Overcapacity at Port Container Facilities: Planning Techniques and Policy Concerns

Containerization as a means of cargo transport represents the most progressive technological advance in shipping today. The efficiency that containerization presents to shippers has made it the preferred means of cargo transport by sea and land. As containerization continues to grow throughout the world, semi-autonomous public ports in the United States compete for larger shares of high valued cargo. Competition among ports has led to the extensive development of container handling facilities throughout the United States and created a certain degree of unneeded capacity. The cost of this overcapacity to society can be measured in financial waste, opportunity cost of land, and environmental damage from coastal development. Despite its political implications, no federal policy or management mechanism exists to solve the problem. This thesis demonstrates that overcapacity at container facilities exists and demands political attention as a public welfare issue. It is suggested that . , capacity analysis, if utilized by ports, can serve as a mechanism to prevent and correct the social inefficiencies of overcapacity from port competition. By utilizing a capacity monitoring and assessment tool similar to the method used in this thesis, government permit decision-makers and ports can produce tnore information to better make port development decisions. On a broad level, available capacity information can improve U.S. port facility development project planning. This document quantitatively demonstrates the extent of container terminal excess among large ports (100,000 + TEUs annually) along the U.S.

. , capacity analysis, if utilized by ports, can serve as a mechanism to prevent and correct the social inefficiencies of overcapacity from port competition. By utilizing a capacity monitoring and assessment tool similar to the method used in this thesis, government permit decision-makers and ports can produce tnore information to better make port development decisions. On a broad level, available capacity information can improve U.S. port facility development project planning.
This document quantitatively demonstrates the extent of container terminal excess among large ports (100,000 + TEUs annually) along the U.S.
ii mid-Atlantic port range and presents evidence of a continuing overcapacity problem. Evidence supports the hypothesis that significant overcapacity resulting in social costs does indeed exist and requires political attention as a societal issue.
iii LIST OF TABLES PAGE      were selected because of the known competition among them (Containerisation International, 1987). In addition, the Mid-Atlantic range exhibits characteristics which are representative of typical container ports throughout the nation. Therefore, the results of this study could have policy implications in other U.S. ports and port ranges.
Extreme overcapacity within a port and a range is symptomatic of inefficient port planning and coastal land use, and creates long-term environmental consequences associated with dredge and fill activity. As the mid-Atlantic container ports continue to develop and expand in order to accommodate a limited growth of cargo, the question of overcapacity must be addressed.
To a certain extent, excess capacity among U.S. ports is a natural condition of the system. It provides for peak trade periods and for specialized uses such as occasional military berthing. Excess capacity also allows cargo growth potential so a port can remain competitive ( , 1976). Beyond this ancillary excess, however, a port may exhibit wasteful overcapacity in container facilities.
Many of the ports in the United States operate within a competitive structure, whereby individual ports are granted a charter from each state to operate and manage commerce upon its public coastal lands. Most ports, including all of those in this study, are managed by state-run port authorities.These entities operate autonomously from each other and with minimal federal control. Therefore, each port competes separately for container cargo.
As in any competitive free market system, ports attempt to gain certain advantages over their competitors. Accordingly, ports attempt to offer efficient, quality service that will expedite the loading and unloading of vessels.
Container cargo is usually comprised of general cargo or manufactured goods. The value of container cargo is high relative to other types of cargo (i.e. bulk) and is charged a higher price per ton for wharfage (cargo handling) and demurrage (removal form the port) relative to other cargo types ( Figure 2).
Ports generate more revenue~ when they can increase the amount of containerized cargo moving through their facilities (throughput). They attempt to attract more containerized cargo by improving and expanding port facilities.
Problems arise when a competing port provides at least as much container handling capability as its neighboring ports in order to maintain its cargo share and to secure a competitive position. The competition among ports is intense because their infrastructure (berths and storage yards) and superstructure (cargo handling equipment) do not vary significantly. 4 permit better service. If an individual port has sufficient facility space to nnmediately allocate a berth and service a vessel quickly, that port may have an advantage over its competitors. Ports always strive to be in this position by providing sufficient and even excess capacity for peak trade periods.
Thus, like other competitive industries, ports will always exhibit a certain degree of over-supply. Given the unique competitive character of ports in the U.S. and their tendency to overbuild, how much overcapacity exists today in the Mid-Atlantic port range from Baltimore, Maryland to Jacksonville, Florida? Does this overcapacity represent significant land use, economic and planning inefficiencies? What policy decisions could be implemented to solve these problems?
As a result of poor port planning, container facility overcapacity can lead to three resulting problems: 1) inefficient use of coastal lands, 2) inefficient use of port and public expenditures, and 3) long-term environmental degradation of adjacent marine resources. Inherently, overcapacity represents a "suboptimal allocation of resources due to overinvestment" (Hikkila, in Hershman, 1990, p. 52). Planning for port expansion becomes a function of monitoring growth, land availability and, most importantly, market conditions. Ports may find it less costly to acquire and develop new container facilities rather than upgrade existing facilities.
Expanding land holdings may be less costly than improving operating efficiency within existing facilities due to spatial constraints. Expansion planning in tum adds to the tendency of ports to overbuild without improving operating and land use efficiencies. Port expansion precludes the use of coastal lands for other means and imposes future coastal planning constraints as available land diminishes. Inefficient capacity monitoring not only results in inefficient land use by ports, but may also cause long-term environmental degradation from dredging. Further, over-investment of public funds is a result of planning decisions too often made without political review.
According to the United States Maritime Administration, "Some of the port capacity being built today stems from the strong desire to entice carriers to divert cargo from another competing port rather then to serve incremental growth in cargo" (Pisani, 1990, p.37 6 Hypothesis It is hypothesized that there is significant overcapacity of container facilities among the Mid-Atlantic range that includes the ports of Baltimore, Norfolk, Charleston, Savannah and Jacksonville. Competition among these individual ports has resulted in a tendency to overbuild in order to attract more cargo and revenue (Welch, 1991). This thesis assumes that if overcapacity exists, there may be a need for local and/ or regional capacity review by port managers and public officials as part of development planning and permitting. It is further assumed that although other options may exist, capacity review could lead to a more efficient port system. A major issue of this study is whether or not competition leads to overcapacity. It is assumed, because of the historical development and the physical size of the U.S. port system, that a competitive port system is more economically efficient than a federally controlled system. Still, some type of capacity review on a regional level may be necessary in order to encourage economic and land use efficiencies while not impeding port growth. 7 A secondary hypothesis, which promotes the need for capacity review, is that port development will continue to exceed container throughput in the region. Forecasts of future container flows do not justify the extent of container development in ports today. Thus, the problem is not short-term.
Rather, it is becoming greater as ports continue to develop container facilities.
"We do not have gross overcapacity now, but with today's trend, we're heading down that road " (Kelly, 1987, p. 37). In support of this growing problem of excess container capacity, it is further hypothesized that ports are placing unwarranted importance on container cargo relative to other cargo types.
Justification of Study Preliminary research shows that the ports of Baltimore, Norfolk, Charleston, Savannah and Jacksonville collectively operate a total of seven major container facilities with twenty-eight container berths and forty-seven, 40-to 50-ton container cranes. They also utilize approximately 2,000 acres of coastal land for storage. Table 1 shows the facility specifications in the ports studied.
According to published capacity information, a normally operating container berth with SO acres of backup space has an approximate capacity of 100,000 twenty-foot containers or Twenty-foot Equivalent Units per year(TEUs) (Ashar,1986). A conservative preliminary calculation shows that with 29 berths, total capacity within the study region in 1989 equaled 2,900,000 indicates a 49 percent current excess capacity throughout the range (Figure 3).
Although these figures are based on rough estimates, they support a plausible theory that increased competition among ports for containerized cargo has led to overcapacity (Pisani,1989;and Kelly,1987). Furthermore, preliminary research also indicates that all ports in the study have either completed or are currently planning expansion projects today in order to further increase container handling capacity (See Table 2).
In recognition of related problems in port planning, coastal land use, and environmental degradation, significant overcapacity becomes an even more pressing issue that must be faced. In this study, if significant overcapacity is shown to exist, a re-evaluation of policy and management on a regional or local level is suggested. Therefore, a more definitive quantification of capacity information is required. This quantification will ultimately help resolve policy questions associated with the problem of overcapacity. The purpose of this research project is: 1) to identify the potential problems and implications of coastal land use; 2) to quantify the extent of overcapacity; 3) and, to suggest policy solutions which might address some of these inefficiencies.

