NEW YORK - A $2.3 billion plan aimed at deepening the Port of New York and New Jersey's principal channels in time for the next wave of jumbo cargo ships - saving $800 million - was announced yesterday by the bistate agency that oversees the East Coast's busiest marine terminals.

Saying they intended to ensure the region's economic vitality for decades, commissioners of the Port of New York and New Jersey unanimously endorsed the strategy that would see the projects completed seven years sooner than expected. At the same time, they earmarked another $110 million for harbor-related projects with environmental benefits.

Included is $60 million to purchase waterfront properties in New Jersey and New York in an effort to preserve or restore wetlands and $50 million for rail improvements so more shipping containers can be carried by trains instead of by trucks on congested highways.

But the key component is a new, coordinated approach to deepening the channels that 4,500 ocean-going ships and tankers use every year in sailing to and from oil depots and cargo terminals at Port Newark-Elizabeth and Howland Hook on Staten Island.

In the past, such work would be done piecemeal as multiple contracts were awarded by the Army Corps of Engineers for various segments of waterways like Ambrose Channel, the Kill Van Kull and Newark Bay.

"Back in March, we began thinking, 'Why not do it all at once,'" said Richard Larrabee, port commerce director for the Port Authority.

The agency then came up with a scheme to reduce the number of contracts to seven from 45, telescope the time needed to finish by 2009, instead of 2016, and cut the cost from $3.1 billion.

Congress, the Army Corps and the Environmental Protection Agency must still sign off on the idea. Even though the government provides 65 percent of construction funds - and not all are yet committed by Washington - Larrabee said the savings alone would cover the port's ultimate tab even if the federal share did not come through.

More important, he said, the projects will be completed as shipping lines add jumbo-sized ships to their fleets. Not only do they sail deeper than most of today's ships but they also carry thousands more of the tractor-trailer-sized containers that bring imports like liquor, computers, clothes and toys and leave with plastics, machinery, pharmaceuticals and chemicals.

We are serving the most affluent consumer market in the world and that market's appetite for commodities from around the world is increasing," Larrabee said.

And the ocean carriers stand ready to feed it. On a tour of Asia in May, Larrabee said, executives of the 10 lines he visited told him over and over that larger ships were critical components of their business strategy..

"They increase the size of the vessel to reduce per unit cost of operations," Larrabee said. Further savings come when they can dock at select ports that not only serve local but outlying markets.

None on the East Coast has as much growth potential as the Port of New York and New Jersey. Acting as the chief magnet is a mammoth local market that accounts for 70 percent of the exports and imports, according to the Port Authority. The rest is destined, or comes from, New England, Canada, the Midwest and points south.

Thanks to a change in trade routes, forecasts call for Southeast Asia to become a major trading partner. In all, the volume of containers is expected to swell to more than 11 million by 2060, compared with the 1.78 million handled by the bistate port last year.

The tidal wave of freight is expected to add 233,000 jobs to the 166,000 in New Jersey and New York already devoted to ocean trade.

In part, the Port Authority's new strategy could be viewed as an attempt to atone for a major mistake it made in the 1980's. It had the authorization to dig to 45 feet but decided to only go to 40 feet as a move to save money.

By the time it deemed the project necessary, the congressional authority had lapsed and the port was caught in a six-year dispute with environmental and fishing groups that were opposed to as-sea disposal of the mud and sand scooped from th network of underwater highways. The issue wasn't resolved until 1996, when a combination of ocean releases for clean silt and upland use of tainted dredge spoils was agreed upon.

Three years later, the Army Corps of Engineers recommended a plan for deepening 34 1/2 miles of channels to 50 feet, but said it would take until 2016 to complete the job in a port that has an average natural depth of 18 feet.

Speeding up the channel projects also would guarantee the Port Authority's $1.8 billion investment in land-side projects during the next five years.

Included are the expansion of Howland Hook and the three terminals at Port Newark-Elizabeth: P&O Nedlloyd's Port Newark Container Terminal and the terminal operated by Maersk Sealand, the world's largest shipping line. Maersk had threatened to move to Baltimore if it wasn't guaranteed deeper water for its leviathans. The third terminal, the privately held Maher Terminals, handles 45 percent of the port containers. Its chief executive, Brian Maher, endorsed the Port Authority plan.

"It's definitely none too soon," Maher said. Deeper sailing ships with capacity for more than 5,000 containers are already at sea and will likely be deployed to the bistate port in the next three years.

Another benefit: "How many times do you hear about government projects where somebody's figured how to save $800 million?" Maher said.

Janine Bauer, executive director of the Tri-State Transportation Campaign, applauded the plan's rail component, aimed at doubling to 25% the amount of cargo now shipped by trains.

"It's good first step," she said. But, she noted the $50 million allocation represented just 10 percent of what the organization estimates is needed.

Larrabee agreed additional rail and barge links are needed. With them, containers that now sit for up to a week waiting for trucks could be shipped within a day of their arrival. Not only would that improve efficiency, but it also would reduce truck traffic and pollution and free up terminal space.

Al Frank covers the Port Authority. He may be reached at afrank@starledger.com or (973) 392-5808.