The Port of San Diego on Tuesday officially began a $24 million modernization the Tenth Avenue Marine Terminal on the edge of downtown.

The project will remove two obsolete warehouses and create a much-needed area for assembling large cargo like steel pieces and military equipment. It will also include improvements to utilities, lighting and pavement and new modular office space.

“The timing is right for this project as the Port of San Diego is poised for additional growth in the blue economy,” said Port Chairman Rafael Castellanos. “We are the fourth largest port in the state and this project will allow the Tenth Avenue Marine Terminal to handle up to 4.6 million metric tons of cargo annually and create many great jobs, while protecting the environment by incorporating smart technology to reduce pollution.”

A long-term redevelopment plan for the terminal envisions three distinct cargo areas — refrigerated containers, commodity cargo like cement, and “break-bulk” for large cargo like vehicles and steel pieces.

“This project is a great example of how the federal government is investing in ports and San Diego’s maritime industry to increase our global competitiveness and provide for our national defense,” said Rep. Scott Peters, a former port chairman.

The port received a $10 million grant from the U.S. Department of Transportation and will match it with a $14 million contribution.