Overcapacity of Port Container Facilities
There are many problems related to the definition of excess port capacity berthing in time of conflict. However, differing political perspectives complicate the determination of a desirable level of excess capacity. It is imparta~t to understand these different political perspectives because they illustrate the complexity of managing the port industry.

Problems Defining Excess Port Capacity
From a federal viewpoint, a certain level of overcapacity is desirable.
Historically, federal port policy has been linked to transportation and national defense policies (Marcus, 1976). There is a strong federal interest in minimizing transportation costs to shippers as well as providing an excess in capacity to serve national defense interests in times of war. However, federal interests also include overall social welfare functions such as land availability and environmental degradation. This interest is directed at broad national benefits.
The state perspective and that of the individual ports is quite different.
Ports are interested in sufficient excess capacity to ensure effective operations and to allow for peak trade periods. Excess capacity is a desirable condition which allows a port to remain competitive. State-run and locally run port interests are rarely concerned with overall . social benefit. Rather, a port is primarily concerned with the success of its operation and the opportunity to increase cargo throughput and revenues.
Public concerns, involving available coastal space, public expenditure and the environment, influence the perception that any excess is too much.
Public concerns for environmental protection and preservation often conflict with port desires to expand and up-grade facilities. It should be understood that determining the amount of acceptable excess capacity depends upon a 13 particular policy setting. Because the level at which excess capacity is reached depends upon a combination of the previously stated three perspectives, management for the prevention of excess capacity should naturally involve these factors. Ideally, there should be a coordination of port operations management and social welfare policy. Unfortunately, the present system of port development leaves decisions about acceptable excess capacity to individual ports. Consequently, port overcapacity extends across various port ranges. The question remains: how much excess should be tolerated by the public when it causes inefficiencies in public expenditure and coastal land use?

Public Port Entities Managed as Private Corporations
To what extent are publicly owned port facilities accountable to the public? The influence that this accountability should bear on the management of port operations is the central question of this thesis.
Most ports in the United States, with the exclusion of military ports, are publicly owned. The most common form of public port management is the port authority. Public port authorities are created by statute as non-profit organizations with a separate legal personality, the right to hold property, make contracts, adopt budgets, employ its own personnel and function with considerable financial and political autonomy. The Port of New York Authority is described as: " ... a public corporation set up outside the regular framework of federal, state, or local government, and freed from the procedures or restrictions of routine government operations, in order that it may bring the best techniques of private management to the operation of a self supporting or revenue producing public enterprise." {The New Jersey Council for Social Studies, 1953,p.45) Port authorities can vary in geographic scope from city to entire state jurisdictions. Their actions may conflict with broader public goals regarding environmental protection and coastal management.
The following discussion pertains to publicly owned and operated ports and makes no distinction about the jurisdictional scope of the port. Instead, an argument is made that these publicly owned ports have an inherent prevailing public interest. Accordingly, there should be some public accountability for their actions.
Efficiency: The Conflict Between Business Decisions and Public Interests.
Efficiency in production for a private firm can be much different than efficiency from a social perspective. Private firms, unless they are regulated to do so, do not normally include social costs such as pollution as costs of production. Efficiency on a private level 'understates costs and overstates netbenefits. The result is a dichotomy between public interest and business operations which affect public lands.
A general criterion for optimal efficiency occurs when the marginal benefits of production equal marginal costs of production. For a private firm, this condition will be the optimal efficiency point in so far as its individual goals are concerned. For society, the benefits and costs become broader than those of the micro-environment of the firm. Society incurs external costs as a result of private operations. In the case of ports these external costs include the opportunity cost of land and environmental degradation. These social costs may not be considered by the public port , since it can acquire land more easily than competing users and it does not pay taxes. Rather, these unpaid costs are forced upon society. Thus, the point at which the marginal benefits and marginal costs intersect to indicate optimal efficiency differs between the public and private sectors. A set of cost and benefit curves for the private firm understates costs because social externalities are not considered (See Figure 4).
Quantity ~ and pa• represent an optimal output and price for port development when external social costs are not included. When social costs are considered, marginal costs of development will increase and quantity Qis then the optimal quantity at a higher price pt ... In reality, if a port system develops at~ and does not consider external social costs, then there is an excess quantity of port facilities of Q--~.
While a private firm can have optimal production efficiency, if this production results in negative external costs to society, a socially inefficient condition exists. Since the private sector does not account for the social expenses, their costs are understated from a social perspective.
As quasi-public agencies in a competitive system, ports operate similarly to the private firm described above. H ports are not accountable for social costs, they will operate under a different efficiency condition which is at variance with social efficiency. Inherently, over-investment and subsequent overcapacity in container facilities is due in large part to the fact that public ports operate autonomously as private corporations. Insufficient cost information leads to over-investment and to inefficiency in port development and operations. It is in recognition of the social inefficiency associated with quasi-public ports that information on port capacity should be made available for coastal planning and management. Ports can then move towards a more socially efficient operating condition.
A public port is often viewed by its community as an important utility (Marcus, 1976). It serves as a focal point for business in the city and has a strong economic and social impact on its community.
While the port industry operates within a competitive market oriented system, it is also a public entity and, as such, is subject to public accountability.
Public financing often provides for port expansion and improvements to infrastructure. At the same time, the public is concerned about the impacts of the port facility on surrounding communities. While these impacts may be beneficial, such as the economic expansion within a port region, it may also have negative consequences such as those mentioned with respect to overcapacity.
A prominent characteristic of a public utility is that it operates at its greatest efficiency as a monopoly. The reason is that economies of scale result in decreasing unit costs with respect to increased output. The capital intensive nature of the present port industry mandates that the more traffic moving through a port, the lower the cost per ton. From a national or regional standpoint, duplication of facilities that serve essentially the same region reduces their economic efficiency. This is particularly evident in harbors with competing ports, such as the Ports of Long Beach and Los Angeles, and states such as California and Washington which have more than one port competing for cargo within state boundaries. The larger a port is, the greater are the advantages that it can realize through economies of scale. Economies of scale are achieved within the port through greater efficiencies and lower costs per ton of throughput.
However, large ports are particularly susceptible to public scrutiny. These all represent inefficient use of public funds.
From a national and regional standpoint, this higher than needed per unit cost is undesirable because it is passed on to the shipper resulting in elevated shipping costs. In the end, some potential cargo may not flow through the U.S. port system. The federal government also has an interest in the economic vitality of the port industry because the nation benefits from port economic activity (Brinson, 1980).
There is an additional layer of complexity which surrounds the issue of managing public port entities as private corporations. State governments, local communities, and port authorities are concerned with the economic vitality of their ports within the industry. This has led to the present competitive system. At the same time, there is a public interest with respect to efficient coastal management and environmental protection. In other words, there is a conflict between economic motivations and environmental concerns. Yet, at the present time, there is no one to coordinate these actions.
The environmental permitting process, although it impacts national and regional economic activity, does not review industry requirements for capacity growth. There is a desire at the federal level to ensure the protection and conservation of the nation's coastal zone. It is conceivable that if environmentally acceptable, a·port development permit application may be approved even if current capacity needs are sufficient within the existing port. The loss of coastal ocean space from the construction of unnecessary container facilities is not in the public's best interest. In addition to the loss of coastal ocean space, there are additional effects which affect the public in a negative way. While increased container handling capability may bring positive economic benefits to the surrounding port community, there also may be detrimental effects associated with this construction, such as increased pressure on the highway and rail infrastructure.
There are also questions surrounding continued construction pf container facilities. Many ports are continuing to build facilities to service increased intermodalism. Intermodalism is the practice of moving cargo from place to place utilizing several different modes of transportation. Much of the capacity that some ports are building seeks to capture cargo that would not normally flow through the port region. While the port entity and the ( public realize a profit, the primary economic benefits of this cargo throughput are not felt within the port community in the same manner as cargo bound for the port region. Thus, some ports reach a point where the incremental benefits of port expansion begin to decrease.
The question remains, should ports compete for cargo not destined for the port's region? Obviously, the role of a non-profit public port should not primarily be to earn a profit at the expense of society. If it does, it then can invest profit in the local society. It should function as a self-sustaining . economic entity much in the same way that public utilities function. It is this clash between free market economics and public welfare that guides the recommendations for managing an ever-growing overcapacity among the nation's container ports.
The situation in San Pedro Bay, California illustrates the conflict. The recently completed 2020 plan for the Ports of Long Beach and Los Angeles in response to the projected increase in Pacific Rim trade represents an attempt to manage inadvertent overcapacity and inefficient use of coastal ocean space with respect to port growth. Coastal ocean space consists of coastal lands, near coastal waters and the interf~ce between the two. The plan also attempts to alleviate the stress placed upon transportation infrastructure as a result of new development. But this plan incurs specific costs that the public will bear.
The estimated construction and implementation costs are estimated to exceed five billion dollars (Hall, 1990). Despite many projected benefits, there are many costs associated with the plan which are not easy to calculate or predict.
The resulting environmental damage and coastal ocean space utilization sometimes associated .with port development should arouse public concern.
In addition, these ports are by no means assured access to the projected increase in trade, and this construction may, despite planning, result in overcapacity and underutilized infrastructure. From a regional perspective, other parts may be in a better position to handle the projected Pacific Rim trade and may serve ~s trade more efficiently at a reduced cost.
While it is encouraging that these ports are at least planning on a small scale, regional basis, the projected increase in trade may to effect the entire West coast port range. Management of ct>ntainer facility capacity at this level can result in better efficiency in coastal ocean space utilization and improved economic efficiency in existing ports throughout the region.
In order to improve the public accountability of public port actions and improve the management of excess overcapacity, there are many actions which could be taken at the federal, regional and state levels. The next sections explore the present roles of these governmental levels with respect to the management of overcapacity and suggest what roles they could play in the future.

