With the completion of the $5.3 billion Panama Canal expansion planned for next year, much more rail freight and truck traffic could be headed throughout eastern Pennsylvania as cargo increases at New York City and Philadelphia ports.
The expansion would allow bigger ships, some tripling in size, to carry much more freight through U.S. ports, including New York and Philadelphia, spilling over into major truck and rail shipping traffic throughout eastern Pennsylvania. A little more than an hour’s drive from these two locations, the Greater Lehigh Valley is poised to reap the benefits of increased business opportunities from carriers looking for freight rail access, warehouse and distribution space.
Some officials say infrastructure improvements on the region’s highways are in place or in progress, making the region well positioned to take advantage of the expected increase in truck traffic. Others say the region’s roads already are heavily congested and question the ability of the region’s infrastructure to handle the looming surge.
One opportunity exists with the potential establishment of an inland port in Bethlehem at the intermodal facility near Route 412, which could relieve stress from U.S. ports. Others say recent improvements to Interstate 78, a new interchange project for Route 33 and future expansions of Route 22 could pave the way for better access as truck traffic increases.
But the question remains, are the region’s transportation, infrastructure and logistics networks equipped to handle it?
It’s not a simple question to answer and a lot depends on whether or not the canal expansion is delayed and if industry takes advantage of the economic opportunities around the bend.
The Panama Canal expansion will have an effect on the Lehigh Valley’s freight traffic, but the question is, how much?
“Freight is going to grow whether we want it to or not,” said Becky Bradley, executive director of the Lehigh Valley Planning Commission, an organization based in Hanover Township, Lehigh County.
Bradley said the organization, which manages a more than $1 billion transportation plan, is creating a regional freight plan to examine what products are moving through the Valley in terms of commodities and value. The report raises questions about air cargo capacity, road infrastructure and how resources can be targeted from the federal and state government to make improvements.
Though not directly related to the expansion of the Panama Canal, several transportation improvements are in the works which aim to enhance the flow of freight through the region.
The widening of Route 22 from two to three lanes in either direction from the MacArthur Road exit in Whitehall to the Airport Road exit in Hanover Township, Lehigh County, is one example of an infrastructure project expected to be underway over the next four years, increasing the capacity for traffic.
And several others projects will create new distribution hubs in the Valley.
The proposal for a FedEx distribution facility in Allen Township near Lehigh Valley International Airport will also bring increased freight opportunities and warehousing/manufacturing opportunities.
“The FedEx project is coming; there is going to be additional development around FedEx,” Bradley said.
Other areas of the Lehigh Valley, such as Upper Macungie Township have been acquiring a significant amount of manufacturing facilities, Bradley said.
“We have a real significant growth in food and beverage,” Bradley said.
The opening of the new Chrin Route 33 interchange in Palmer Township also will open freight opportunities in Northampton County. One new warehouse/distribution center near the interchange under construction has been completed and others are rising out of the ground.
Some of these projects are a result of expected increases in traffic of not just trucks, but all types of vehicles.
With a population that’s growing about 10 percent per decade in Lehigh and Northampton counties, traffic across the board will grow, according to Bradley.
“That’s why we are going to invest in that infrastructure now,” Bradley said.
The expansion of Route 412 from the Hellertown border to Southside Bethlehem is another example of infrastructure that’s related to freight with its proximity to the intermodal rail shipping facility.
While the widening of the Panama Canal would allow for large ships to come through on the East Coast, it’s still premature to determine what the impact on the Lehigh Valley would be, said Don Cunningham, president and CEO of Lehigh Valley Economic Development Corp.
A lot of the mid-Atlantic ports do not have the width to handle larger ships. The canal widening would allow for larger ships with more freight containers on them, he added.
“The changes with the Panama Canal are probably a few years away for the Lehigh Valley,” Cunningham said. “I think mid-Atlantic ports are looking at changes they would have to make.”
These changes include dredging ports and expanding capacity.
“Initially it will be more cost-effective because shippers can move more products with the same fixed costs,” Cunningham said. “What it really is going to do is make for better pricing on transatlantic [transportation of freight.]”
The first ports that will get the bigger ships will be on the West Coast and some southern U.S. ports, he said.
The Lehigh Valley also is becoming an attractive market for international companies to locate, and this, in turn, will affect manufacturing. Cunningham noted out the recent example of a Chinese manufacturing choosing to establish a production facility in Upper Macungie Township.
