard. If proved feasible and Congress authorizes and funds this project, completion of work is still not expected before 1980. By that time, total dredging costs are estimated to escalate to approximately $288 million. Adding ten feet in Hampton Roads will increase the full coal ship loading capacity at Norfolk and Newport News from about 70,000 tons at present to possibly double that size. But "that is not sufficient in the bulk shipping world of today and tomorrow. As pointed out earlier in Chapter I, by 1980, the 200,000-300,000 ton combination bulk carrier is expected to become the standard vessel in major international movements of coal, iron ore and oil. This is most evident from the growing number of combination ore-bulk-oil and ore-oil carriers over 150,000 tons presently under construction. These vessels will require depths of 65 feet or more. Clearly, the cost of attaining such channel depths at Hampton Roads, involving the relocation of three existing vehicular tunnels, would be uneconomical. Futhermore, major deepening in Hampton Roads and other U.S. North Atlantic ports channels would require significant maintenance dredging. The Corps of Engi- neers in the past has had considerable difficulty in maintaining authorized project depths in the North Atlantic at great cost. For example, the annual mainte- nance costs of the Delaware River alone have run as high as $5 million, but the controlling depth of its channel is often below its authorized 40 feet. Thus, judging from past experience it is doubtful that maintenance funds of the scale necessary for major channel improvements would be made available by Congress for an indefinite period. In recent remarks at the Port of Halifax, Roger Jones, an international bulk shipping consultant, summed up the realities of the inability of U.S. North Atlantic ports to meet future, deep draft bulk shipping requirements when he said, "Today, no new big steel, refinery, aluminum, coking or petrochemical complex, heavily dependent on large volume overseas raw material move- ments, should be built at coastal locations having less than 65 feet and preferably 90 feet or more depth in the approaches and berth. The days of 35, 40 and even 55-foot channels, where really large volume seaborne bulk movements are concerned, are gone." Thus, in view of the fact that these water depths cannot be attained economically through major deep- ening beyond 50 feet for Delaware River and New York/New Jersey and 55 for Baltimore and Hampton Roads, it is quite obvious that alternative solutions in the form of a regional, offshore transfer terminal must be explored for the North Atlantic. CHAPTER VI COMPARATIVE ANALYSIS OF ALTERNATIVE PROPOSALS TO HANDLE LARGE BULK VESSELS ON NORTH ATLANTIC COAST As stated earlier in this report, the U.S. North Atlantic coastal region has the greatest economic need to handle large bulk carriers to keep U.S. coal exports competitive in world markets and to reduce the unit transport costs of our iron ore and crude oil imports. However, as pointed out in the previous chapter, its major ports also have the least channel deepening capability to provide depths adequate to accommodate these deep draft vessels. Therefore, the objective of this chapter is to compare the existing port situation with the economics of several alternative proposals to accept large bulk vessels trans- porting crude oil, iron ore and coal to and from the North Atlantic Coast of North America. As shown in Tables 13, 14, and 15, the first step in this analysis was accomplished by comparing the total unit transport costs and annual savings of transporting these commodities in direct service on smaller vessels using existing and improved port channels with trans- shipping at various deep water terminals using larger vessels and oceangoing tug-barges. The various transship- ment alternatives explored included terminal facilities Table 13. -CRUDE OIL IMPORTS (TRANSPORT COSTS AND SAVINGS) 1 Alternatives Descriptions/Depth Liquid bulk ship size D.W.T. Total unit transport costs 2 for 1980 ($/LT) Projected annual savings for 1980 (millions of dollars) Persian Gulf Libya Persian Gulf Libya Total A Delaware River Unchanged New York/New Jersey Unchanged 40' 35' 35,000 25,000 25.98 29.26 8.67 - - 9.86 B. Delaware River Dredged New York/New Jersey Dredged 50' 45' 80,000 65,000 16.58 18.08 5.65 - - 6.16 94 56 45 19 139 75 C. Montauk Transfer: 3 75' To Delaware River To New York/New Jersey 250,000 250,000 10.99 10.77 4.86 - - 4.64 242 83 325 Machiasport Transfer : 75' To Delaware River To New York/New Jersey 250,000 250,000 11.49 11.71 5.25. - - 5.44 233 73 306 Lower Delaware Bay Transfer: 75' To Delaware River To New York/New Jersey 250,000 250,000 10.66 10.62 4.56 - - 4.53 246 89 335 D Open Sea-Off New Jersey Transfer To Delaware River To New York/New Jersey 85' 250,000 250,000 14.05 14.02 7.97 - - 7.94 195 22 217 E. Nova Scotia Transfer: 4 75' To Delaware River To New York/New Jersey 250,000 250,000 11.25 11.38 5.02 - - 5.15 236 79 315 'All ocean freight rates based on U. S. flag bulk carriers, including construction subsidy. 2 Total transport costs calculated to tidewater oil refineries at Perth Amboy, N.J., and Marcus Hook, Pa. 3 Shuttle voyage rates for all U. S. transshipment locations based on 40,000 D.W.T. U. S. flag oceangoing barges. 4 Shuttle voyage rates based on 47,000 D.W.T. foreign-flag tankers. Table 14. -IRON ORE (TRANSPORT COSTS AND SAVINGS) Total unit transport costs 1 for 1980 ($/LT) Projected annual savings for 1980 (millions of dollars) A. Baltimore Unchanged 42' Delaware River Unchanged 40' B. Baltimore Dredged 50' Delaware River Dredged 50' C. Montauk Transfer: 75' To Baltimore To Delaware River Machiasport Transfer: 75' To Baltimore To Delaware River Lower Delaware Bay Transfer: 75' To Baltimore To Delaware River D. Open Sea-Off Chesapeake Bay: 85' To Baltimore To Delaware River E. Nova Scotia Transfer: 2 75' To Baltimore To Delaware River 250,000 6.27 - 11.68 - 250,000 - 6.27 - 11.68 250,000 7.23 - 12.77 - 250,000 - 7.23 - 12.77 250,000 6.22 - 11.68 - 250,000 - 5.57 - 11.68 1 Total transport costs calculated to tidewater steel plants at Sparrows Point, Md., and Fairless, Pa. 2 Shuttle voyage rates based on 50,000 D.W.T. foreign-flag ore carriers. Table 15. -COAL EXPORTS (TRANSPORT COSTS AND SAVINGS) Alternatives Descriptions/Depth Total unit transport costs 1 for 1980 ($/LT) Projected annual savings for 1980 (millions of dollars) Japan Europe Total A. Hampton Roads Unchanged 45' B. Hampton Roads Dredged 55' C. Montauk Transfer: 75' From Hampton Roads Machiasport Transfer: 75' From Hampton Roads Lower Delaware Bay Tranfer: 75' From Hampton Roads D. Open Sea-Off Chesapeake Bay: 85' From Hampton Roads E. Nova Scotia Transfer: 3 75' From Hampton Roads 56,000 2 23.23 14.18 40,000 22.85 12.67 50,000 18.86 11.25 50,000 19.74 12.10 50,000 18.21 10.70 .50,000 19.20 11.70 .50,000 20.02 12.30 ^nit costs include inland rail cost through Hampton Roads. 2 Via Panama Canal. 