Federal Port Policy and Overcapacity of Container Facilities
Federal policies pertaining to port development have historically been institutionally fragmented and short on focus. Federal port policy has been limited by Article 1, Section 9 of the Constitution which states that: "No preference shall be given by any regulation of commerce on revenue to the ports of one State over those of another: nor shall vessels bound to, or from, one State, be obliged to enter, clear, or pay duties in another." This paragraph limits federal and state regulatory powers and prevents them from imposing either a discriminatory or competitive bias. Other factors have prevented the assertion of any strong federal port policy. The structural fragmentation and jurisdictional conflicts inherent in the congressional committee structure tend to constrain unified port development policy.
Most federal port policy takes place at the regulatory level. Federal agencies affect port development in three ways: (1) through the allocation of federal funds for port related projects; (2) through the implementation of regulations that control the siting and operation of container facilities; and (3) through the formulation of policy that directly and indirectly affects ports.
Much of federal regulation and policy deals with environmental effects. The environmental regulatory responsibilities imposed on ports are fragmented and split among different agencies of the federal government, such as the Army Corp of Engineers (COE), the Coastal Zone Management Program, and the Environmental Protection Agency (EPA). This fragmentation serves as a barrier to unified policies pertaining to the national port industry (Marcus, 1976). The Federal deregulation of transportation industries and the change in the nature of the traditional "partnership" pattern of port development have also prevented any strong assertion of federal port policy (Brinson, 1980). Yet, it can be argued that there is a strong need for a federal port policy.
As the ever present effects of an intermodal transportation system take hold and the competitive pressures of containerization are felt by the nation's ports, there is a strong need to prevent excess capacity of container facilities at both the regional and national level. This need is expressed in the national desire to provide the best possible service at the lowest possible cost in order to take advantage of the opportunities presented through economies of scale.
There is also a national need to operate in a .socially efficient manner and to aiiJtimize the detrimental environmental effects of unnecessary expansion.
Environmental degradation is a national concern. There is a strong national desire to preserve, protect and develop the marine coastal environment.
There has already been significant federal participation in land use planning in the coastal zone in order to provide a balance between conservation and development (Holmes, 1980).
Federal policy has shifted toward increased cost sharing between state and federal governments. The federal government also has a monetary interest in preventing overcapacity. Federal money is often spent directly or indirectly on projects affecting port development. These projects range from highway construction to channel and harbor maintenance which effect port operations.

