Impacts of Panama Canal Expansion on the Trans-Pacific Container Trades and the U.S. Ports
A comparison between the Asia-US West Coast and Asia-US East Coast via Panama Canal post expansion from an economic angle and its impacts on the U.S. Ports
Since the beginning of the expansion project, the Panama Canal is expected to handle more than double the canal’s current annual tonnage capacity upon completion of the expansion. Agreed by most, if not all, industry experts, the Panama Canal expansion is expected to have significant impacts on the existing international seaborne trades, especially on the Asia - US routes. Not only would the existing trading routes be affected but also the ports and the modes of transportation. Among different shipping sectors, the fast growing container trade is most likely to be hit with the biggest impacts. With the canal’s expansion that enables larger container ships to transit through the canal, container ships of up to 13,000 TEUs would be able to call the US East Coast directly. As a consequence, it is a possibility that a tremendous trade volume can be shifted from the congested US West Coast to the US East Coast. Would the ports on the US East Coast be able to handle the volume that shifted from the US West Cost? The challenge is not only the infrastructure and equipments of the ports but also the timing and cooperation among the ports on the US East Coast. Many decision makers of these ports are already prepared and ready for the expected change once the canal expansion is complete. Based on the forecasts and data, strategic plans and guidance have been adopted to deal with the uncertainties. This paper provides analysis on the impacts of the Panama Canal Expansion on the US East Coast ports versus the impacts on the US West Coast ports as well as the effects on the US intermodal system. To include perspectives from as many industry participants as possible, the paper presents several analyses based on interviews with industry analysts, US ports, Consultants and Liner companies. It shall as well provide short-cut cost comparison analyses between the water leg and the land based intermodal system from which the preference of the Liner companies is expected to emerge when choosing between the two transports modes. Using the results from this analysis, we will develop integrated scenarios from the supply side and the demand side, assessing the impacts due to the Panama Canal Expansion. Furthermore, a sensitivity analysis and recommendation shall be provided for each scenario. This paper also compares the two alternatives (water way via Panama Canal to USEC and water way to the USWC plus shipment across the U.S) there are some tradeoffs when determining the best shipping route from Asia to US East Coast. Although the route via Panama Canal might be the cheaper choice it is also a slow opinion. Since cost is shipper’s main concern, the route via Panama Canal might be the preferred choice. However, certain cargo may require a faster shipping alternative that the shipper is willing to pay a higher cost. Furthermore, the best alternative appears to be the water route to the U.S. West Coast plus intermodal system by rail to the East Coast. The results show that the current trade volume split between US East Cost and US West Coast is most likely not to be disturbed within short period of time post to Panama Canal expansion. The current costs of ships that use intermodal system via US West Coast ports is still more attractive when compared to direct transport via Panama Canal to US East Coast. However, all this could change subject to canal the canal transit fee which might give it the incentive.
|Dooms, M. (Michael)|
|Maritime Economics and Logistics|
|Organisation||Erasmus School of Economics|
Zhu, M. (MIngli). (2012, September 14). Impacts of Panama Canal Expansion on the Trans-Pacific Container Trades and the U.S. Ports. Maritime Economics and Logistics. Retrieved from http://hdl.handle.net/2105/33084