The Panama Canal in 2015 will regain much of the U.S. East Coast container cargo that is being diverted now to the Suez Canal route, according to Rodolfo Sabonge, the canal authority’s executive vice president of market analysis and research.
However, the biggest growth cargoes in Panama after the canal expansion project is completed will be dry and liquid bulk cargoes that will transit the canal, and transshipment container cargo moving in the north-south trades, Sabonge told the South Carolina International Trade Conference on Sept. 10.
The Panama Canal in some ways is beholden to the vagaries of the liner shipping industry. Vessels with a capacity of up to 5,000 20-foot container units are the largest ships that can transit the Panama Canal in its present configuration. However, carriers have ordered so many post-Panamax vessels with capacities of 8,000 to 18,000 TEUs that they are running out of trade lanes where they can deploy the mega-ships.
This year Maersk Line and the G6 consortium launched a number of new services from Asia to the East Coast via the Suez Canal with vessels of 8,000 to 9,000-TEU capacity. The Suez Canal does not have the draft and width limitations that exist in the Panama Canal.
When the Panama Canal expansion project is completed in 2015, carriers intend to follow one of two business models, Sabonge said. Some carriers will maintain their present all-water capacity, while seeking economies of scale, by replacing two services with ships of less than 5,000-TEU capacity with one string of ships of 9,000-TEU capacity, he said.
Other carriers will increase their capacity by keeping the same number of strings, but doubling the size of the vessels.
At that time, carriers that have diverted services from Panama to the Suez route will probably return to the Panama route because transit times to the East Coast are faster, services command higher freight rates and fuel consumption is lower.
After 2015, the U.S. trade with Asia will return to its traditional trade patterns. High-value, time-sensitive cargo will continue to move through West Coast ports and on to the eastern half of the country via intermodal rail.
Low and mid-value cargo originating in China and North Asia will move back to the Panama Canal route, while some shipments from Singapore and the Indian subcontinent will stay on the Suez route.
Panama will be out of luck, however, when it comes to attracting the biggest ships that are in operation today. When Panama began planning for the expansion project in 2007, carriers told the canal authority the largest vessels they intended to build would be about 13,000 to 14,000-TEU capacity. A year later, carriers announced plans for vessels of 15,000 to 18,000-TEU capacity, Sabonge said. Some of those vessels are in service today on the Asia-Europe trade lane, and they will be too large for the expanded Panama Canal.
Panama will still be a winner, though, because it is diversifying its maritime operations. There is a growing trade between South America and Asia, so Panama is expanding ports on both the Pacific and Atlantic sides of the canal to handle transshipment cargo. Large vessels on the east-west trade route will transfer an increasing volume of cargo to somewhat smaller vessels serving Latin America.
Also, Panama has large tracts of land adjacent to the canal that it plans to develop for distribution and trans-loading warehouses and other value-added services.
With the boom in energy production in the U.S., and the growing trade in exports of minerals from South America to Asia, the canal authority expects that its dry and liquid bulk trades will grow faster than the container trades, Sabonge said.