The Federal Role in Port Development
What should be the federal role in port development with respect to overcapacity in container facilities? As mentioned previously, there is a desire at the federal level to maintain a certain level of excess capacity. Its importance was exhibited by the use of ports during the Gulf War in 1991. At the same time, there is a demand for the orderly development of an economically efficient transportation network of ports, railroads, and highways which does not impose significant social costs on the nation with respect to environmental degradation and inefficient use of public funds.
The federal government can play a stronger advisory role in supervising port development without interfering with the competitive nature of the industry. In some respects, the formulation of a comprehensive national port policy would be useful to guide national port development as it expands to meet the growing demands of intermodalism and world trade. It is recognized that there are many difficulties involved in the formulation of such a federal port policy. The integration of existing federal policies affecting ports is a good place to start.
A coordinated approach within the environmental permitting and regulatory process with respect to port policy would be beneficial to quell the growing overcapacities at regional and state levels. The integration of regulatory responsibilities and policies towards ports would offer the federal government increased controls over coastal land use which results in overcapacity. For example, environmental impact statements prepared under the National Environmental Policy Act could be required to recognize regional forecasts of overcapacity with respect to the requirements for construction. The Coastal .zone Management Act could be used to facilitate port planning with respect to overcapacity at the State level. Within their permit reviews, the EPA and Army Corp of Engineers should coordinate efforts with other agencies in.order to ascertain required dredge and fill operations to help achieve desired levels of excess capacity.
The federal government should play an ongoing role at the regional level with respect to assessing port container capacities. This review process and the required supervisory role could be handled by the Maritime Administration {MARAD). MARAD could coordinate environmental regulation of various federal and state regulatory agencies so as to minimize detrimental effects of overcapacity at the regional level. It could also serve as technical consultant and conduct the capacity review. MARAD could sponsor annual or semi-annual meetings for port managers, state officials, and the public in an attempt to manage container overcapacity in a more efficient snanner.
Federal  (Kalo, 1990 According to Environmental Protection Agency 1989 regulations: "no discharge of dredged or fill material shall be permitted if there is a practical alternative to the proposed discharge which would have less adverse impact on the aquatic ecosystem, so long as the alternative does not have other significant adverse environmental consequences" (Kalo, 1990, p. 275).
According to the definition of practical alternative, "an alternative is practical if it is available and, capable of being done after taking into consideration cost, existing technology and logistics in light of overall project purposes." (Kalo, 1990, p. 275) Unless actual port technology and logistics are considered during permit review, proper consideration of potential practical alternatives to development will not occur. EPA regulations obligate federal regulators at EPA and the Army Corps to consider all relevant information, which could include figures that demonstrate productivity and the capacity requirements of the port. Again, MARAD could lend expert assistance, and provide technology and logistic information in this capacity. The following flow 28 chart is an example of how the permitting structure for port development could be facilitated ( Figure 5).
The federal permitting process plays a key role in a port's ability to expand. Economic implications to a port community from a permit denial based solely upon environmental considerations could be significant. The U.S. Supreme Court recently began to recognize that a property owner could not be denied economic use of his land (Kalo, 1990 increasing cargo throughput and improving local economies. Any policy relating to land conservation may exist in a port charter or as an inherent factor of public accountability. The assurances of any such policy ,however, can not be guaranteed due to the lack of a reliable political mechanism.
Generally, port development goes unchallenged by the public due to assumptions that all port development is required to maintain competitive positions.
Regionally, states are not required by federal law to cooperate or engage in joint management. In a competitive system, it is unclear whether regional management, involving more than one state, is mutually beneficial. Each state gains economic benefits from trade revenue. In theory, inter-state competition distributes this wealth efficiently. Consequently, port competition presents barriers to a cooperative management structure.
Efficient inter-state port management would result in cargo allocations. In the case of containerized cargo, regional management would also require that all ports agree on cargo allocation decisions. The problem with this proposition is that each state port has different goals, mainly involving gain at the expense of others. Potentially, a port can attract all the cargo in a region if it is big enough. The main question here is why sacrifice any cargo, when you could have it all? Although the existing competitive system may provide economic justification for state rather than regional or federal port management based on market theory, it does not provide for the efficient 31 allocation of coastal land. For this reason, capacity review on a state and regional level is necessary.
But, there are barriers to successful state and regional management strUctures. Regional management cannot occur effectively unless ports have the same goals. Until ports can be convinced that regional management will result in benefits to all involved, cooperative management will not occur on a voluntary basis. There have been examples of this cooperation, but they have fallen short of achieving better land use efficiencies from a public perspective (Hershman, et al., 1978). In response to the charges of overcapacity in the 1970s, and due to the increasing difficulty in financing container facility development, voluntary cooperative management has taken place in the state of Washington (Hershman,et al., 1978). The

Cooperative Development Committee (CDC) of The Washington Public Ports
Association (WPPA) was formed to review port projects. Although it functioned particularly well in sharing capacity information among ports, capacity information was utilized by non-member ports and there were no sanctions for non-compliance (Hershman, et al, 1978). CDC in Washington was an attempt at preventing .redundant facilities and improving efficiency; however, the Association did not coordinate planning efforts with other public officials and thus precluded any effective regional management (Hershman, et al., 1978).
Regional or coordinated state management must consider port needs in conjunction with other social welfare functions, such as other uses of public land. Clearly, it would be useful to involve port managers, regulatory officials, and the public in government in the decision-making process.
Whether or not such management should be mandated depends upon the extent of the overcapacity problem. It is suggested that the competitive port Y stem in the U.S. is the best system available and should remain intact. To s .
prevent potentially wasteful use of public coastal space, however, policy must be reevaluated and designed to meet the social goals of land conservation.
Understandably, ports are not primarily concerned with land conservation. As a public agency competing for international trade, the port is ultimately concerned with sustaining its viability and competitive success. should therefore be coordinated. Not only will the port benefit from accurate productivity and capacity assessment, but inter-agency review of this information can facilitate decisions concerning coastal space utilization.
An important point to be made is that regardless of accurate productivity and capacity monitoring, overcapacity may still occur. Port expansion and improvement requires many years of planning and development. Ports are forced to develop according to anticipated cargo rather than proven growth. Thus, there is bound to be a certain amount of excess capacity. The goal of public policy should be to decide how much excess is allowed. This determination can only occur with a cooperative effort between public ports and other public officials once all pertinent port information is made available for study. A thorough inter-agency capacity 33 review will lend itself to maximum attainable social planning efficiency within the competitive framework. Thus, close cooperation provides a 111 echanism for limiting overcapacity on a local and regional level.

Summary
Inter-port competition in the U.S. has resulted in an expansive port system and the development of large container facilities. Within a region, duplicate facilities create overcapacity. This overcapacity represents social inefficiencies in coastal land utilization, public expenditures, and environmental degradation. As container development continues, expansion by politically autonomous public ports threatens to increase these inefficiencies. A certain level of autonomy must be preserved so that ports can operate effectively in a competitive world economy. As public entities, ports are accountable for their actions. In order to prevent the social inefficiencies created by excess capacity, a policy designed to link port management with the environmental regulatory system is needed.
A capacity review should become part of a coordinated state or regional planning effort as a means to allow for more efficient coastal space utilization.
Such a review is good public policy. Perhaps it is time to draw the line with respect to total port autonomy. Port activities can concurrently increase economic benefits to a region while incurring heavy social costs . With better planning that attempts to strike a balance between development and conservation, the future will bring more efficient use of the nation's dwindling coastal ocean space and maximize the benefits of its use to society as a whole.  1989). This growth has led to the development of many container facilities throughout the U.S. Ports are continually developing these facilities in an effort to increase cargo handling and revenue generating potential (Dowd and Leschine, 1990 (National Research Council, 1976).
In addition to this large amount of land, 800 to 1,000 foot berths with channel depths of 35 to 40 feet are required to accommodate the container ships of today (Pisani, 1989 (Boschken, 1988). A chassis based yard storage system can not handle as many containers per acre as a stacking system. It may seem, then, that the chassis system is not as efficient as a stacking system. But, the s~d of cargo transfer in a chassis yard from ship to shore, port to destination and vise versa makes this system equally efficient over time per acre as other systems of container storage.
Straddle carriers transport containers from the apron to the yard and from the yard to truck or rail. The typical efficiency associated with straddle carrier systems is 168 TEUs per acre (Boschken, 1988).
From a strictly land use perspective, stacked systems involving yard gantries, straddle carriers and top loaders are more efficient than chassis based operations. A Chassis system's low land use efficiency may be made up in yard productivity. Chassis can be moved in and out more quickly and therefore may be no less efficient than stacked operations in container yards.
Thus, port overcapacity is only partially a function of container yard land use efficiency. A combination of factors including land use efficiency, yard productivity and berth productivity influence the extent of overcapacity.
Another result of increased containerization has been the reduction of manual labor within ports (Gilman, 1987). Containerization is capital intensive as opposed to the labor intensive loading and unloading before the advent of container technology. This trend continues as ports focus more of their resources onto container facilities.
One major characteristic of containerized cargo is its relatively higher value per ton compared to other break-bulk and bulk cargoes. Ports can charge more per ton for this cargo. They can generate more revenue by attracting more container cargo. Because of higher potential revenue and the growth of containerization throughout the industry, capital intensive container facility development will likely continue to replace longshoremen.
While this development is continuing, the externalities of the container revolution must be addressed. In the long-run, the loss of longshoremen jobs may prove to be a positive externality. Increased port efficiencies result in increased cargo revenues and promote positive secondary employment impacts throughout the port community. In addition, former port labor can be retrained making them more productive in an economic sense, than if they continued to work while not utilizing the modern technology.
The negative impacts on coastal land use from container facility development is the impetus for this thesis. It is an established matter of practice that ports dredge and fill coastal lands and wetlands in order to provide adequate paved storage yards for containers, extended berths and deepened channels. This practice is necessary for efficient container handling.
· While dredge and fill activity is regarded as environmentally degrading, it is necessary to a certain extent to accommodate increases in the size of vessels engaged in international trade. The competition among ports for container cargo tends to lead to overdevelopment as independent autonomous port authorities attempt to provide better services and more storage and berthing ' space. These trends require that more attention be directed toward the possible negative effects of overdevelopment within United States port system.