3 Shuttle voyage rates based on 40,000 D.W.T. U.S. flag barges. both in U.S. and foreign natural, deepwater harbors, such as Lower Delaware Bay, Montauk Point, Machias- port, Maine and Canso Strait, Nova Scotia, in addition to open sea transfer terminals off New Jersey and Chesa- peake Bay. These various alternative locations are identified on Map 2. With the time lags involved in engineering, environ- mental studies, financing, and construction, the late seventies is the earliest any of these alternatives could be in full operation. Therefore, our entire economic anal- ysis was based upon projecting unit transport costs, commodity throughput, annual transport savings, and total capital investment expenditures for the year 1980. It is important to note that in Tables 13, 14, and 15 all unit costs for transporting crude oil, ore and coal to and from each alternative proposal were based upon total transportation costs and not merely ocean freight rates. As such, the principal component cost systems com- prising these total 1980 unit transport costs for the various alternatives explored were: (A) Ocean Shipping (B) Transfer Terminal (C) Transshipment Fleet, and (D) Inland Transport Appendixes I-III contain a breakdown of all total unit costs of transporting each commodity into each com- ponent cost system. Appendixes X-XII present examples of how the annual transportation cost savings were calculated. Therefore, using 1980 as a planning basis, the following key assumptions and conditions, associated with each of these component cost systems, were used in arriving at total unit transport costs and annual savings. A. Ocean Shipping Costs All ocean freight rates were based on the use of U.S. flag combination ore/bulk/oil (OBO) vessels operating in selected triangular voyages involving coal, iron ore, and crude oil. Construction differential subsidy of 45% was included for all vessels with a 10% return on investment after taxes, based on 100% equity capital and linear depreciation. No operating subsidy was included and ship life was assumed at 20 years due to nature of cargo operations. Table 16 contains a description of the triangular voyages used in this analysis for smaller OBO vessels serving alternatives A and B (existing and dredged North Atlantic ports) in Tables 13, 14, and 15 as compared to 250,000 d.w.t. OBO vessels serving alter- natives C, D, and E (deepwater transshipment terminals). The sizes of the smaller vessels were considered to be the maximum which could safely berth at existing and improved North Atlantic ports at all stages of tide allowing a five-foot keel depth clearance for squat, trim and maneuverability. The 250,000-ton vessel, requiring a Table 16. -OBO TRIANGULAR TRADES Deepwater transshipment terminal (D.T.T.) (1) Coal-Hampton Roads/Japan (P. Canal) Ballast -Japan/ Australia Iron ore -Australia/Italy Ballast-Italy/Libya Crude oil-Libya/Philadelphia (Marcus Hook) Ballast-Philadelphia/Hampton Roads (2) Coal -Hampton Roads/ Japan (Panama Canal) Ballast- Japan/Kuwait Crude oil-Kuwait/Rotterdam Ballast-Rotterdam/Liberia Iron ore-Liberia/Baltimore (Beth. Steel) Ballast-Baltimore/Hampton Roads (3) Coal -Hampton Roads/Rotterdam Ballast-Rotterdam/Liberia Iron ore -Liberia/ Japan Ballast -Japan/Kuwait Crude oil-Kuwait/New York (Good Hope) Ballast-New York/Hampton Roads (4) Coal-Hampton Roads/Rotterdam Ballast-Rotterdam/Libya Crude oil-Libya/Japan B allast - Japan /Australia Iron ore-Australia/Philadelphia (Good Hope) Ballast-Philadelphia/Hampton Roads (1) Hampton Roads/D.T.T. /Japan (Good Hope) Japan/Australia Australia/Italy Italy/Libya Libya/D.T.T./Philadelphia (Marcus Hook) (2) Hampton Roads/D.T.T. /Japan (Good Hope) Japan/Kuwait Kuwait/Rotterdam Rotterdam/Liberia Liberia/D.T.T./Baltimore (3) Hampton Roads/D.T.T./Rotterdam Rotterdam/Liberia Liberia/Japan Japan/Kuwait Kuwait/D.T.T./New York (Perth Amboy) (4) Hampton Roads/D.T.T./Rotterdam Rotterdam /Libya Libya/Japan Japan/ Australia Australia/D.T.T./Philadelphia (U.S. Steel) water depth of 75 feet, was considered to be the maximum size bulk carrier which would be built in the U.S. with construction subsidy under the new Merchant Marine Program. By 1980, this vessel size is expected to become the standard in major world bulk commodity trades, and thus will set the ocean freight rates of these movements which U.S. shipowners will have to meet. Plots of empirical data were used to obtain approxi- mate ship dimensions and various form coefficients of all vessels. For example, the basic characteristics of the 250,000-ton OBO vessel used to serve all deepwater transfer alternatives are shown below: Length (BP) 1,040 ft. Beam 171 ft. Depth 93 ft. Draft 70 ft. Cargo d.w.t 250,000 SHP 46,800 Speed (loaded) 16 knots Crew size 30 Construction cost $60 million In developing the required ocean freight rates for the various OBO sizes, vessel utilization was assumed as 100% on all cargo legs of each voyage. Inasmuch as coal, iron ore, and crude oil were carried separately on individual legs of each voyage, it was essential to allocate total annual vessel costs associated with the transport of each commodity in order to determine required ocean freight rates between two ports. Power estimates were made using the Gertler Revised Taylor Standard Series Data, which in turn enabled fuel consumption while steaming to be determined. Fuel rates in port were based upon ship size and cargo pumping discharge capacities. Weight estimates were developed for hull steel, outfit and machinery. All foreign ports used in triangular voyages had sufficient berthing depths and loading and discharge faculties to accommodate 250,000-ton bulk carriers. Port time was based on a 24-hour working day. With regard to commodities, crude oil, iron ore, and coal are the principal North Atlantic bulk imports and exports moving to destinations or from sources where total volume and distance could support the use of larger, more economical vessels. Projected 1980 import and export tonnages for these three commodities by foreign source or destination are illustrated in Appen- dixes IV, V, and VI. A further breakdown of these commodity tonnages by U.S. receiving or shipping port is shown below in millions of long tons: CRUDE OIL IMPORTS Persian Gulf Libya Delaware River 10 15 New York/New Jersey . 5 5 Total 15 20 IRON ORE IMPORTS Liberia Australia Delaware River 5 2.5 Baltimore 5 2.5 Total 10 5 COAL EXPORTS Japan Hampton Roads 35 20 It should be noted that these projected tonnages are based on anticipated growth in industrial demand for each commodity, and not on whether larger ships are employed. In all alternative proposals explored in Tables 13, 14, and 15, these tonnages represented total annual cargo throughputs and formed the basis for converting unit transport cost savings into annual savings for 1980. B. Transfer Terminal Costs For alternatives A and B (existing and dredged port channels), current loading and unloading terminal charges at North Atlantic port faculties were included in total unit transport system costs of smaller vessels in direct service. At each of the four, natural deepwater alternative sites, capital construction costs were esti- mated and escalated to 1980 for separate dry bulk (coal and ore) and liquid bulk (crude oil) transshipment terminals. At each of these protected, harbors locations, water depth requirements for berthing 250,000-ton bulk vessels were established at 75 feet. Two open sea transfer terminal alternatives were also examined— one off the coast of New Jersey for crude oil and another outside the entrance to Chesapeake Bay for coal and iron ore. To serve 250,000-ton vessels at these locations, water depth requirements were increased to 85 feet to allow for increased vessel motion from wave action. Appendixes VII and VIII contain a breakdown of these total capital costs of all the deep water dry and liquid bulk transfer terminals at