Port Everglades seeks its place in the new Florida sun

The chief executive and port director of Port Everglades, Steven M. Cernak, would like Americans to know they probably couldn’t start their day without his port.

Most of the nation’s underwear traverses the Broward County, Fla., port, according to Cernak, who has headed up operations there since March 2012. Each day, enormous quantities of materials enter the port to be loaded aboard ships bound for manufacturing sites in Latin America. The finished garments then return to the port, where they are then loaded onto trucks and trains to complete their journey.

“We like to think we play an important role in getting Americans dressed each morning,” Cernak joked in a phone interview.

Cernak’s jocularity belies the seriousness of his job and gives no hint of the intensity that comes with spending 12 years as a senior engineer at the Port Authority of New York & New Jersey, and then a 10-year stint as director of the Port of Galveston before he moved to South Florida. In a state surrounded by water, populated with 15 seaports, and boasting the third-largest population (Florida recently surpassed New York and trails only California and Texas), Port Everglades sits at the top of several categories. It is the state’s leading port by revenue (cruise and cargo), with $153 million in fiscal year 2014, which ended Sept. 30, 2014. It is Florida’s top containerport by volume, handling 1.01 million twenty-foot equivalent units (TEUs) in FY 2014, an 8-percent increase over the prior fiscal year. It was Florida’s leading export port, with $13.6 billion in exports during calendar year 2014. It is the state’s largest refrigerated cargo port, and the seventh largest in the nation. And it is the number one U.S. gateway for trade with Latin America, with 15 percent of all U.S.-Latin commerce moving through its terminals. It handled a record $27 billion in 2014.1 billion in total trade, split evenly between imports and exports.

Port Everglades believes it has an ace in the hole with the July 2014 opening of Florida East Coast Railway’s (FEC) $72 million intermodal container transfer facility, built on 43 acres adjacent to the seaport that the port provided to Jacksonville-based FEC. The facility, constructed with $48 million in state loans and grants, is used to transfer international boxes and to move domestic cargo in and out of South Florida. For example, import containers are transloaded at the port to FEC trains, which can then take the boxes to their destinations via its 351-mile rail network linking Miami and Jacksonville. Or FEC can connect with Eastern railroads CSX Corp. and Norfolk Southern Railway to deliver as far north as Cincinnati and as far west as Dallas. The service can reach 70 percent of the U.S. population within four days, according to FEC.

Before the facility opened, containers had to be trucked between Port Everglades and an FEC yard two miles from the port. Because of its proximity to the port, the new terminal will allow the operation to expedite inbound and outbound movements, and will eliminate 180,000 annual truck trips from local roads by 2029, according to port officials.

James R. Hertwig, FEC’s president and CEO, said he expects the railroad to execute 500,000 to 600,000 lifts per year at the facility by 2020, up from 100,000 per year currently. A lift is defined as a trailer or container’s being lifted onto or off of a railcar, and one intermodal movement can consist of multiple lifts, depending on how many transport modes are involved.

GOING DEEP

Port Everglades’ leading position in the state’s ocean cargo market is all the more striking considering that 42 percent of its revenue in the past fiscal year came from the leisure cruise segment, where it is one of the world’s busiest ports for multiday voyages. It’s hard to imagine any U.S. port that serves two masters in the way Port Everglades does. Cernak acknowledged that the business is still “slanted toward the cruise side of the house,” and that one of his main objectives is to elevate the cargo business to reach parity. Cargo traffic is growing by about 2 percent a year, he said.

After a solid start to 2015, Port Everglades’ import TEUs trended down from last year’s levels until September, according to Hackett Associates, a consultancy. Import volumes through July dropped 2.8 percent from the same period in 2014. In its September forecast, Hackett said import TEUs should rise for the balance of the year on a sequential basis. Year over year, however, 2015 volumes will drop 0.9 percent from 2014 levels, the firm predicted. Ben Hackett, the firm’s founder, said Port Everglades’ volume growth will be hamstrung by its shallow 42-foot channel depth, which makes it impossible for the port to handle large vessels laden near capacity.