Container Importance
The need for capacity review on a local or regional level is supported by the increasing level of importance that ports are placing on containerized cargo. In order to remain competitive in the shipping industry, U.S. ports have to accommodate the growing amount of containerized cargo being shipped on the oceans, Great Lakes, rivers and waterways. Between 1985 and 1989, container tonnage increased from about 12 million shc:>rt tons to over 20 million tons among the ports being studied (See Table 3 Source: Courtesy of the American Association of Port Authorities 40 palicy setting, when ports exhibit overcapacity, problems associated with those previously mentioned are likely to continue into the future.
The importance of containerized cargo to a large port is not in doubt.
Containerization has become the preferred means of transporting manufactured goods and more effort is being put into this area of shipping than any other. Nevertheless, the growing emphasis of ports with regard to containerization has several implications which concern this study.
It has been discussed in this chapter that container facility development requires a large amount of dredge and fill activity which can be detrimental to coastal ecosystems. In addition, these facilities require large capital investments. If the analysis in this study shows that there is sufficient existing container capacity at ports to handle cWTent and future cargo demands, additional development on a large scale will be wasteful. Further, the following results indicate that the problems associated with overcapacity are not going away. Instead, they are intensifying.

Location Quotient
Location quotients have been used to illustrate the relative degree of importance that ports in this study are placing on container cargo. Originally used to measure the movement of populations in geographical locations, this method was used by Kula and Marti in a prior port study (Marti, 1982, andKula 1986). The following formula yields a ratio which represents the Where: . xc= individual port container cargo xt= individual port total cargo YC= total regional port container cargo YT= total regional port total cargo A ratio less than 1.00 indicates that containerization at an individual port is less important in comparison to containerization within the region on the whole. A ratio greater than 1.00 indicates that containerization at an individual port is more important than it is to the region. The results demonstrated in Table 4 and the accompanying Figure 6 show that all of the ports except Baltimore and Savannah have placed increasing importance on containerized cargo since 1985.

Competition Among Container Facilities
All five state-run ports that were studied operate in competition with each other. Through the marketing of various services offered by each port to its port users, competing ports continuously attempt to increase cargo tonnage (throughput) and revenues. By providing the_ most advanced container handling technology in addition to expanding cargo storage capability, ports are more likely to achieve their major goals. As they succeed, competing ports attempt to "out-do" each other by focusing their resources on expanding facilities and deepening channels and berths to accommodate new generations of container vessels, by providing more high technology container cranes and storage yard equipment. Similar to other competitive industries, ports exhibit a certain degree of over supply. The possibility that over supply of container facilities represents a waste of public funds and coastal-land leads to the present analysis. Without impeding market-efficient competition between inter-state part authorities; the goal of this analysis is to present a method for analyzing regional port capacity. In this way an effort to provide better management within each separate port authority and to some extent in cooperation with all port authorities could achieve maximum operating efficiency.
It has been argued that the level at which ports compete is declining, i.e. that barriers to entry are becoming greater, limiting the ability of smaller ports to compete . As a result of the high cost of port development, an argument can be made that larger ports are better able to fund such development while smaller ports cannot. While this may be true in some instances, it has not occurred in the mid-Atlantic coast range. As seen in market-share analysis (See Figure 7), there has not been dominant growth by any one port. In fact, the indication that over-supply exists throughout the region shows that the level of competition may indeed be increasing (See Table 5).
The deregulation of the ocean transportation industry has been one of the causes of increasing competition among ports. In 1984, the ocean transportation industry in th~ United States was deregulated so that it could compete more freely and offer internationally competitive prices. The effect on ports was that land and sea shippers and carriers could pick and choose at which ports to call. Intermodal rail and trucking competition led to more variability in trans-shipment of cargo, and ports became uncertain of where, when, and how much cargo throughput they could expect. One way they could affect throughput, aside from facility leasing agreements with private operators, was to expand and improve container cargo facilities. Still, they could never be assured of stable long-term cargo throughput. Intensified competition among the entire transportation industry, as a result of  with providing connections to as broad an area as possible.
To understand the efficiencies and inefficiencies of competition within the port system, a simple discussion of competition is necessary. If competition fosters better operating efficiency in most if not all industries, then ports are no different on a micro-level than other enterprises.
Competition provides fair market prices for the port user without much variation among ports. Although they are governmental entities, ports interact with private international commercial industries. It is in their best interest to keep costs low, so that they can offer competitive service prices for dockage, wharfage, storage and drayage (removal). In this respect, ports are efficient and contribute to the economic well-being of the state and region they serve.
Competition is regarded as offering economic efficiency within an industry. But, there are inefficiencies associated with competition as well.
Port expansion is financed through large public expenditures from revenue bonds, reinvested port revenues, and taxes. When substantial port resources are invested in container facilities (superstructure and infrastructure), it is assumed that such investments can be justified. Infrastructure is the physical improvement that allows the vessel to berth at a port. Superstructure is the equipment that is necessary to handle and transport the cargo in the port.
Because such facilities take many years to plan and develop, there is a level of uncertainty with respect to future cargo flows which will pass through the new facility. Due to the high level of competition among the transportation industry as a whole, the impetus for new port developments lies in the hope for cargo attraction, rather than actual cargo growth at the port. In addition, public ports can often acquire coastal lands at a lower cost than improving operating efficiency at existing facilities. Ports often acquire land as part of their charters. They can also acquire tax-free land because they are a public agency. Ports, in effect, have an advantage over all other waterdependant, water-related and non-water related uses. Inefficient land use by ports, therefore, may not affect overall efficiency if more land can be cheaply acquired rather than restructuring existing facilities. This acquisition will not contribute to higher average costs in the port. In these cases it is possible that acquiring more land will be more economically efficient to the port but not necessarily more socially efficient.
Free competition, w ithout regulation, will, like other competitive industries, improve market efficiency on a port level by providing better service, and fair market prices to the port user. However, while efficient for the industry, expanding the supply of the port service market implies social external costs involving the mis-use of public funds and coastal lands.
49 indeed, part competition has intensified along the East Coast, and ports there }lave demonstrated their continuing desire to place more importance upon container cargo. These increasing levels of competition along with the fact that parts are concentrating more resources on container handling capabilities, suggest that the problems associated with over-supply will increase into the future. In this respect, the competition associated with containerization and the quasi-public port has led to a sub-optimal efficiency condition on the social level. To correct this situation, more information on port growth requirements must be obtained and made available for future planning.