each alternative loca- tion. Terminal transfer costs per ton for handling coal, ore and oil at each deep water alternative location were based primarily on total estimated capital construction and operating costs. From the standpoint of capital costs, three significant classes of locations were considered. Each was assumed to be best served by a separate construction system which placed it in a distinctive category of cost: Class 1 : In the Lower Delaware Bay and Montauk Point areas, shallow water exists close to natural water depths 75 feet and more which would permit construc- tion of a conventional artificial island at reasonable cost using hydraulic sand fill within a minimum barrier of rock armour. Class 2: At Machiasport and Canso Strait, construc- tion of island terminals would not be required. Because natural deep water is available close to shore, existing land could be used for commodity storage and marine terminal faculties could be constructed less than one mile offshore. Thus these locations had the lowest construction costs. Class 3: For open terminal locations in 85 feet of water about 15 miles off New Jersey and Chesapeake Bay, a sand filled artificial island could be built in water depths of 45 feet with clear approaches, and protected by a ring of concrete castings produced ashore in a highly mechanized plant and towed to the site where they would be sunk on a submerged rock armour foundation. Because of heavy seas, expensive breakwater protection would also be required at these locations which raised total capital construction costs consider- ably. C. Transshipment Fleet Costs Feeder voyage costs were derived from the use of oceangoing tug-barge and, in specific cases, shuttle ship systems. Although not used in this study, pipelines are another means to transship liquid bulk commodities. For this analysis, the size of the waterborne feeder systems and their resulting costs, in dollars per ton, were direct functions of the annual cargo throughput of the entire transfer system and the voyage distance traveled from each deepwater terminal location to tidewater desti- nations or origins. In addition, the annual throughput volume for all alternative transfer terminals remained at the same level. Therefore, the transshipment voyage time and distance were the key factors in determining the various feeder system sizes and costs for each transfer terminal alternative. A detailed breakdown of the number of components in each transfer terminal's feeder system is found in Appendix IX. To comply with U.S. cabotage law, all transshipment water movements between U.S. mainland ports and U.S. deepwater transfer terminal locations must be in U.S. flag carriers. Oceangoing 40,000 d.w.t. barges pushed by 10,000 horsepower tugs were used, because they are significantly more economical than U.S. flag vessels for these shuttle movements. These economies stem from the inherent advantages of lower capital investment costs, lower manning requirements, and the greater operational flexibility of a tug-barge system. For example, a barge can be left in port for loading and unloading while its power plant (tug) remains in con- stant shuttle service, thus minimizing expensive port time and costs. In the case of the Nova Scotia transfer terminal alternative, however, foreign-flag vessels, com- mensurate with the limiting dimensions of the U.S. ports involved, proved more economical than the tug-barge for iron ore and crude oil transshipments. Specially designed self-unloading barges were used in delivering coal from Hampton Roads to all transfer terminal locations. Standard 40,000 d.w.t. barges, how- ever, were used to carry iron ore from all transfer terminals to Philadelphia and Baltimore where they were unloaded by existing shoreside faculties. Doubled skinned tank barges were used to transport crude oil imports from all transshipment sites to existing tide- water refineries in Delaware River and New Jersey. D. Inland Transport Costs For iron ore and crude oil imports, the total unit transport costs were calculated to existing tidewater- based steel plant and refineries. For coal exports, however, a rail rate from inland mine to Hampton Roads was included in the total transportation unit costs. Two inland rail rates were used for this analysis. The higher unit train rate in Appendix III reflects the existing costs and conditions at Hampton Roads. By utilizing larger vessels at a deepwater transfer terminal and a tug-barge feeder system, a second lower inland rail rate was derived. This lower rate was based on the assumption that the blending and storage of coal, which is now performed inefficiently at Hampton Roads by -expensive rail cars and switching engines, would take place at the transshipment terminal location. The blend- ing and storage functions at the deep water transfer terminal would be carried out by a more efficient ground storage system similar to the one in operation at Roberts Bank in Canada. The round the clock avail- ability of 40,000 d.w.t. barges adjacent to the Hampton Roads loading piers would permit the railroads to reduce considerably the turnaround time of coal cars by eliminating costly switching operations for blending and permitting immediate dumping into the barges. Barges would thus serve as additional buffer capacity between production and ocean shipping offering significant economies to the railroads that a ship could not duplicate. More rapid turnaround time would result in lower switching costs and more efficient coal car utilization which would help to alleviate the existing shortage of rail cars for domestic deliveries of steam coal. 4 The tug-barge, therefore, is essential in realizing this inland rail reduction. A case in point is the transship- ment of coal from Hampton Roads to Nova Scotia. If 80,000 foreign flag coal carriers were used in shuttle service between Hampton Roads and Nova Scotia, the resultant feeder voyage costs would be lower than employing 40,000-ton U.S. flag barges. However, a foreign flag shuttle system would not bring about any inland rail cost reduction to Hampton Roads. Therefore, when the feeder costs of a U.S. flag tug-barge system are combined with the lower inland rail costs, brought about by an improved export coal transport system, the total costs are lower than that of a foreign flag shuttle vessel system to Nova Scotia. The final steps in completing our economic compari- son of alternative proposals with existing North Atlantic ports remaining unchanged are included in Tables 17, 18, and 19. In Table 17, a comparison of the total annual transport savings for 1980 was made between the various deep water transfer terminal alternatives and multiple channel dredging for handling crude oil, coal and iron ore. In Table 18, 1980 investment costs for dredging existing port channels were compared with the capital outlays of constructing transshipment terminal facilities and a shuttle fleet system for each deepwater alternative. Table 19 contains a final base of comparing total capital investment costs with total annual transport savings for 1980 for each alternative proposal. This summary also includes the number of years for total savings to match total investment assuming the level of 1980 savings as constant. 4 Little, Arthur D. Inc., Preliminary Assessment of Potential RailRoad Economies In the Movement of Export Coal Through Hampton Roads Utilizing the Delaware Transfer Terminal, May 1971. Table 17.