Risking Stability

AGC Winter 2018 Risking Stability


Piles under Port of Alaska in need of serious repair, officials say

By Rindi White

Below the waterline at the main port in Anchorage, a “slow-motion disaster” is taking place. The port, renamed the Port of Alaska in October to reflect the intermodal transport hub’s importance to the statewide economy, is on an irreversible path toward crippling corrosion, one that officials say will shut down the port in about 10 years if not addressed.

Temporary measures are being used to slow the damage, but port officials say that without a $700-plus-million modernization project, those temporary efforts will not materially extend the port’s lifespan.

There are 1,423 piles supporting the Port of Alaska. When installed, the piles were typically 24 inches in diameter and averaged 7/16-inch thick. The newest sections of the dock are more than 40 years old; most areas were built 50 or more years ago. The piles have lost up to three-quarters of their original thickness and likely will not withstand another significant earthquake, Port of Anchorage officials stated in an Oct. 20 presentation.

A project to strengthen the piles by installing metal jackets around them is helping, but it is a one-time fix and lasts between 10 and 15 years. The pile jacket project began in 2004, and, so far, 609 piles have been jacketed. Some of the jacketed piles are already reaching the end of their useful life.

“In about 10 years we will have to start closing docks because of compromised load-bearing capacity,” said Jim Jager, Port of Alaska External Affairs Director.

Warning signs

During the October presentation, officials said that the port had a major wake-up call on June 26. Holland America’s cruise ship MS Amsterdam was preparing to dock at 7:30 a.m. when a 57,000-pound dock fender broke off the dock face and sank into an adjacent ship berth. The vessel docked with no damage or injuries, and after its scheduled departure, divers and surface workers recovered the fender and reinstalled it in time for a Matson container ship to dock the following morning.

A modernization project would demolish and rebuild the aging docks and replace the corroded piles with 1,000 48-inch-diameter, 1-inch-thick steel piles filled with steel-reinforced concrete and driven as much as three times as deep as the old piles, depending on where in the harbor they will be installed.

A $6 million test-pile program in 2016 installed 10 piles, then tested and compared pile-driving technologies. Plans to begin shore-stabilization work were set to begin this summer, but the U.S. Army Corps of Engineers determined that the new petroleum-cement dock must be realigned to better accommodate the annual dredging operations the Corps conducts to keep the harbor clear of silt and navigable. Jager said the decision requires an expected $13 million in dredging that was not included in the original plan, and delayed initial construction.

Money for the project is tight, and time is of the essence. Port officials are hopeful the Corps will help pay for the added dredging.

The project is expected to cost between $700 million and $800 mil-lion. About $125 million will come from unspent state funds remaining from the port’s Intermodal Expansion Project. Another estimated $75 million will be paid by port users for user-requested enhancements, such as heavy-gauge cranes on the dock. Additional funding will come from port revenue bond, repaid with revenue from tariffs and port fees, will pay a portion of that, and port officials plan to dedicate proceeds from litigation over work done during a failed expansion project, expected to go to trial next year, to the project.

The Municipality of Anchorage has requested $300 million in funding from the state. It is expected that at least that amount will be needed more before work on the main cargo terminals used by cargo shippers Matson and TOTE Maritime can begin. Port officials have requested state and federal funding to help fill the gap in funding. In the meantime, construction of the new petroleum and cement terminal is moving forward, and the dredging outlined by the Army Corps of Engineers will begin in 2018. The total cost for the new petroleum and cement terminal and shore-side improvements is expected to be about $150 million.

Statewide importance

The October name change from Port of Anchorage to Port of Alaska reflects what port officials say is the statewide importance of the shipping hub.

About 90 percent of the freight that comes into Alaska is waterborne, and about half of that comes through the Port of Alaska, according to a 2016 freight and fuel analysis conducted by Anchorage-based research and consulting firm McDowell Group. About 10 percent of all Alaska-bound freight arrives by air or is shipped overland by truck.

About half the freight arriving at the Port of Alaska continues to destinations outside Anchorage. The port also handles 90 percent of all refined petroleum products disbursed across Southcentral Alaska and Fairbanks, as well as shipments of cement and other goods. Traffic at the port is not limited to consumables; in 2017, 10 cruise ships docked there, and about 20 percent of the cargo handled at the port is U.S. military-related.

The state budget imbalance makes a generous state grant unlikely, but port and municipal officials have asked the legislature to levy a $298 million general obligation bond, or to use another funding method, to help cover the cost of the needed repairs.

If state funding isn’t available, Jager said tariffs on freight moving across the dock is an option. It’s a common method for financing port improvements, but it works better at ports with a more balanced import/export profile.

Businesses are looking for the fastest, cheapest way to move freight. If adding a tariff to goods coming in on container ships makes that method of shipping more expensive than, say, using a barge to transport the goods, shippers might opt to use a Lynden barge, for example, instead of Matson and TOTE Maritime container ships.

But only some of the shippers have the flexibility to switch to barges, which take longer to travel between Alaska and the Lower 48 than container ships, so products like milk, produce and other refrigerated, fast-shipped goods, will end up costing more under a tariff. Adding a tariff, Jager says, will disproportionately increase the cost of some goods, such as food, which will ultimately have a greater impact lower-income Alaskans.

“Alaskans will ultimately pay any cargo tariff levied for dock replacement, because the vast majority of Anchorage freight is inbound and stays in Alaska,” Jager said of the tariff.