CAPA01Y ANALYSIS AND PRODUCTIVITY
In order to manage any system effectively, quantitative information is necessary to ensure quality and efficient productivity consistently. Through accurate measurement of productivity and growth, a port can better manage its existing capacity and plan for required expansion. Capacity monitoring can lead to maximum efficiency in port productivity and more efficient coastal land utilization. As publicly owned, non-profit agencies that operate on public land, ports must make efficient use of coastal space to accommodate public interests. The allocation of coastal space for port development excludes others from the use of this space. Social inefficiency occurs if the benefits of land use do not equal or exceed the opportunity cost of the land.
Port development results in environmental degradation associated with dredging and filling (Zabel v. Tabb, in Kalo, 1990). In addition, vessel traffic contributes to environmental degradation from air and water pollution. This pollution places additional stress on natural ecosystems.
Ecosystems can be lost and disturbed by any development activity. But, some waterfront development is necessary in environmentally sensitive areas for Water-dependent and water-related uses such as ports. In the proper management of coastal lands, non-water dependant uses such as residential construction should not take precedence over water-dependent port activity.
In accordance with proper coastal land management, development should not usually take place in environmentally sensitive coastal areas if it is not 51 ' ,, ' I necessary. Port activity is water-dependant and should not be denied if benefits are shown to exceed costs. The negative consequences associated with port development projects imply that port managers, in cooperation with public officials, should utilize planning techniques designed to limit part overcapacity.
The management of coastal space is becoming increasingly important as the demands on coastal lands increase. Public policy which addresses coastal issues in an integrated fashion is required for the proper preservation and protection of the environment in the future. Since ports require large amounts of coastal space to operate effectively, it is necessary that port requirements be quantified through productivity monitoring and capacity review. In this respect, port development can be justified. If it is justified, port development should be incorporated into integrated mechanisms for the management of the environment and expenditure of public funds.
A container capacity review can provide information to port managers and public authorities about the development needs of a port. Capacity review can also be used to indicate how much excess capacity is justified.
Accordingly, "the more productive you are, the more capacity can be generated in your terminals, and the less you need to expand them." (Ashar, 1986, p. 93). Capacity review models, both simple and complex, can be used to determine need for expansion and better productivity.

Measuring Container Productivity and Capacity
Industry pressures for improved productivity at container facilities has Stimulated ports to take a serious look at improving facility productivity. In response to this demand, there has been considerable interest in the manner by which container facility productivity can be measured (Dowd and Leschine,t990). Accurate quantification and monitoring is necessary to assess production at container facilities. This measurement gives ports a better understanding of their capacity needs as well as their productivity strengths and weaknesses. Productivity analysis and monitoring also serves as a valuable planning tool, not only for ports, but for society. It is a means to achieve more efficient coastal land use.   International, 1987). Double lift cranes can achieve 50 lifts per hour (Container News, 1988). However, varying rates are a function of operator skill. Operational delays and downtime also influence overall productivity.
Crane productivity is measured by moves per hour, downtime and crane hours. This measurement yields net and gross productivity.
The Gate is an important element of facility productivity. The factors Which affect gate productivity include operational hours, number of lanes, extent to which it is automated and whether a data collection system exists.
Better productivity in the gate depends largely upon the efficiency of container weighing and documentation checks. Productivity of the gate is JJ\easured in containers per hour, per lane, and truck turnaround time.
These figures yield net and gross throughput factors.
Labor is the final major element affecting facility productivity. Gang sizes, work rules, general skill of workers, work environment, amount of training and vessel characteristics all influence labor productivity. This productivity is measured by the number of moves per man hour.
Mariy factors within the operating port affect capacity. From an operations standpoint, productivity among the various sectors in the port influence and determine overall productivity and available capacity. In this thesis, physical productivity measures of capacity are calculated, not cost efficiencies. According to some models, optimal capacity has been determined using costs and financial efficiency (Varaprasad, 1986). Due to the fact that the above cost methods do not include the social cost of overcapacity, they may not be accurate. In addition, this study examines physical overcapacity as a social inefficiency. Thus, it is concerned only with physical productivity measures.
The following analysis attempts to demonstrate two things. First, it determines whether the seven container facilities studied exhibit individual overcapacity. It has been suggested that, ''U.S. public ports have failed to enhance productive usage of container facilities" (Ashar, 1986). The capacity analysis demonstrates whether this is true or not. Second, the analysis serves to demonstrate the usefulness of accurate productivity data as a tool to monitor port capacity at container facilities. The quantification of capacity is an important step toward the prevention of unnecessary port investment. In addition, through productivity monitoring within the port, quality control can be better maintained, and improvements in these productivity measures can more easily be attained.

Method
The method that will be used to test the major hypothesis is based on a capacity modeling formula called The Container Capacity Model that has been previously utilized by the Ports and Inland Waterways Institute. It is an input/output model in which the input variables include productivity ratios for the storage yard and berth utilization. For example, data on berth utilization (i.e. number of vessel calls, typical number of containers per call and ship-shifts worked per vessel) will be divided by the total number of vessel shifts in a year to yield the berth requirement for a given number of vessels and containers.
These variables are a function of variable shipping line characteristics per port, including size of vessels and frequency of calls. In addition, typical loading, unloading, and storage ratios are added to accurately account for cargo handling operations within ports.
The Container Terminal Capacity Model was developed as a practical planning tool and was originally used at the Port of Seattle to assess container facility capacity (Ashar, 1986). In the absence of true cost figures, cargo movement productivities are utilized to accurately assess facility efficiencies. limitations of the model, however, are that the ratios used for facility operations assume equal operational efficiencies among facilities with regard to cargo movements per hour and per vessel. Although these ratios do not yield exact results for a particular facility, they are based upon reasonable 56 industry data and will yield reasonably accurate output information (Ashar, 1986).
Based upon shipping line characteristics, actual berth utilization, and container yard productivity data, the model permits an accurate measurement of container capacity at a facility. Once the capacity is evaluated, the amount of excess can be determined by simply comparing capacity with actual cargo throughput.

Berth capacity
Berth capacity is a function of crane productivity, and labor productivity per ship size and shipping line class (See Table 6). To simplify the model, ship sizes were categorized into three classes: Large Lines-call every seven days or less, exchange 1,000 or more boxes per call, and contribute 100,000 TEUs per year.
Medium Lines--call every seven to ten days, exchange 600 boxes per call and contribute 50,000 TE'µs per year.
Small Lines--call 15 or more days, exchange 100-200 boxes per call and contribute 5 to 10,000 TEUs per year. (Ashar, 1986) Individual vessels may be considered in berth capacity calculation, unfortunately, necessary size information was not available for this study.
Typically, container berths can move an average of 170 boxes per crane shift (Ashar, 1986 Source: Ashar, 1986 Thus, large ships require more shifts. Subsequently, the berth requirement for larger vessels is greater.
The operational factors added in the calculation of the berth requirement coefficient reflect productivity margins. The Reasonably High Level Factor (RHL) accounts for high ship loads and/or low productivity on the berth. The safety margin accounts for the margin of time between ship arrivals to assure that no ships have to wait. Finally, the berth requirement was obtained by dividing gross ship shifts per year by the total shifts in a year.

Yard capacity
A conservative assumption of 50 acres required per berth was made to accommodate the varying degrees of yard utilization among the ports in this study. This acreage is deemed sufficient to permit the effective operation all types of yard systems.
Based upon accurate shipping line characteristics at the facility, and given yard acre requirements per berth, capacity of the port can be generated.
Further, berth and yard requirements are indicated. The amount of excess capacity can be determined.by comparing these three results to actual cargo and physical characteristics.

