There is a growing divide among prominent industry consultants and advisers regarding the anticipated impact, particularly on U.S. East and Gulf Coast ports, of the third lane expansion program for the Panama Canal.
Some well-known management consultants refer to the expansion impact of the Panama Canal as the next Y2K fiasco, indicating there will be little or no impact on U.S. East and Gulf Coast ports.
What will the real potential impact be, considering the current global trade dynamics, and how should major North American gateway ports anticipate these future changes?
North American marine and intermodal volumes have nearly recovered from the 2008-2009 recession with unsettling “2006 déjà-vu” container volume increases at key gateways and global marine carriers ordering the largest container ships in history. Robust port cargo projections prepared in 2010 for major U.S. West Coast gateway ports to the year 2030 appear to have this “2006 déjà-vu effect.”
Consider the following: Recent trans-Pacific container forecasts indicate a potential return to the days of 2-to-1 Asian import-export imbalances by 2025. Even recent trans-Atlantic container forecasts show significant Asian import-export imbalances.
There has been no slowdown in the dramatic increase in intra-Asia trade. Economic ministers in Southeast Asia’s largest economies have agreed to push up the creation of “ASEAN 2014,” a single regional trade economic market, to 2015, five years ahead of schedule, to avert the loss of foreign investment to China and India.
Indonesia in 2011 announced plans to build 14 new ports as international gateways, in preparation for the establishment of the single ASEAN market in 2014 and anticipated increases in intra-Asia transshipment containerized cargo.
Enter the great North American consultant debates over the 2015 impact of the Panama Canal’s expansion program. Two points of view have emerged on the debate:
Proponents of Significant Impact
Assuming the following North American conditions will prevail, global carriers may route significant increases in vessel cargoes, predominantly containerized cargo, through the newly expanded Panama Canal in the years after the expansion.
-- West Coast ports and intermodal rail systems become or remain congested.
-- Major East Coast gateway ports accommodate the new larger container vessels of 8,000 to 10,000 20-foot equivalent units with upside to 12,600 TEUs.
-- Canal transit fees and costs remain competitive, particularly with the Suez Canal and other alternatives.
-- North American trade volumes continue to increase.
-- The canal’s infrastructure keeps pace with trade growth.
Proponents of Little or No Impact
Assuming the following North American conditions will prevail, the anticipated market shifts to East and Gulf Coast ports may not occur at all and would have little or no effect.
-- West Coast cargo diversion to the U.S. East and Gulf coasts already has occurred or will be completed by 2015.
-- Canal tolls are set to maximize canal revenue and not encourage container volume flow.
-- East Coast ports and their governing political bodies decide they can’t accommodate the new bigger vessels because of channel draft and terminal infrastructure cost concerns.
-- Class I railroads exert their inherent intermodal volume “pricing flexibility.”
-- All-water time isn’t competitive for high-value, time-sensitive intermodal landbridge cargoes.
John Vickerman is president of Vickerman & Associates, a Williamsburg, Va., port and intermodal planning company. Contact him at firstname.lastname@example.org.