Long Beach Intermodal Terminal Blows the Budget

Plans to create a mega terminal at the Port of Long Beach at a cost of $1.2 billion that were set in motion early in 2013 have shown signs of blowing that budget by as much as $85 million. The project which aims at combining two aging terminals into a single, large container handling facility designed to handle the new fleet of ultra large container ships, has encountered some unexpected costs involved in the relocation of utilities and other unforeseen construction costs. The new estimates come after the port hired risk analysis experts to survey the accuracy of projections for phase two of the project. It was found that relocation of the oil fields, the actual cost of a battery exchange terminal and other construction works required for connecting the port to the rail network had been under funded in the original budget for the project.

As the second busiest container port in the United States, the Port of Long Beach has 76 feet of draft in its main channel, allowing the new fleet of ultra large ships easy access to its terminals. As many of these larger ships will not be able to use the Panama Canal even after the upgrades are complete in mid 2015, the necessity of providing easy access to the US intermodal network is seen as vital to the port’s future. On the east coast, the Port of Miami is currently dredging to the necessary depth in order to accommodate the new ships; also as a hedge against the projected loss of volumes that passage of the upgraded part of the canal is forecast to remove from the US intermodal network.

When the capacity of the Panama Canal increases from ships that currently carry a maximum of 5,000 teu to the larger capacity of 13,000 teu ships that will be able to transit the new locks, the Port of Long Beach will need to become more efficient to reduce the costs of using the sea to rail option which is still more costly than taking the long route to the East Coast through the Suez Canal. It is hoped that the new development, with its improved links to the road and rail infrastructure will reduce costs through greater freight handling efficiency in order to make it a competitive option for shippers. This cost blowout is just the latest in a series of underestimations for the project which was originally budgeted at $750 million and may soon be slated to cost as much as $1.35 billion.