Calculations
The calculations for the total container capacity within a given facility is measured in TEUs or container units. Total capacity includes empty as well as full containers. It should be noted that the final capacity number for a facility included the characteristics of shipping lines, operations on the berth 59 and in the yard, and other port operations. The individual facility analyses proceeded according to the numbered steps which follow.

Average berth requirement
The average berth requirement was calculated based upon the shipping characteristics outlined previously. Table 6 p.58, summarizes the berth requirements for each line type. Data needed to make exact calculations were not available from the ports, therefore, an average requirement was determined based upon Table 6. The average berth requirement for a model ship line generating an average of 52,500 TEUs annually is .423 berthing space.
Determining the number of model ship lines per port To determine the berth requirement for actual cargo throughput, the average berth requirement for a ship line generating 52,500 TEUs must be multiplied by the representative number of model lines. This is not the actual number of lines in the port. It is, however, representative of many lines exhibiting similar size and cargo generation characteristics. For example, rather than counting_ ten ship lines, one line is used to account for the requirements of all ten actual lines. The following demonstrates the line calculation: Total # of TEUs per year I 52,500 TEUs = # of Model lines.

Determining total berth requirement
The total berth requirement is the necessary amount of berth space needed to accommodate existing cargo throughput and is determined by the following: #of Model Lines • .423 = Total Berth Requirement.
This calculation is useful to the port in order to determine whether sufficient berth space is available for existing cargo throughputs. As a planning tool, berth capacity calculations can be used to indicate whether or not additional berths will be required. In_ addition, if sufficient excess is shown using this calculation, a particular port can formulate investment criteria based, in part upon berth requirements.

Determining yard requirement
Earlier, it was stated that yard moving systems vary considerably. A standard yard requirement does not give justice to the effectiveness of a particular yard system. Because different yard systems yield different yard productivities, this study assumes a conservatively high yard requirement.
Normally, 30 to 50 acres of yard storage space is needed per berth (Hershman, 1989). For the subsequent analysis, SO acres will represent the,storage space required per berth.
Highest attainable berth productivity A number of factors influence the productivity in berths, as mentioned earlier. High levels of productivity are 150,000 TEUs/berth/year (Gilman, 1987). But, because all ports have different physical and operational characteristics, setting a single high industry standard for all ports is not practical. While berth productivity may be limited to operational barriers, these productivities could be improved in many instances. Although yard moving systems vary, much of the overall superstructure and infrastructure are identical among ports. It is therefore reasonable to assume that a port exhibiting low productivity could make changes enabling it to achieve productivities equal to its neighbor. The use of productivity monitoring is 61 justified under this assumption. When capacity can be improved through facility redevelopment unnecessary expansion can be prevented. In this respect, better productivities can increase cargo ~apacity without significant ~xpansion of land.
Cargo throughput among the ports studied have revealed that the Wando Terminal at the Port of Charleston yields the highest berth productivity at 111,295 TEUs/berth/year. Recognizing the intense competition among these ports, it is not unreasonable to suggest that all ports in the range could achieve this type of productivity figure, given size and facility similarities. It has been demonstrated that ports achieve better productivities than this (Containerization International Yearbook, 1989).
Therefore, 111,295 TEUs/berth/year is not extraordinary. This number represents the highest attainable regional berth productivity and is used to calculate the total capacity of the existing port facility. This study indicates that there is sufficient excess in existing facilities to accommodate a substantial increase in cargo throughput. Capacity potentials were calculated according to the following: Potential throughput given productivity increase The requirements for potential increase represent the total capacity in the part. The excess capacity is simply the difference between utilized capacity and the total port capacity. Applied consistently throughout the range, the calculations represent reasonably accurate capacity assessment. The excess within these ports is not necessarily alarming in itself for most of the facilities studied. What is of concern from a social point of view is that, despite the excess and relatively slow cargo growth trends, these ports continue developing new and improved facilities. Based on these results, such development in many cases may not be justified; for this reason, overcapacity is a public concern.
The Port of Baltimore (  TEUs, the potential throughput represents the highest attainable productivity.
This potential is not constrained by land or berth space and is possible given existing facility dimensions. The current excess in the Dundalk facility is demonstrated within Table 7 and Figure 8. The validity of this capacity is reinforced by historical cargo throughputs. In 1985, Dundalk was at capacity operating levels when cargo approached 700,000 TEUs.
At 56 percent, the excess in Dundalk is not of major concern on a state or regional policy level. In 1981, the ports in Virginia imposed integrated management on themselves. Facilities combined their resources and eliminated duplication and inefficiency. Rather than plan for expansion in a disjointed fashion, productivity improvements were made on a broad level. The Neptune computer system was developed in 1986 and provided shippers, agents and other port users with shared data. This cooperation helped to improve operating efficiencies and cargo movements.
Another productivity improvement made in Norfolk was the acquisition of double-hoist container cranes. Double-hoist capability allow~ crane productivity to be improved from 25 lifts per hour to 50 lifts per hour (Container News, 1988). These improvements, which are regarded as innovative, contribute greatly to the success of Norfolk.  Table 9 and Figure 10).

Development plans in North Charleston include two additional berths
for container cargo and other cargo types. Historic container growth demonstrates that North Charleston facility has increased its share of regional container cargo to 13 percent of the market in 1989 with signs of continuing improvement in the early 1990s. (See Table 3, p. 40).
Its land use efficiency ranks fourth overall, which is relatively efficient.
The acceptable efficiency, typical amount of excess, limited future development and continuing container cargo growth indicate that overcapacity may not be a social concern at the North Charleston container facility. Due to the multi-use nature of the facility, the additional berths to be developed may be justified, given the indications of growth in the facility.

Port of Charleston (Wando Terminal)
The Wando Terminal is located one hour from Charleston Harbor on the Wando River. Its three developed berths handle more cargo per berth than any of the other six container facilities. The modern practices and location of this facility result in a highly efficient container facility. Source: Author's calculations assumed that all of the ports could be as productive per berth as the most productive competitor.
The Wando standard is conservative becaµse it does not exhibit extra ordinary productivity for a container port and it does not hold an advantage in total cargo handled compared to the other ports. In fact, W ando is ranked fourth in total container cargo handled. Because it is the benchmark facility, it is assumed that there is no overcapacity at Wando (See Table 10). Although there may be excess in the facility, for the purposes of this analysis, it will not be a factor. As the most productive port in the study range, Wando represents the most efficient facility that society can obtain at this time. In other words, while there may be some additional excess at Wando, the perfectly efficient container facility does not exist and so W ando represents the next best alternative.
The Port of Savannah (Containerport) Containerport is located on the Savannah River, northwest of Savannah. The 245-acre container facility captured almost 20 percent of the regional market share and ranked third overall in total container cargo.