-SUMMARY OF PROJECTED ANNUAL TRANSPORT SAVINGS FOR 1980 (Millions of dollars) B. CHANNEL DREDGING Hampton Roads 55' Baltimore 50' Delaware River 50' New York/New Jersey 45' C. NATURAL DEEPWATER HARBORS Lower Delaware Bay 75' Machiasport, Maine 75' Montauk Point 75' D. OPEN SEA TERMINAL Off New Jersey 85' Off Chesapeake Bay 85' E. FOREIGN TRANSFER TERMINAL Nova Scotia 75 ' 'Total savings for coal include projected unit train rate reduction of $2.40/LT through Hampton F E for 1980. s for Alternatives C, D, and -SUMMARY OF PROJECTED CAPITAL COSTS FOR 19 (Millions of dollars) Alternatives Descriptions/Depth Dredging (Federal costs) B. CHANNEL DREDGING Hampton Roads 55' Baltimore 50' Delaware River 50' New York/New Jersey 45' C. NATURAL DEEPWATER HARBORS Lower Delaware Bay (Coal and ore) 75' (Crude oil) 75' Machiasport, Maine (Coal and ore) 75' (Crude oil) 75' Montauk Point (Coal and ore) 75' (Crude oil) 75' D. OPEN SEA TERMINAL Off Chesapeake Bay (Coal and ore) 85' Off New Jersey (Crude oil) 85' E. FOREIGN TRANSFER TERMINAL Nova Scotia (Coal and ore) 75' (Crude oil) 75' 1,000 1,000 -SUMMARY OF CAPITAL COSTS VS TRANSPORT SAVINGS FOR 1980 (Millions of dollars) Alternatives Descriptions/Depth B. CHANNEL DREDGING Hampton Roads 55' Baltimore 50' Delaware River 50' New York/New Jersey 45' C. NATURAL DEEPWATER HARBORS Lower Delaware Bay (Coal and ore) 75' (Crude oil) 75' Machiasport, Maine (Coal and ore) 75' (Crude oil) 75' Montauk Point (Coal and ore) 75' (Crude oil) 75' D. OPEN SEA TERMINAL Off Chesapeake Bay (Coal and ore) 85' Off New Jersey (Crude oil) 85' E. FOREIGN TRANSFER TERMINAL Nova Scotia (Coal and ore) 75' (Crude oil) 75' Total investment 1,190 1,075 Years for savings to equal investment We believe the following significant conclusions can be drawn from our economic analysis: 1. Multiple dredging of North Atlantic ship channels is not the most economical solution. The total cost for deepening four ports would be approximately $2 billion for the year 1980. Such an investment for relatively minor improvements would be quite difficult to justify in light of the fact that larger bulk vessels would still be unable to use the deepened channels. 2. A strong national incentive, on the order of approximately $700 million, has been determined to be the potential 1980 annual transport savings resulting from the use of large U.S.-flag bulk vessels for only the export of coal and the import of iron ore and crude oil. As illustrated in Figure 6, these total savings can be viewed as the additional costs to the U.S. that will be incurred for the year 1980 if U.S. North Atlantic ship channels remain unchanged and the best deep water transfer terminal alternative is not adopted for each commodity. 3. The most economical alternative of providing deep-draft bulk vessel handling capability in the North Atlantic is an offshore transfer terminal in a natural deep water harbor location. (a) For coal and iron ore, every natural deep water transfer alternative examined produced significant annual transport savings for 1980 which would require only three years or less to exceed projected 1980 capital ADDITIONAL COSTS TO BE INCURRED FOR THE YEAR 1980 WHEN COMPARING NORTH ATLANTIC PORTS UNCHANGED WITH THE BEST DEEP-WATER TERMINAL ALTERNATIVE ANNUAL COSTS (Millions of Dollars) $673 600 - 500 " 400 ~ $335 " 300 $246 200 100 $92 "n ~ Combined Ore, Coal & Crude Oil I6A 1)2 COMMODITY This offshore coal transfer terminal was designed to receive export bound coal in 40,000 deadweight ton barges, to be t f erred to larger 250,000 deadweight ton bulk carriers destined from the United States to Europe and Japan. investment. However, the order of results reveals clearly that the economics of coal and iron ore transshipment in the North Atlantic is greatly affected by the location of the deep water transfer terminal. For example, a combination coal and iron ore terminal in Lower Delaware Bay is the most economical alternative because it affords the best, deep water, sheltered access to existing North Atlantic coal and iron ore handling ports. Therefore, the more distant the location of the natural deep water transfer terminal, the more inferior its economics become because of higher feeder transport costs. (b) For crude oil, the annual transport savings for 1980 were sufficiently high at all natural deep water harbor transfer locations to exceed total 1980 invest- ment costs within one year. The closeness of these results indicates that the economics of crude oil trans- shipment in the North Atlantic are relatively inde- pendent of terminal location. Because of its access to foreign-flag shuttle vessels and lower total capital in- vestment costs, it is clear that a Canadian, crude oil transfer terminal is a very viable alternative to a comparable U.S. facility in either Delaware Bay, Mon- tauk or Machiasport. 4. Based on estimated 1980 total capital costs and annual savings, it is reasonable to conclude that all deep water harbor transfer terminals would be within the financial capability of private industry to implement by 1980. 5. The recent enactment of legislation in Delaware prohibiting construction of offshore bulk transfer facilities within its coastal zone, coupled with other strong coastal environmental opposition in New Jersey, New York and Maine, may make the development of an open sea U.S. transfer terminal for large bulk vessels a more real possibility. The costs of open sea terminals, however, 15 to 20 miles off the U.S. North Atlantic coast to handle dry or liquid bulk cargoes, have not been fully developed to the point where valid comparisons can be made between these facilities and transfer terminals in natural deep water harbors. But, our preliminary findings indicate that, while there are potential transport savings in an open sea terminal, it would be significantly more expensive to construct and operate. Therefore, the open sea terminal alternative is viewed as a much longer term solution to the supership problem which may perhaps require both federal and private funding to amortize the high capital investment costs. 6. Any undue delay in developing deep draft capa- preclude the development of a competitive U.S. based bility for large bulk carriers in the U.S. North Atlantic transfer facility. That such a vital transportation will more than likely permit Canada and possibly the terminal be owned and controlled by foreign interests Bahamas to secure the necessary U.S. industry/customer and not subject to U.S. jurisdiction would be distinctly support to build a deep water, redistribution terminal. inferior, particularly from a national security standpoint, Once established, such a project, which would probably and would have a deleterious impact upon our world be based on long term contracts, would substantially trade posture. CHAPTER VII MAJOR OBSTACLES TO OFFSHORE TERMINAL DEVELOPMENT Although the alternative of offshore transfer ter- minals offers significant transportation cost benefits, the provision of such facilities would encounter certain problems which are presently under study by several Federal agencies. For example, in addition to high construction costs, certain physical, environmental and political constraints are potential barriers to offshore bulk transfer terminal development for large vessels in the North Atlantic. breakwater and island construction. Such castings could be mass produced in a mechanical plant onshore to minimize labor