Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

US East Coast ports set to benefit from Panama Canal expansion

US East Coast ports set to benefit from Panama Canal expansion
The completion of the Panama Canal expansion by 2016 could see up to 10% of the US-East Asia container traffic shift from the US West Coast ports to the US East Coast ports by 2020, according to a new research conducted by The Boston Consulting Group (BCG) and CH Robinson.

The $5bn expansion will permanently alter the competitive balance between the ports of the US East and West coasts, the research pointed out. With global container flows rising, West Coast ports will still handle more traffic than they do today, but they will experience lower growth rates and their market share will likely fall.

Goods shipped from East Asia through West Coast ports are currently transported by rail and truck as far east as the Ohio River Valley. The canal’s expansion will allow big post-panamax containerships to reach the East Coast.

Those East Coast ports will then become more cost competitive because it is cheaper to move cargo by water than over land. West Coast ports, however, will remain the destination of choice for shippers who need to use the fastest routes possible.

“With the Panama Canal’s expansion, shippers will have more options and carriers will compete to provide those options,” said Peter Ulrich, a BCG partner and the leader of the firm’s transportation and logistics topic area in North America.

In 2014, about 35% of the container traffic from East Asia to the US arrived at East Coast ports. The research said that current growth trends would push that share to 40% by 2020 without the canal’s expansion.

But with the canal expansion in place, the East Coast’s share could reach 50% - a 10% increase in market share.

Additional scenarios were also analysed by the report to look at the container traffic swing from West Coast to East Coast ports. The different conditions include energy prices, canal tolls, infrastructure investments, and economic growth.

Under any scenario, however, all major US ports will have greater container traffic in 2020 compared to today. But the largest of the West Coast ports, the Los Angeles-Long Beach complex, will handle less traffic than if the expansion were not to occur.

That complex will likely see growth at an average rate of 5-10% per year through 2020, compared to double-digit growth rates at some East Coast ports.

On the East Coast, the New York-New Jersey port complex and the southeastern ports of Norfolk, Savannah and Charleston are well positioned to gain traffic by virtue of their relative proximity to the battleground region and rail routes to the major markets.

As the East Coast’s largest ports, they are also likely to be on the routes of the post-panamax vessels, which tend to make fewer, longer stops than smaller vessels.

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish
TMSRPan21-22 Category Promo 600_600-resize
Read Now

The 21st Edition of Panama Maritime Review

"We will invest in digital transformation, exploring innovative ways in which we can maxinimise the Canal's capacity to provide value guarentee quality of service to our customers."

Ricaurte Vásquez Morales, Panama Canal Administrator

Read Panama Maritime Review 2021/22 to find out more.

TMSRPan21-22 Category Promo 600_600-resize