Locked In for Growth

 The container shipping industry is in the midst of perhaps the longest wait for a Panama Canal lock opening in, well, a little more than a century.

Since the Panama Canal Authority announced plans in 2006 for a third set of locks that can handle ships twice as big as the current locks, the industry has been girding for the potential shift of trans-Pacific shipments to the U.S. East Coast. East Coast ports have spent billions of dollars to dredge channels deep enough to accommodate the big new ships capable of handling up to 12,500 TEUs that will transit the canal when the new locks open, expected in 2014. Ports and private terminal operators are rushing to expand capacity.

But importers of goods from Asia probably will wait before switching to all-water services to see if the bigger ships can offer large enough advantages over the mini-landbridge route from West Coast ports to the Midwest.

It’s far too soon to tell how the pricing of the bigger-volume all-water services to the East Coast will shake out, but some observers say a lot of the switch to all-water service already has happened and that future shifts will be small.

“The expansion of the canal will be a bump, not a sea change,” said Asaf Ashar, research professor at the National Ports and Waterways Institute at the University of New Orleans. “We won’t see much of a change — maybe a percent or two — because most of the big retailers are already going all-water.”

That may not be such bad news for East Coast ports. If the volume of all-water service to the East Coast grows more slowly than originally projected, it may prove a blessing in disguise for many East Coast ports that haven’t been able to move ahead with dredging or construction projects as quickly as they had hoped.

Right now, only Norfolk, Va., Charleston, S.C., and Halifax, Nova Scotia, have the 50-foot-plus channel depth to accommodate the 12,500-TEU ships that will be able to transit the new locks. Baltimore has signed a deal with Ports America, which will take over operation of the Seagirt Container Terminal and dredge its depth to 50 feet by 2014. New York-New Jersey is dredging its channel to 50 feet, but the low air draft of the Bayonne Bridge will curtail access to the big terminals in New Jersey and Staten Island until the bridge can be raised or razed.

But even the economies of scale of bigger ships may not be enough to convince container ship companies to take them to the East Coast because demand may be insufficient.