costs, and towed to the deepwater site where they would be placed on top of a submerged, rock armour base filled with a sand core. It is anticipated that this research study will identify further means of reducing the significant capital costs of constructing an open sea island transfer terminal to handle large bulk vessels in the U.S. North Atlantic. A. Physical The construction of a deep water bulk cargo transfer terminal in the North Atlantic would clearly encounter more severe physical constraints at open-sea locations than in natural harbor sites. These constraints mainly take the form of less favorable marine and atmospheric conditions prevalent in an open-sea environment which raise capital construction costs considerably. For example: (a) Wave action which increases in proportion to water depth, would be more significant at an open-sea terminal. As such, larger rock armour designed for very high waves would be required for breakwater protection and island construction. These units weighting up to 50 tons require precise placement in smooth seas. Any delays incurred while awaiting such conditions would be costly. (b) The required transportation of men and materials to construction sites 15 to 25 miles offshore would increase costs through non-productive overtime. (c) Weather conditions in the North Atlantic would probably limit effective work at these distances offshore to one-half or two-thirds of available time, and (d) Construction of an artificial, open-sea island would take place in deeper water, thus requiring a greater volume of sand fill to be pumped at higher cost. In order to make the economics of open-sea terminals more viable, the costs of overcoming the above physical constraints must be lowered. To this end, Soros Associ- ates, a consulting engineering firm, under contract to the Maritime Administration, is presently evaluating the economic and technological feasibility and ecological acceptability of various designs for offshore terminals in the North Atlantic, including open-sea locations. Preliminary findings, however, have indicated that to overcome strong wave action at lower cost, a system of sink-in-place concrete castings might be used both in B. Financial The dual problem of who would own and operate an offshore, regional transfer facility for bulk cargoes in the North Atlantic and how it would be financed is highly complex and fraught with political implications. In the previous chapter, it was concluded that the estimated total capital construction costs of offshore facilities in natural deep water harbors appear to be within the financial capability of private industry, where return on investment could be included in terminal transfer rates. As such, private enterprise as the principal user, could assume the major role in financing and operating these faculties. However, coordinated planning between the involved industry groups and local and regional public agencies would be absolutely essential to ensure that both the economic and environmental quality needs of the North Atlantic coastal region are satisfied. However, if proposed deep water harbor transfer terminals in the North Atlantic region continue to be blocked by opposing State or local interests, then the construction of an open sea island terminal may become the only alternative to provide deep draft vessel handling capability. Preliminary industry estimates have set the 1980 price tag of this solution in the billion dollar range. This conjective stems primarily from the lack of significant offshore experience in this country with building an open sea island of significant size in depths of more than 30 feet. To this end, MarAd's current research contract with Soros Associates is expected to produce more accurate economic and technical data on the design, construction and operation of offshore island terminals. However, if this research effort demonstrates that an open sea terminal will cost significantly more than a deepwater harbor facility, then it is almost certain that some form of Federal assistance would be required to amortize its initial capital investment. A likely develop- ment would seem to be some kind of joint venture between Federal government, regional and local agencies and private industry. The precise form this would take, who would assume financial responsibility for certain developmental phases and who should have overall direction and authority, would have to be worked out by all parties concerned. C. Environmental and Ecological Establishing an offshore terminal in a natural, deep- water harbor or in the open sea would obviously require no dredging. But this is not to say that all possible risk to the surrounding environment would be eliminated. The following is a brief discussion dealing with some key areas of environmental concern which may be affected by the construction and operation of an offshore terminal. This discussion is followed by a description of a detailed study to be undertaken by a group of Federal agencies on the specific environmental hazards of different offshore terminal systems. There are basically two areas to be considered for the location and construction of an offshore terminal- inshore harbor and open sea. The sheltered harbor location would be in a bay or inlet protected from excess marine and weather conditions by existing land. These inlets or estuaries are often highly sensitive ecosystems that serve as transitional zones between land and sea and between fresh water and salt. Construction of an offshore terminal in these areas may have adverse effects upon the local biophysical ecology. The follow- ing are examples of areas that would have to be considered when constructing an artificial island in a deepwater harbor: (1) Does the fill material have suitable ecological characteristics with regard to the original bottom condi- tions as well as adequate load-bearing strength? (2) Do core samples indicate presence of any fresh water aquifers and marine life that may be affected by the construction? (3) Will the terminal in any way have a major impact on existing shoaling and shoreline characteristics? (4) Is the mere sight of the transfer terminal, even several miles offshore, objectionable from an aesthetic point of view? On the other hand, it would appear at present that the actual construction of an offshore terminal in the open sea would have the least, if any, impact on marine life and the surrounding environment. Turning to the operation of offshore terminals, an oil transfer facility, for example, regardless of its location, will have to be designed in a configuration that would provide inherent spill protection, containment, and removal capability through the use of some type of all weather breakwater or barrier system. A fire fighting system could also be built into the system capable of protecting both the facility and the vessels moored there. Storage tanks at the terminal or on adjacent land could have floating roofs to prevent emission of hydro- carbon vapors. These facilities will be a costly but necessary price to supertanker logistics. Oil spills from large tankers or the facility itself pose probably the greatest pollution threat. An open sea facility would be more subject to extreme sea and wind conditions making it potentially more dangerous. This fact would also tend to disperse oil spills over a greater area making clean-up and containment that much more difficult. Oil spills at an