Lifting anchor in New York, the Dahe will steam toward Boston Harbor Wednesday night. While almost three football fields long and capable of holding 3,800 20-foot metal containers, this 12-year-old Chinese container ship is relatively small compared with today's high-tech transports. But Boston's port can't receive those bigger boats, so the Dahe will have to suffice.
As export economies continue to expand in the Far East to supply hungry American consumers, shipping companies are shifting to vessels three times larger than the Dahe. These new behemoth freighters are forcing many US ports to decide whether to spend millions on improvements - like deeper harbors and new terminals - or watch the next generation of ships pass them by.
"In a lot of ways, smaller ports have already dried up," says Marc Levinson, a New York economist who has written a book on the 50-year history of container shipping. "The fact is: Many small US ports are simply not equipped to handle [the largest ships in] today's fleet. Shipping companies want the fastest, cheapest route. And they'll go to Canada or Mexico to find it."
To compete with other Eastern cities, the Massachusetts Port Authority wants to dredge five to 10 feet of rock and clay from the bottom of the harbor to allow larger, deeper-floating ships to enter safely. The estimated cost: $100 million.
"In order to be competitive in the global marketplace, we need a 45- [to] 50-foot harbor, one that can serve these new vessels," says Boston port director Michael Leone.
While Boston waits for a green light from the US Army Corps of Engineers and Congress for the project, ports from Sacramento, Calif., to New Orleans are scrambling to find funds for their own plans to dredge and deepen.
The Virginia Port Authority finished a three-year, $37 million project last April, turning Norfolk into the deepest port on the East Coast, at 50 feet. The Port of New York/New Jersey hopes to join the 50-foot club by 2009, as part of a multibillion-dollar harbor renovation.
Tired of losing major manufacturing contracts to neighboring states with stronger infrastructures, North Carolina recently approved construction of a new billion-dollar port on Cape Fear, designed for 21st-century container ships.
"The American container market is going to double by 2012 [or] 2015, and we want to be a part of that," says Thomas Eagar, CEO of the North Carolina State Port Authority. [Editor's note: The original version misspelled Thomas Eagar's name.]
True, only a small percentage of container vessels have outgrown big commercial ports like Boston. But the shipping industry runs off economies of scale.
"The more containers they can pack into a single boat, the bigger their profit," says Brian Cudahy, author of "Box Boats: How Container Ships Changed the World." "Shipowners and operators want to go as big as they can, and unless ports turn around and say 'no,' they're only getting bigger."
Today, US ports handle 95 percent of the volume of goods coming in or out of the country, according to federal statistics. However, "for all intents and purposes, container ships are all under foreign flags," says Mr. Cudahy. Where Americans make their money is in unloading and transporting the containers as they head from the docks to the checkout counters, he says.
Shipping companies have always taken the path of least resistance when it comes to managing routes and keeping costs in check. And with container technology improving and outdated ports straining to handle volumes they never expected, trading routes are changing quickly.
Volume at Pacific ports like Seattle and Long Beach, Calif., grew more than 15 percent last year, which slowed unloading speeds, therefore increasing shipping costs. "One reason the West Coast ports are congested is because the Panama Canal is no longer suited to handle the [larger, deeper] ships coming out," says Mr. Levinson. "So for large ships to get from Singapore to Savannah [Ga.], they can either head around Africa or go to L.A. to offload."
But if for the moment Los Angeles is an attractive option, "that advantage is being lost because of their inability to move cargo," says Mr. Eagar. "Their rail system [built decades ago] is grossly undersized."
Panama, for one, has discussed expanding its canal to meet new industry standards. But if Panama increases tolls to cover what might become a $10 billion price tag, container companies could quickly draw trade routes around the canal to avoid the added cost, Levinson warns. "The industry is extremely price sensitive and not particularly loyal to a particular route," he says.
To find the cheapest combination of open access, location, and infrastructure, many shipping firms are eyeing previously untapped sites.
Just south of the Alaska border, officials in Prince Rupert, British Colombia, are trying to turn their frigid frontier town into a Northwest shipping hub. Their new port, scheduled to open next year, offers a tempting package: the deepest North American harbor not trapped under ice, connection to Canada's rail system, and a location 1,000 miles closer to Hong Kong than is Los Angeles.
Even if container ships head toward deeper waters, Boston, a city historically tied to its docks, is not about to surrender its port business. Over the past decade, it has nurtured its standing as a cruise-line destination. It has also encountered controversy as a major liquid natural gas terminal. "There are a lot of questions that coastal cities have to answer when it comes to sea trade," Cudahy says. "Remember, the container industry is only 50 years old."