Indeed, Port Everglades’ biggest long-term challenge is remaking its waterside infrastructure to compete with other South Atlantic ports for the megavessels entering global trade lanes, traffic that’s likely to rise following the scheduled April 2016 opening of the expanded Panama Canal that will enable passage of the big boats sailing to and from Asia. Today, the port is constrained in both turning space and navigation channel depth. Although the port handles post-Panamax ships—vessels with a 10,000-TEU capacity and up—the ships must be lightly loaded in order to safely maneuver in its 42-foot-deep channel. In addition, the port’s ship turning basin at its southern end is only 900 feet long, which limits the size of the ships that can call at Everglades.

Work will begin in late 2016 to extend the turning basin to 2,400 feet, which officials said would expand the quay area from one to five berths. The port also plans to add five cranes over the next 12 years to its existing seven-crane infrastructure, with each of the new units capable of working vessels carrying up to 13,000 TEUs. The first two, which are the only ones paid for, will be delivered in 2017.

The “Southport Turning Notch” project is slated for completion sometime in 2019, according to Cernak. The channel-deepening project, which will expand its depth to 50 feet, is set for completion in 2022; the project has been on the drawing board since 1996. Though Port Everglades will always be primarily a north-south port, Cernak said he sees an opportunity to gain more share of the bidirectional Asian trade, which today accounts for just 4 percent of its business.

Besides the need to upgrade its infrastructure, Port Everglades must contend for trans-Pacific market share with PortMiami, which opened its 50-foot channel for business in mid-September. Because of its geographic position as the nation’s southernmost gateway, Miami is positioning itself as the first U.S. deepwater port of call for megaships transiting the canal. Like Port Everglades, Miami is not a major player in the trade; Asian imports account for only 6.5 percent of Miami’s business. In attracting vessels plying the Asian trades, both ports suffer in comparison with Savannah (Ga.), Charleston (S.C.), and Norfolk (Va.) because Southeast Florida is considered too far away from major U.S. commerce centers to be viable for businesses serving the eastern half of the country.

Cernak said he does not look to compete with Miami for vessel calls, and noted that all Florida ports work closely with the state to support its competitive position. Port Everglades does not receive any direct local tax revenue. Cernak added that both ports’ limited footprints—Miami handles fewer TEUs than Port Everglades—mean that one will not disproportionately gain at the expense of the other. “I can’t assume all of Miami’s business, and they can’t assume all of mine,” he said.

Cernak said he’s happy Miami has achieved the supposedly magical 50-foot water depth status to accommodate near-full or fully laden megaships. “I applaud them, and I’m coming right behind them,” he said. “The winners will be South Florida businesses and consumers.”

Time is running out on Amtrak’s aging tunnels

For Joseph Boardman, the aggravating delays for New Jersey Transit and Amtrak trains traveling through the 105-year-old Hudson River rail tunnel in July proved to be an important lesson.

For years, Amtrak’s president and chief executive officer has been sounding the alarm that the tunnel’s antiquated state risks the reliability of rail systems that use the link to transport passengers from New Jersey to New York City and back every day. Amtrak owns and uses the infrastructure, but it’s also used extensively by NJ Transit.

Although Amtrak crews shut down one of the tunnel’s two tubes every weekend to perform repairs and maintenance, their condition — including the 80-year-old electric cables that were the source of the summer outages — is crumbling. And the tubes sustained an enormous amount of damage when Hurricane Sandy pounded the East Coast in October 2012, filling the Hudson tunnel with corrosive saltwater.

While the need to rebuild the Hudson tunnel in particular and invest in Amtrak and transportation infrastructure in general is a message that Boardman has been sending since he took Amtrak’s reins in 2008, it wasn’t until the electrical problems caused five days of train delays in July that he says he understood “on an emotional level” what the tunnel’s deteriorating condition means for the hundreds of thousands of passengers who rely on travel through the tunnel daily.

“When we had to shut down those tunnels, we went from 24 trains running at peak hour, to six trains at peak hour,” Boardman says. “And that really tied up the New York metropolitan area, from New Jersey to New York and back. And that affected people’s lives: their concerns for their safety, for reliability, for their ability to get to work and then home again so they could pick up their kids at daycare. The issue is really about those things. And that’s the story that needs to be told.”

A peek at what’s in store

The power outage was an alarming picture of what the future holds if regional, state and federal leaders don’t act soon on a plan to overhaul the existing tunnel and build a new one into New York City. If the status quo continues much longer, the region can look forward to more unpredictable infrastructure breakdowns, creating a transportation nightmare for people who live and work in the nation’s economic epicenter, Amtrak officials say.