inshore harbor terminal would not be as dispersed, thus making clean-up efforts easier. But the mere fact that such a concentrated oil spill would be so close to densely populated areas makes the immediate impact that much more dangerous. On the other hand, the operation of a dry bulk offshore transfer terminal for coal and iron ore would appear to be less environmentally hazardous than that of a crude oil terminal. Certain precautions, however, would have to be made to ensure safe operation of handling and storage equipment on a dry bulk transfer terminal. For example: (1) Contaminated water percolation and runoff due to rain would have to be contained, possibly by storing the bulk material in a four-sided bin. (2) Air pollution due to dust emission during opera- tions would require some means of control. As little is exactly known about the real pollution and environmental hazards of these different offshore systems, additional research is needed. In a Presidential message on the environment of February 8, 1971, the Council on Environmental Quality in conjunction with the Department of Trans- portation and the Environmental Protection Agency were directed to review measures to deal with the risks of oil pollution. As such, the Corps of Engineers and the Maritime Administration together with these Federal agencies will soon begin an in-depth study on the several alternative means of receiving oil from seaborne trans- port and evaluate each alternative in terms of its economic costs, probable amount of oil pollution and its environmental impacts. Examples of relevant areas to be studied are: (1) Assessment of the pollution hazards of different systems that deliver oil from ship to shore. (2) How should alternative geographic locations for proposed oil facilities be ranked in order of possible environmental damage? (3) For any general port location, would a spill be more damaging in a harbor, near offshore or far offshore? (4) Consideration of the possible dispersions of the oil depending on the season, tide, weather, etc. (5) Consideration of the environmental impact of construction operations near marshland or sensitive aquatic biota. Such a study and continuing research in these areas affecting our ecology, should insure orderly and logical future planning, enabling the U.S. to maintain its high standard of living as well as its natural environment. D. Public and Political In addition to cost, public fear of potential environ- mental damage from oil spills is presently the most significant constraint to offshore, port development in the North Atlantic for large bulk carriers. In effect, the dual problem of where and how to accommodate these vessels while preserving our natural environment has evoked considerable strong public and private debate. Conservationist, environmental, resort and certain political interests are deeply concerned with safe- guarding coastal beaches, wetlands and marine life. To these groups, the prospect of offshore, supertanker facilities pose frightening possibilities. As tourism and recreation are the primary industries in many North Atlantic states, the extensive investment in beach resort areas has made every coastal state extremely sensitive to environmental damage from oil spills. On the other hand, private industry and the Federal Government are vitally concerned with meeting the Nation's rapidly growing energy needs. It has become evident that to support an increasingly expanding industrial economy, future energy requirements will depend heavily on imported oil from sources where larger more economical tankers can lower transportation costs. Thus, the energy and environmental crises have nurtured a view held by many over the past few years that resource development and ecological protection are somehow basically incompatible in the North Atlantic. The significant impact of public and political aware- ness of oil's potential as a pollutant and its damaging effects on local ecology, natural resources, and valuable recreational areas has already been manifested in several industry deep water port proposals in the North Atlantic region. For example, in 1969 considerable coastal resident opposition was primarily responsible for stymying a pipeline company proposal to construct two mono- mooring buoy supertanker facilities in the open sea off Long Branch, New Jersey, and Cape Henlopen, Dela- ware. Several oil company proposals to build port terminals for large tankers in deepwater bays off Machiasport, Portland, and Searsport, Maine, were all stalemated by similar public resistance. As evidence of its desires to protect its shoreline, Maine has enacted unique site development legislation which gives a state commission sole veto power over any proposed onshore or offshore development that might harm its coastal environment. Perhaps the most significant action affecting offshore port development was embodied in a recent coastal zone law passed by the State of Delaware. This unprece- dented, conservation legislation specifically bars not only heavy industry, such as refinery, petrochemical, steel and paper plants, but also offshore bulk transfer terminals from a specially defined coastal zone along Delaware's Bay and ocean fronts. Delaware has elected to preserve these areas for tourist, recreational and compatible industrial uses. The immediate impact of this legislation was to thwart construction of a major new refinery complex and two proposed offshore, deep draft transfer facilities in Lower Delaware Bay— one for exported coal and another for imported crude oil. In light of what has occurred in Delaware, the State of New Jersey is presently taking a closer look at the adequacy of its existing shoreline protection laws (Wet- lands Act). There have been indications that certain political interests in New Jersey wish to further strengthen the State's legal machinery by proposing legislation patterned after Delaware's landmark law. Thus it is becoming clear that, in this age of ecology, environmental politics may well set the limits on where North Atlantic processing industries can and cannot locate future manufacturing and port facilities. If Delaware's coastal zoning legislation sets a prece- dent which is followed by other neighboring North Atlantic coastal states, the implications to the national economy would be most far-reaching. The overwhelming national interest argues for devel- oping ways of constructing deep water transfer facilities that are consistent with the integrity of the environ- ment. In lieu of outright prohibition, major emphasis should be on devising acceptable plans which would balance environmental safeguards with economic needs and public rights with private goals. Given the state and capabilities of present technology, there appears to be no reason why adequate, deep water harbor transfer terminals cannot be provided and in the process com- pletely protect adjacent land and water areas from the dangers of pollution. Similar facilities which provide such protection already do exist in other parts of the world today. To this end, it is anticipated that the findings of the major research studies now underway by several Federal agencies will demonstrate that commercially viable transfer facilities for larger bulk vessels can be built both in deep water harbor and open sea locations, incorporat- ing the most advanced safeguards in construction design, operating techniques and control equipment, to