The Panama Canal expansion slated to be open by the spring will allow massive new ships through the trade route, and could shift the flow of goods from the U.S. West Coast to the East Coast.
However, many of the ports on the U.S. eastern seaboard are still scrambling to accommodate the bigger ships, spending billions dredging deeper berths and expanding marine terminals in a race to compete with each other and their rivals on the West Coast for ships that might never come in.
“It’s not self-evident that the ports will benefit on the East Coast,” said Basil Karatzas, a shipping consultant in New York.
The $5.2-billion (U.S.) expansion of the 77-kilometre Panama Canal, expected to be complete by April, more than doubles the capacity of the trade route that links the Pacific Ocean with the Caribbean Sea and Atlantic Ocean.
A third set of locks, a new Pacific access route and deeper channels will allow the passage of ships that are 366 metres long and 49 metres wide and can carry more than twice as much as before.
The expanded Central American route will allow ports along the U.S. Gulf and Atlantic coasts the chance to compete with their West Coast rivals for vessel traffic. For the shipowners and their customers, they will gain a cheaper – albeit slower – way to reach markets in the densely populated eastern half of the United States via the Atlantic ports.
The trip from Asia to markets on the eastern seaboard is about 18 days via the West Coast ports, using trucks and trains for the final leg. The same journey takes 22 days sailing though the Panama Canal to East Coast ports, including road and rail transport.
Currently, East Coast ports get about 35 per cent of the container traffic from Asia, while 65 per cent is unloaded at such West Coast ports as Los Angeles-Long Beach and Seattle-Tacoma, which can already handle larger ships and have the additional advantage of access to roads that are less congested than those of the eastern seaboard.
The wider canal will let East Coast ports take an additional 10 per cent of this traffic from the West Coast, according to a report by Boston Consulting Group and C.H. Robinson.
This is good news for such eastern ports as New York-New Jersey, Virginia, Savannah, Ga., Charleston, S.C., New Orleans and Houston. Canadian National Railway Co. is also hoping to benefit from new flows of containerized freight, signing agreements with ports in New Orleans, La., and Mobile, Ala.
According to Drewry Shipping Consultants Ltd., 37 of the massive ships are slated to be delivered by the end of 2017, many of which will be sailing the Asia-Panama-East Coast route.
Receiving the larger ships requires bigger docks and cranes, in addition to berths that are about 15 metres deep. Halifax exceeds that depth, but other ports, including Savannah and Charleston, are dredging to reach it. Houston has spent $10-million on new cranes. Other ports are expanding terminals and adding rail links to their docks in construction sprees costing billions.
“We have been ready for a wider Panama Canal for years now,” said Joe Harris, a spokesman for the Port of Virginia. “We think that it’s going to bring business, but at this point it’s hard to say.”
At the Port of New York and New Jersey, the steel Bayonne Bridge is being raised by 20 metres to allow 65 metres of clearance for the larger ships. Construction delays in the $1.3-billion project, which began in 2013, mean the larger ships won’t be able to pass beneath until 2017.
The Port of Halifax is the last stop along the East Coast route before the trip across the Atlantic Ocean to Northern Europe. The port has spent $250-million (Canadian) over the past several years getting ready to handle bigger vessels, said Lane Farguson of the Port of Halifax.
“Carriers have been moving to larger ships for scale, and that’s been happening for some time now,” said Mr. Farguson, who says the wider Panama Canal will be “neutral to positive” for the port.
The port has already begun seeing larger ships after the opening of a second lane on the Suez Canal last summer.
However, there are doubts the East Coast ports will benefit from the higher freight volumes the larger fleet will carry. The West Coast route is well-established, and faster by a few days to the interior of the continent, a key consideration for many goods, the Boston Consulting report says.
A wobbly global economy and consumer demand has dampened global trade.
Cheap fuel prices are also working against the eastern ports, making it more affordable to sail the longer route from Asia around the tip of Africa, Mr. Karatzas said.
And shipping lines are keen to avoid the Panama Canal passage fees of hundreds of thousands of dollars, not to mention the possible delays getting through the canal, Mr. Karatzas said.
If one major port along the Atlantic Coast is not ready, there is a good chance the larger ships will skip the entire coast.
“The huge ships, basically, they are on a milk run. They stop at five ports. If any of the ports cannot accommodate it because the port is not big enough or deep enough or does not have the crane, the ship will not take that route. They will have to use smaller vessels.”Report Typo/Error