It’s also a glimpse of what Americans’ day-to-day lives will be like if the nation continues putting off investment in aging infrastructure along the Northeast Corridor (NEC), Boardman believes. Which is why Amtrak has been advocating for funding to build a new two-track tunnel under the Hudson River, make extensive repairs of the old tunnel and complete other projects that are part of the railroad’s NEC Gateway plan.

This summer’s service disruptions were not surprising. A year earlier, after HNTB Corp. completed an engineering review on the tunnel’s condition post-Hurricane Sandy, Amtrak officials warned that service disruptions would occur if major investment in tunnel repairs and upkeep weren’t made. While the engineers’ study found no evidence that the tunnel linings were unsafe, the engineers did conclude that chlorides and sulfates left from the storm were eating away at bench walls, track, signal, electrical and mechanical systems.

The HNTB report underscored the urgency for accelerating Amtrak’s Gateway plan, the heart of which is building new, two-track tunnel capacity under the Hudson River. The Sandy damage was so severe that long-term closures of the tunnel would be necessary within 20 years, it concluded.

“The Northeast region needs to make the Gateway program a priority and we must get about the business of moving it forward as fast as we can,” Amtrak Chairman Tony Coscia said in October 2014, when the report’s findings were announced. “There is no comfort zone to say we don’t need to be worried.”

A project of national significance

The stakes are high. U.S. Transportation Secretary Anthony Foxx recently described construction of new Hudson River rail tunnels as “one of — if not the — most important” infrastructure projects in the nation because of the regional economy’s reliance on a well-functioning rail system between New Jersey and New York City. Beyond that, the structures serve as a critical NEC link between Washington, D.C., and Boston. While the rail corridor is near capacity at some locations, congestion appears to be the worst in the area leading into Penn Station because the Hudson tunnel is the only intercity passenger-rail crossing from New Jersey into New York City.

Trains passing through at peak commute times typically are overcrowded, a status that will only worsen as demand for rail service is projected to increase significantly by 2030, according to Amtrak. As a result, the Gateway plan calls for a series of projects that Amtrak officials believe are necessary to double the rail capacity between Newark, N.J., and New York City, expand Acela high-speed rail service, and shore up the infrastructure’s severe-weather resiliency.

The projects would increase tracks, tunnel, bridge and station capacity, and eventually create four mainline tracks between Newark and Penn Station in Manhattan, including the new Hudson tunnel.

New portal bridges, expanded Penn Station

Moreover, Gateway would expand Penn Station tracks and platforms, and create new “Penn South” concourses that would provide connections to the Farley Post Office Building, which is currently being renovated into the future Moynihan Station. The future Penn/Moynihan complex would be better able to serve the growth of Amtrak’s Acela trains and future higher-speed rail service, Amtrak officials believe.

Additionally, two high-level fixed bridges — known as the North and South Portal Bridges — will be built to replace the moveable Portal Bridge that crosses the Hackensack River between Kearny and Secaucus, N.J. The North Portal Bridge will be the first one built, at a cost of about $1 billion. Final design and federal environmental review have been completed on that bridge plan, and the five-year construction phase will begin as soon as funding is secured.

Gateway also would improve the NEC between Newark and Secaucus, with the mainline expanded from two to four tracks between Newark and Bergen Palisades tunnel portals. Better connections would be constructed to link the NEC and NJ Transit’s Morris and Essex lines, according to Amtrak’s Gateway website.

Amtrak officials came up with the Gateway plan four years ago, following New Jersey Gov. Chris Christie’s decision to call off the trans-Hudson rail-tunnel project. At the time, Christie expressed concerns that the NJ Transit project would top its $14 billion cost.

Boardman has declined to put a price tag on the yet-to-be-funded Gateway plan until the overall design phase — now underway — is completed. Various news media have cited cost estimates between $15 billion and $20 billion, but Boardman won’t comment on those figures.

“Until you have a more complete design of the project, you’re not going to know what the number is, and we’re not even close to that at this point,” he says. “But we know that it will be a multi-billion-dollar project.”

Making progress, despite lack of funding

Funding, of course, has been the biggest roadblock to putting Gateway on a faster track. Still, Amtrak has been plugging along on the project, even though questions about who’ll pay for the whole thing and where the money will come from have yet to be answered.