satisfy the most stringent environmental protection require- ments. While the problems are complex and the opportuni- ties are clear, the need for deep draft vessel port capability is pressing in the North Atlantic. Rapid advances in ocean bulk shipping technology and support- ing port development are taking place throughout the world. U.S. shippers, however, who would benefit from lower transport costs of using supersized bulk carriers, are being penalized by the lack of adequate deep water port facilities. Offshore terminals offer the most viable means of providing bulk cargo transshipment facilities in the North Atlantic for deep draft vessels. However, gaining public and political acceptance of these deepwater transfer facilities, no matter where they are proposed, may continue to prove difficult. There- fore, the cooperative planning efforts of the concerned ports, private industrial interests and appropriate Federal, state and local government agencies will be essential to ensure that future investments in deep water port facilities are consistent with both the economic needs and environmental values of the North Atlantic region and of the entire Nation. APPENDICES COMPONENT TRANSPORT COSTS ($/LT) FOR CRUIDE OIL IMPORTS Feeder barge (40,000 dwt) Feeder vessel (47,000 dwt) : Offshore transfer rate .... Ocean freight rate 1 $18.29 Total 1970 costs Total 1980 costs 4 . . . PERSIAN GULF-NEW YORK New York New York Lower Off 35' 45' Delaware Bay !o.56 Machiasport 1 135 New Jersey l 0JS6 Montauk Pt. J 0.56 Nova Scotia _ _ _ _ _ _ - - - 1 1.21 _ _ 0.36 0.30 2.50 0.48 0.30 J $18.29 1 11.30 5.72 5.67 5.70 5.69 5.60 $18.29 11.30 6.64 7.32 8.76 6.73 7.11 (29.26) (18.08) (10.62) (11.71) (14.02) (10.77) (11.38) LIBYA-DELAWARE RIVER Feeder barge (40,000 dwt) Feeder vessel (47,000 dwt) : Offshore transfer rate Ocean freight rate 3 $ 5.42 Total 1970 costs Total 1980 costs 4 (8.67) Delaware 40' Delaware 50' Lower Delaware Bay Machiasport Off New Jersey Montauk Pt. Nova Scotia 3 $ 5.42 3 3~53 3 0.58 0.36 1.91 3 1.23 0.30 1.75 3 0.58 2.50 1.90 3 0.70 0.48 1.86 3 1.13 0.30 1.71 $ 5.42 3.53 2.85 3.28 4.98 3.04 3.14 PERSIAN GULF-DELAWARE RIVER Feeder barge (40,000 dwt) . Feeder vessel (47,000 dwt) 2 Offshore transfer rate Ocean freight rate 3 $16.24 Total 1970 Costs . . . Total 1980 costs 4 . . . Delaware 40' Delaware 50' Lower Delaware Bay 3 0.58 Machiasport 3 1.23 Off New Jersey 3 0.58 Montauk Pt. 3 0.70 Nova Scotia - - 3 1.13 0.30 5.60 3 $16.24 3 10.36 0.36 5.72 0.30 5.65 2.50 5.70 0.48 5.69 $16.24 (25.98) 10.36 (16.58) 6.66 (10.66) 7.18 (11.49) 8.78 (14.05) 6.87 (10.99) 7.03 (11.25) LIBYA-NEW YORK New York New York Lower Off 35' 45' Delaware Bay Machiasport New Jersey Montauk Pt. Nova Scotia Feeder barge (40,000 dwt) .. . - J 0.56 1 1.3S *0.56 '0.56 Feeder vessel (47,000 dwt) 2 . . - - l 1.21 Offshore transfer rate - 0.36 0.30 2.50 0.48 0.30 Ocean freight rate ' $ 6.16 ' 3.85 1.91 1.75 1.90 1.86 1.71 Total 1970 costs $ 6.16 3.85 2.83 3.40 4.96 2.90 3.22 Total 1980 costs 4 (9.86) (6.16) (4.53) (5.44) (7.94) (4.64) (5.15) includes $.10/LT unloading costs at Chevron Oil, Perth Amboy, N.J., Refinery Terminal. 2 Foreign flag tanker. includes $.10/LT unloading costs at Sun Oil, Marcus Hook, Pa., Refinery Terminal. Escalation factor 1.6 (5%/yr.) to 1980. APPENDIX II COMPONENT TRANSPORT COSTS ($/LT) FOR IRON ORE IMPORTS LIBERIA-DELAWARE RIVER Feeder barge (40,000 dwt) . . . Feeder vessel (50,000 dwt) 2 . . Offshore transfer rate Ocean freight rate 1 $ 5.69 Total 1970 costs Total 1980 costs 4 . . . Feeder barge (40,000 dwt) Feeder vessel (50,000 dwt) ; Offshore transfer rate .... Ocean freight rate 3 $14.23 Total 1970 costs $14.23 9.85 Total 1980 costs 4 (22.77) (15.76) Delaware 40' Delaware 50' Lower Delaware Bay Machiasport Off Chesapeake Bay Montauk Pt. Nova Scotia H 5.69 x 3.79 !l.26 0.39 1.83 1 2A6 0.36 1.70 ! 1.67 1.25 1.81 H.61 0.45 1.80 *1.94 0.36 1.63 $ 5.69 (9.10) 3.79 (6.06) 3.48 (5.57) 4.52 (7.23) 4.73 (7.57) 3.92 (6.27) 3.93 (6.29) AUSTRALIA-BALTIMORE Baltimore 42' Baltimore 50' 3 9.85 Lower Delaware Bay 3 1.67 0.39 5.21 Machiasport 3 2.46 0.36 5.16 Off Chesapeake Bay 3 1.26 1.25 5.19 Montauk Pt. 3 1.67 0.45 5.18 Nova Scotia 3 $14.23 3 1.94 0.36 5.09 LIBERIA-BALTIMORE Baltimore Baltimore 42' Feeder barge (40,000 dwt) ... Feeder vessel (50,000 dwt) 2 . . Offshore transfer rate - Ocean freight rate 3 $ 5.37 Total 1970 costs $ 5.37 Total 1980 costs 4 (8.59) 50' Delaware Bay 3 1.67 Machiasport Chesapeake Bay Montauk Pt. 3 1.67 Nova Scotia _ 3 2.46 3 1.26 _ — — — — — 3 1.94 - 0.39 0.36 1.25 0.45 0.36 3 3.79 1.83 1.70 1.81 1.80 1.63 3.79 3.89 4.52 4.32 3.92 3.93 (6.06) (6.22) (7.23) (6.91) (6.27) (6.29) AUSTRALIA-DELAWARE RIVER Delaware Delaware Lower Off 40' 50' Delaware Bay Machiasport Chesapeake Bay Montauk Pt. Nova Scotia Feeder barge (40,000 dwt) ... - - U.26 1 2A6 h.67 l \.61 Feeder vessel (50,000 dwt) 2 . . - - - 1 1.94 Offshore transfer rate - 0.39 0.36 1.25 0.45 0.36 Ocean freight rate 1 $15.11 *9.85 5.21 5.16 5.19 5.18 5.09 Total 1970 costs $15.11 9.85 6.86 7.98 8.11 7.30 7.39 Total 1980 costs 4 (24.18) (15.76) (10.98) (12.77) (12.98) (11.68) (11.82) includes unloading costs of $.50/LT at U. S. Steel Fairless Works. 2 Foreign flag vessel. includes unloading costs of $.50/LT at Bethlehem Steel Sparrows Pt. Works. Escalation factor 1.6 (5%/yr.) to 1980. COMPONENT TRANSPORT COSTS ($/LT) FOR COAL EXPORTS HAMPTON ROADS-JAPAN 45' Inland rail to Hampton Roads .. 2 $ 5.95 Feeder barge (40,000 dwt) Offshore transshipment - Ocean freight 2 8.57 Total 1970 costs Total 1980 costs 3 (23.23) Lower Off Delaware Bay Machiasport Chesapeake Bay Montauk Pt. Nova Scotia I4.45 *4.45 J 4.45 ! 4.45 M.45 0.42 1.46 0.19 0.79 1.70 0.39 0.36 1.25 0.45 0.36 6.12 6.07 6.11 6.10 6.00 Inland rail to Hampton Roads Feeder barge (40,000 dwt) . . . Offshore transshipment Ocean freight Total 1970 costs $ 8.86 Total 1980 costs 3 (14.18) $14.52 (23.23) 14.28 (22.85) 11.38 12.34 12.00 (18.21) (19.74) (19.20) HAMPTON ROADS-EUROPE 11.79 (18.86) 12.51 (20.02) ampton Roads 45' Hampton Roads 55' Lower Off Delaware Bay Machiasport Chesapeake Bay Montauk Pt. Nova Scotia $ 5.95 2.91 l S.9S 1.97 1 4A5 M.45 *4.45 0.42 1.46 0.19 0.39 0.36 1.25 1.43 1.29 1.42 x 4.45 0.79 0.45 1.34 M.45 1.70 0.36 1.18 7.03 (11.25) includes loading costs of $0.06/LT at Hampton Roads. 2 Via Panama Canal. Escalation factor 1.6 (5%/yr.) to 1980. lu m < (j ~ << O 00 ai O u. o ct ^ cc en E5 LU Q II APPENDIX VI MILLIONS OF LONG TONS 64 - 55 COMBINED JAPAN & EUROPE " - 40 35 IAPAN ' ^^~- - 24 20 EUROPE - - - 1 " APPENDIX VII TOTAL CAPITAL COSTS OF DEEP-WATER CRUDE OIL TRANSFER TERMINALS (Millions of dollars) Lower Delaware Off New Jersey Montauk Machias Artificial Island 12 170 20 (Size/Depth) (200 acres in 15 ft.) (200 acres in 45 ft.) (200 acres in 25 ft.) Existing Land - - - 1 Breakwater 370 19 Tankages 10 10 10 10 Marine, mechanical and electrical facilities 35 55 40 30 Other _U_ 20 _11 _8 Total-1970 price $68 $ 625 $100 $49 Total- 1980 price 1 $108 $1,000 $160 $78 Escalation ratio- 1.6 (5% per year compounded annually). 56 APPENDIX VIII TOTAL CAPITAL COSTS OF DEEP-WATER COAL AND IRON ORE TRANSFER TERMINALS (Millions of dollars) Lower Delaware Off Chesapeake Bay Montauk Machias Canso Strait Artificial Island 18 125 30 (Size/Depth) (300 acres in 15 ft.) (300 acres in 45 ft.) (300 acres in 25 ft.) Existing land — - 1.5 1.5 Breakwater 370 17 Marine facilities . . 