78
The combined number of containers in 1989 for the Blount Island and Talleyrand Terminals was 128,090 TEUs. This gave Jaxport a 6.62 percent share of the regional market. Container facilities within the port included eight total berths with 228 yards of container storage.
The calculated capacity in Jaxport is 565,957 TEUs annually. Excess capacity, therefore, is shown to be 77 percent. It should be noted that the proved excess in this study does not consider how container storage is used by other cargoes in a multi-use facility. This limited perspective may, therefore, overstate total excess. Nevertheless, a proved excess capacity with regard to container cargo to some degree exists (See Table 12 and Figure 12).
Container cargo is continuing to increase within the port at a proven rate of 56 percent from 1989 to 1990 (See Table 3, p. 40). Development within the port involves the acquisition of three new cranes and some restructuring within the facility. Because the port has a competitive disadvantage among its competitors, such as Norfolk and Savannah, Jaxport has continued to focus on other types of cargoes. The specialization in autos, bulk and breakbulk cargoes has given Jaxport success in these areas of trade. Although exhibiting a large degree of overcapacity with regard to container cargo, Jaxport has attempted to utilize its land by pulling resources away from containers and moving them toward other cargo operations and marketing.
Although demonstrating some success in other areas of trade, there exists a large degree of overcapacity within the port that is not necessary for the purposes of trade activity. · Excluding these ten smaller ports, the seven large facilities that were studied have an excess of almost 1 million TEUs annual throughput.
Therefore, the seven large ports as they exist today, could handle the combined cargo from the ten smaller ports. Here, significant overcapacity can be seen.
These figures raise some interesting policy questions regarding how to react to such over-supply. One approach could be to only distribute federal dredging funds to those ports which are successful. However, the commerce clause in the United States Constitution prohibits favoritism toward any one port. In fact, this is one of the major arguments against federal port control.
An alternative approach is to tighten controls on development. The problem with development control is that no direct control mechanism now exists.
Permit denials are based only upon environmental considerations and do not include the actual capacity needs of a port. Permit denials which neglect technical information on capacity needs can harm a port's ability to compete.
A summary of the existing U.S. system shows that 131 public autonomous ports are competing against each other, which has resulted in vast overcapacity of container facilities without any federal mechanism to directly control the public waste of this over-supply (Wekh,1991).
Throughout the previous discussions presented in this thesis, it has been suggested that a mandatory capacity and productivity analysis must be carried out by ports in conjunction with MARAD and used during permit review to fulfill the requirements of Sec 401 perinits, as outlined by EPA and the Army Corps of Engineers. Such an analysis can provide all the necessary information to port management and regulators so that proper planning and development can occur on a broad level.
A comprehensive review could help prevent overcapacity without involving excessive federal control that may hamper a port's ability to compete. The need for measurement and analysis has been supported by the evidence shown of existing excess capacity along the mid-Atlantic port range, and by the proof of the increasing amount of development occurring despite the current excess. The need for capacity review is especially reinforced when 83 observing the added capacity excess of the many smaller container facilities outlined above.

CONCLUSIONS
The analysis presented in the previous chapter demonstrates that there is excess capacity among container facilities in the ports of Baltimore, Norfolk, Charleston, Savannah and Jacksonville. Although it is not as high as it was previously thought to be (49 percent) by the author, overcapacity is growing as ports commit more of their resources to container facility development.
Despite the proven 33 percent overall excess capacity at the ports studied, every port has planned or already begun development for the expansion of their container facilities. The large ports along the mid-Atlantic range have enough excess capacity to handle most of the cargo moving through smaller ports such as Brunswick and Newport News which were not included in this study. Future expansion represents significant public expenditure and coastal land development which may not be necessary. It is the responsibility of public policy-makers to eliminate public waste and prevent unnecessary costs to society. This thesis has shown that there may be a need for better management on a regional level. Specifically, it calls for: 1) mandating capacity and productivity assessment by individual ports to justify development plans; 2) disseminating information about individual port development requirements; 3) sharing capacity information; 87 4) improving federal participation involving capacity assessments, and management and operations guidance from a stronger MARAD; and, 5) Including technical information on development needs for federal, state and local permit reviews.
The previous suggestions will facilitate information exchange among regulators and ports so that port development requirements can be included in permit decision-making. The availability of information will help ports assess their needs effectively and can help prevent unneeded development and overcapacity-a potential advantage to the port as well as to society. Welch (1991) states that only two ports in the entire South Atlantic are achieving successful economic returns. On both business and public levels, this is unacceptable. Economic inefficiencies coupled with a certain degree of overcapacity in public ports are obvious costs to society.
The federal government has chosen to let the individual state ports govern their own development. In the competitive port industry, state rather than federal control has resulted in disjointed, inefficient management and unnecessary facility duplication. The only strong regulatory role of the federal government is dredging regulation. While the protection and preservation of the environment remains important, so does the economic success of existing port facilities.
If the federal government took a more active role in the development of port facilities, it could promote development of financially and operationally efficient container facilities. Federal policy is necessary at this time. There are too many inefficient ports. There is too much excess.
Ports often publish their yearly revenue and the multiplier impacts of the port facility. This is misleading to the port community and to the nation.
Revenues do not indicate the actual success of the port because all costs are not included. Including multiplier effects as a port benefit vastly overstates the total economic benefit of a port. Ports in the U.S. should all have positive rates of return. The indication, however according to Welch (1991), is that they do not. Changes must be made in management that will correct this inefficiency. It is imperative that public ports serve the public as valuable resources The costs of overcapacity discussed in this thesis are inefficiencies in public expenditure and coastal land use. This social problem is of national concern on many levels. Too often, ports see environmental regulations to development as hampering their ability to compete. Occasionally, this view may be warranted. However, protection of the environment is a national concern in addition to the economic benefits of international trade. There is also an inherent dichotomy between economic development and environmental protection. This does not need to be the case. National interests do include economic prosperity and environmental preservation at the same time. There can be a balance between the two that results in a positive net-benefit to society. It is more attainable if the federal government accommodates all of its interests with regard to port development and environmental protection. In this respect, more efficient management needs to be fostered by the federal government. By merely concerning itself with environmental regulations against development, the federal government only hampers a port's ability to compete and operate effectively. This is not efficient government.

89
Ports attempt to utilize their land and funds efficiently. But, the competitive nature of state-operated ports does not encourage intra-state planning and cooperation. Because there is neither cooperation nor communication among ports, duplication of facility occurs. This results in a slow, continuous process of overdevelopment. Negative net-returns can be the eventual result.
In some countries, large "load-centers" are federally controlled to prevent overdevelopment and facility duplication. Considering the greater size of the U.S. and availability of its resources, more medium-sized efficient ports may provide for a better distribution of economic port benefits and better utilization of coastal lands. What is recommended is a policy of continued state control, but with greater federal involvement. While there is often conflict between state and federal goal-setting, cooperation is possible, as exhibited by the National Coastal Zone Management Program.
To eliminate inevitable conflicts between state and federal governments, the federal role in port management should be to provide guidance through a better funded Maritime Administration-through standard mandatory capacity analysis an·d assistance in productivity management. The experts in MARAD can work directly with individual ports, replacing other inexperienced government organizations.
This thesis has attempted to show the value of a capacity assessment to determine port requirements. On a broad scale, capacity results may be less accurate; but, individually, in-house analysis can be very precise when all the facts about operations are available. If all individual port capacity assessments were to be made available, unnecessary development may be avoided.
Knowledge of port requirements and the trade role of individual ports along a range can result in better planning and management decision-making, and 90 more efficient use of port land and public funds. The resources saved can then be used to improve the productivity of existing facilities and to build financial success in each port.
It has been suggested that U.S. ports operate inefficiently, with overcapacity and financial waste. This thesis has proved the existence of overcapacity in container facilities along the mid-Atlantic port range from Baltimore to Jacksonville. While capacity assessment does not provide a panacea for all the problems in the port industry, it does present port managers with the information necessary to make better decisions that can focus public port resources on existing facilities and away from waste.