“It’s a global economy; this is helping American manufacturing,” he said. “I think the Lehigh Valley is in a position to continue to win some percentage of that. The widening of the canal is a reflection of that. It’s probably going to be years away for any effect on the Lehigh Valley.”
The widening of the canal could make some ports more attractive than others and may reduce transportation costs, but it is unclear at this point, exactly what the impact will be, Cunningham said. Ports on both sides of the nation are scrambling to make improvements, he added.
One project that could greatly impact freight transportation in the Lehigh Valley is the establishment of an inland port in Bethlehem at the intermodal facility near Route 412.
That site could alleviate stress on the Port of Newark and reduce a lot of truck traffic through the region, according to Cunningham.
For this concept to work, shippers would drop freight onto a train at the Bethlehem intermodal facility, which is used by the Norfolk Southern Railway, and export the freight to the Port of Newark.
If this concept could be realized, it could reduce truck traffic across New Jersey and Pennsylvania directly related to the widening of the canal, Cunningham said.
“I think it’s something that’s advantageous to everybody,” Cunningham said.
“We’ve in many ways, already prepared for it,” said Joe Donnelly, deputy executive director of communications for the Delaware River Joint Toll Bridge Commission, which has executive offices in New Hope. “In the past seven years, there’s been a succession of projects at our I-78 facility.”
While these major improvement upgrades on Interstate 78 appear to be timed to coincide with the start of the Panama Canal project in 2007, it was not the only reason for completing them.
“That was not the sole reason for them, but that was a recognized, contributing factor for them,” Donnelly said.
The commission launched a series of projects in recognition of not only increasing truck traffic but the probability of ships carrying larger quantities of cargo through the Panama Canal.
These projects include rehabilitating the road on the New Jersey side, which covers a seven-mile stretch of I-78 from the Pohatcong/Greenwich Township line in Warren County to the toll bridge in Williams Township, Pa. For those trucks carrying delicate cargo, it was not advantageous to take I-78 since the subsurface was prone to sinkholes and needed to be fixed and repaved, Donnelly said.
Also, the Toll Bridge Commission reduced the number of lanes at the toll plaza from seven lanes to four, which created less congestion and removed gates, making traffic more efficient with the ability to move quicker, Donnelly said.
Creating two efficient open-road tolling lanes for E-Z Pass users helps decrease congestion because about 80 percent of trucks use E-Z Pass, Donnelly said. With these lanes, drivers can move through the tolls without stopping.
On the Pennsylvania side, the Toll Bridge Commission completed improvements in 2013 on 2.25 miles of I-78 which it owns and operates in Williams Township. While it was not as problematic, from a subsurface point of view, the road was beaten up and in need of slope work on one side, Donnelly said.
Finally, the agency installed a guide rail, commonly known as a guard rail, on the large grassy median of the highway to help mitigate crossover accidents from trucks.
Overall, Donnelly said, the agency is in a good position to handle future truck traffic and does not have to do any future expansions of roadway along this portion of I-78.
“I think the impact is going to be huge and particularly when we look at roadways in that whole part of northeastern Pennsylvania,” said Nada Sanders, professor of supply chain management at Northeastern University in Boston. “The Panama Canal is a game changer. There is no way that you are not going to get spillover.”
Sanders, who has 25 years of experience in supply chain management, previously was a supply chain management professor at Lehigh University in Bethlehem for five years, leaving her post in June.
The region is struggling with capacity issues it already has along its major highways, particularly the Pennsylvania Turnpike north of Philadelphia, Sanders said.
“I just don’t know how the roads are going to be able to handle the increased truck traffic,” she said. “We are going to rapidly expand the cargo that is coming in. It is my understanding that some of the ships will triple in size.
“This would be a fabulous opportunity for a small simulation study looking at where excess capacity could be put in the logistics system to alleviate the bottlenecks that are going to occur.”
The opportunity calls for strategic locations of warehouses, and such a study would show how to optimize size and location, she said. In some cases, this would mean larger warehouses with expanded capacity.
The expansion of the canal could change the entire flow of goods into the U.S., with ships from Hong Kong and other countries bypassing the Suez Canal (a waterway in Egypt) or California ports entirely, increasing the volume to New York and Philadelphia ports, she said. The canal expansion could lead to more jobs in the logistics industry.
“I don’t think the Lehigh Valley is prepared,” Sanders said. “Having said that, this could be an economic opportunity that could be seized; it could be a huge economic boon.”
If opportunities are not seized, large carriers could bypass the Valley.
“Carriers want to move goods,” Sanders said. “If the Lehigh Valley is offering the opportunity, the carriers are going to take it.”