35 coal 49 49 49 49 49 14 ore Mechanical and electrical equipment ...43 coal 59 59 59 59 59 16 ore Other _24 27 25 ^05_ JML5 Total-1970 price $150 $ 630 $180 $130 $130 Total- 1980 price 1 .... $240 $1,000 $288 $208 $208 Escalation ratio- 1.6 (5% per year compounded annually). APPENDIX IX TRANSSHIPMENT FLEET ALTERNATIVES LOCATION TERMINAL TYPE SYSTEM SIZE 1 TOTOAL 1980 CAPITAL COSTS C. Lower Delaware Bay Coal and iron ore 9 tugs 15 barges $235 million Crude oil 3 tugs 7 barges $ 75 million Machiasport, Maine Coal and iron ore 31 tugs 37 barges $489 million Crude oil 14 tugs 18 barges $234 million Montauk Point Coal and iron ore 17 tugs 23 barges $369 million Crude oil 6 tugs 10 barges $118 million D. Off Chesapeake Bay Coal and iron ore 5 tugs 11 barges $190 million Off New Jersey Crude oil 3 tugs 7 barges $ 75 million E. Nova Scotia, Canada Coal and iron ore Coal-27 tugs 29 barges $379 million Crude oil Ore - 6 vessels 10 tankers $ 95 million •System size is a variable of transfer voyage distance and annual throughput. The components are: 40,000 dwt oceangoing barges and 9,200 H.P. tugs; 47,000 dwt foreign flag tankers; 50,000 dwt foreign flag ore carriers. 57 a ° S O O £ *ii •g^S l> £ z .2 S 05 22" oz •3 1 Q Z a a o o o o ii E E ii Pi o o ii oStS BIBLIOGRAPHY Technical Papers/Presentations McPhee, W. S., "Crude Oil Transshipment Ter- minals," Society of Marine Port Engineers, Mari- time College-Fort Schuyler, New York, March 1, 1969. Koisch, Francis P., Supercarriers versus U.S. Harbor Dimensions, ASCE National Meeting on Transportation Engineering, July 21-25, 1969. Brigadier General Charles Noble, U.S. Corps of Engineers, Long Range Planning for Port Develop- ment, AAPA Convention, Vancouver, British Columbia, September 19, 1967. Major General R. G. MacDonnel, U.S. Army Corps of Engineers, Supporting National Growth, May 2, 1962. Cooke, Robert F., Modern Concepts of Ocean Transportation of Petroleum, ASME publication, June 1, 1967. Clark, Allen P., The Impact of Increasing Vessel Sizes on the Ports of the United States, presented to the 15th Annual API Task Conference, April 1970. Marsden, Howard J., Impact of Increasing Vessel Sizes on U.S. Ports, presented to the 15th Annual API Tanker Conference, April 1970. Groves, Brigadier General R. H., Impact of Increas- ing Vessel Sizes on U.S. Ports, presented to 15th Annual API Tanker Conference, April 1970. Jones, Roger, Ocean Bulk Shipping in the 1970's, presented at the 1968 Mining Show, American Mining Congress, October 7-10, 1968. Soros, Paul, Delaware Transfer Terminal System, presented to the Washington, D.C., Coal Club, December 15, 1970. America's Energy Needs and Resources, Remarks of Honorable Hollis M. Dole, Assistant Secretary for Mineral Resources, Department of Interior at Stanford University, January 12, 1971. Rosselli, Albert T., Environmental Considerations in Marine Terminal Development, presented at ASCE Annual Environmental Engineering Meeting, New York, October 1970. Major Studies/Reports Advanced Marine Technology Division, Litton Systems, Inc., Oceanborne Shipping: Demand and Technology Forecasts, Culver City, Calif., June 1968. The American Association of Port Authorities Committee on Ship Channels and Harbors, Na- tional Channel Capability Study (through the year 2000), September 1970. , Ship Channel Capabilities for Merchant Vessels in United States Deepwater Seaports Through the Year 2000 (North Atlantic Region), June 1970. , Merchant Vessel Sizes in United States Offshore Trades by the Year 2000, June 1969. U.S. Army Corps of Engineers, Harbor and Port Development: A Problem and an Opportunity, July 1968. Matson Research Corp., Transocean Tug-Barge Systems: A Conceptual Study, San Francisco, Calif., July 1970. The Port of New York Authority, Ocean Petro- leum Tanker Size and Traffic Forecast, Port of New York 1975, May 1970. Arthur D. Little, Inc., Machias Bay-Environ- mental Management, report to Atlantic World Port, Inc., December 1969. Report of the Study Group on Interoceanic and Intercoastal Shipping, submitted to the Atlantic- Pacific Interoceanic Canal Study Commission, April 1970. Interstate Oil Transport Co., Economic Study of Integrated Deepwater Tanker and Barge Lightering System in the Lower Delaware Bay. Presented to Delaware Bay Transportation Co. New York, New York, May 12, 1970. Little, Arthur, Inc., Preliminary Assessment of Potential Railroad Economies in the Movement of Export Coal Through Hampton Roads Utilizing the Delaware Transfer Terminal, May 1971. Periodicals Pearce, Dr. A. W., "Towards the First Million Tonner," Dock and Harbor Authority, October 1969. Newton E., "Where Will the Big Tankers Go," Dock and Harbor Authority , October 1967. Quint, Jim, "America's Nightmare in the New Age of Super Ships," S. F. Sunday Examiner and Chronicle, California Living, Week of December 7, 1969. Fraser, Donald, "Roberts Bank: America's First Outerport," The Dock and Harbor Authority, August 1970. "Liverpool Looks to Million Ton Tankers," The Dock and Harbor Authority. Hoffman, John F., "Man-made Islands Can Solve Many of Our Problems," Ocean Industry, Feb. 1970. Costa, Vasco, "These Big Ships Need Brakes," The Dock and Harbor Authority , August 1970. Lynch, Bill, "To Dig or Not To Dig-A Bulky Problem," Delaware River Port Authority Log, May 1968. "Tankers Move the Oil That Moves the World," Fortune, September 1, 1967. Weller, John L., "The Greatest Shipping Revolu- tion—Part 2," Handling and Shipping: The Physical Distribution Management Magazine, October 1970. Zumbo, Paul, "Wave of Protest Hits Plan for Oil Depots Off N. J. Coast," N. Y. Sunday News, July 27, 1969. "The Combination Bulk Carrier," Surveyor, August 1970. Oliver, Capt. E. F., "Gargantuan Tankers: Privi- leged or Burdened," U.S. Naval Institute Pro- ceedings, September 1970. Holubowicz, R. P., "The Other Revolution," U.S. Naval Institute Proceedings, October 1970. Williams, John D. "U.S. Ships Get Bigger But Firms Face Hurdles in Bids To Enlarge Ports," Wall Street Journal, June 30, 1971. Janson, Donald, "Delaware Bars Heavy Industry From Coasts to Curb Pollution," New York Times, June 29, 1971. Huth, Tom "Delaware Chooses Conservation Over ' Washington Post, June 26, 1971. References "World Ships on Order," Fairplay International Shipping Journal, published quarterly. U.S. Department of Interior, Mineral Industry Surveys, Annual Summary of Crude Petroleum, Petroleum Products, and Natural Gas-Liquids for 1969. Maritime Administration, Merchant Type Ships of 100,000 Tons Deadweight and Over, as of December 31, 1969. Fearnley and Egers Chartering Co. Ltd., Trades of World Bulk Carriers in 1969, Oslo, Norway. , Large Tankers in World Trade 1969, Oslo, Norway. Department of the Army, Corps of Engineers, Philadelphia District, Public Hearings on Proposed Offshore Supertanker Terminal in Lower Delaware Bay, March 31, 1970, Dover, Delaware; April 1, 1970, Philadelphia, Pa. John J. Jacobs and Co. Ltd., World Tanker Fleet Review, London, published annually. Department of the Army, Corps of Engineers, Waterborne Commerce of the United States, Parts 1-5, 1969. ACKNOWLEDGEMENTS The Maritime Administration wishes to acknowledge with appreciation the cooperation of the following in making photographs available for this publication: American Bureau of Shipping Frederic R. Harris, Inc., Consulting Engineers Marcona Corporation Bethlehem Steel Corporation Seatrain Shipbuilding Corporation. Ishikawajima-Harima Heavy Industries PENN STATE UNIVERSITY LIBRARIES AODDDVlEbSEEa