Since 2012, the railroad has directed $300 million toward planning, design and pre-construction efforts that will pave the way for the new tunnel’s construction. That includes $74 million spent on planning and pre-construction activities, and $235 million on concrete casing construction at the Hudson Yards. A majority of those dollars came from federal Hurricane Sandy resiliency funds as part of the Disaster Relief Appropriations Act of 2013, Boardman says.

In 2013, construction began on concrete casing of the two tubes as part of the effort to preserve the future Gateway tunnel’s underground alignment through the Hudson Yards and into Penn Station. About 800 feet of the casings has been completed. And construction of the next 100 feet to extend the casing under 11th Avenue is underway.

Even though Gateway’s final design hasn’t been finalized and funding questions remain, it was “absolutely necessary” to complete the underground alignment preservation as soon as possible, Boardman says.

“Preserving that alignment is so critical to us and for anybody who would want to do high-speed rail and have access into Penn Station,” he adds.

Meanwhile, Amtrak is preparing to launch the National Environmental Policy Act (NEPA) review required prior to completing the new Hudson tunnel’s design. Last month, NJ Transit’s board authorized negotiations with Amtrak to reach a memorandum of understanding that will put the environmental permitting process under NJ Transit’s authority. Once the MOU is approved, the transit agency will select a consultant to oversee the NEPA process.

Boardman anticipates the environmental process will begin in 2016 and take two to four years to complete.

“So, you’re talking 10 to 12 years to get a tunnel built under the Hudson River. But we’re getting started with it,” Boardman says. “We’ve allocated another $35 million in our budget next year to really make a continuing effort to move forward on this.”

As the environmental review and design planning inches forward, Boardman will continue to advocate for a financing scheme that would allow the Gateway project — and other rail infrastructure needs of national significance — to get built. He says he was encouraged by this summer’s breakthrough in discussions for a Gateway funding solution — prompted by the tunnel’s power outages in July — that included federal officials, Gov. Christie and New York Gov. Andrew Cuomo.

A 50/50 funding split

In September, Cuomo and Christie proposed that the two states and the Port Authority of New York and New Jersey (PANYNJ) come up with a plan that would pay half the cost of the Gateway project if the federal government picks up the rest of the cost. Spelled out in a letter to President Obama, their proposal acknowledged that replacing the tunnel is a national priority, and that the tunnel is the “linchpin” for Amtrak’s 457-mile NEC route. The letter represented a significant turn in the political discussion: a month prior, Cuomo had declined to meet with Foxx to talk about it.

Boardman says he’s also appreciative for longtime support that the Gateway initiative has received from federal officials representing the NEC states, such as U.S. Sens. Charles Schumer (D-N.Y.), Bob Menendez (D-N.J.), Cory Booker (D-N.J.) and Richard Blumenthal (D-Conn.).

A call for a Gateway shepherd

In August, Schumer proposed a “Gateway Development Authority” that would shepherd the Gateway program and find ways to pay for it. Under the senator’s proposal, the authority would bring together the project’s key players — Amtrak, New York, New Jersey, PANYNJ, New York City’s Metropolitan Transportation Authority, NJ Transit and the federal government — to make sure the project gets done.

“Amtrak can’t access federal mass transit funding. The Port Authority and regional transit agencies can’t access federal railroad dollars the way Amtrak can,” Schumer said in August, according to news reports. “We’ll only get Gateway done by adding up several pieces of financing, with an eye toward getting the maximum amount possible from the federal government.”

Boardman says it doesn’t matter to him which entity — the Port Authority or a newly created Gateway authority — oversees the Gateway project, as long as it gets built. And since the July power outages, the political will to advance it seems to be in place.

“All the northeastern political people really do now seem to understand” what’s at stake, Boardman says. “We’re very encouraged with what has been occurring.”

Nevertheless, the clock is ticking. Despite weekly repairs and maintenance, problems like the electrical outage that occurred in July are likely to happen again — and with greater frequency — given the tunnel’s age.

How much life does the Hudson tunnel have left?

“What our engineers have said is that, maybe we have 20 years, maybe we have 7 years,” Boardman says. “If we only have 7 years, then we certainly won’t get the new tubes and tunnels done in that period of time. If we have 20 years, then we can get it done. This nation has proven that when the people make up their minds to do something, we can get stuff done.

“But, the time to get moving on this project is now.”