Panama Canal Expansion – U.S. East Coast Ports to Gain Container Traffic Market Share - Maritime and Salvage Wolrd News

U.S. East Coast ports may acquire as much as 10 p.c further share of the container site visitors to the U.S. from East Asia following the opening of the expanded Panama Canal, in response to new analysis carried out The Boston Consulting Group (BCG) and logistics companies supplier C.H. Robinson.

[contextly_sidebar id=”WQWlnrLDnFLzgiEJweB2wNtDT24Vskpf”]The analysis concerned in depth situation analyses and is believed to be essentially the most complete public examine of how the canal’s growth will possible change cargo motion, by each water and land, into and inside the U.S. The findings of the analysis had been launched right now in a report titled Wide Open: How the Panama Canal Is Redrawing the Logistics Map.

Following the completion Panama Canal growth in 2016, the analysis discovered that as much as 10 p.c of container site visitors to the U.S. from East Asia may shift from West Coast ports to East Coast ports by 2020.

The $5 billion growth undertaking, which includes the development of a Third Lane of Traffic that can permit the passage of bigger ships, will completely alter the aggressive stability between ports on the East and West coasts, in response to the analysis. Although it’s anticipated that world container will rise, West Coast ports will nonetheless deal with extra site visitors, however will even expertise decrease progress charges and a decreased market share, the report says.

Goods shipped from East Asia via West Coast ports are at present transported by rail and truck as far east because the Ohio River Valley. The expanded Panama Canal, nonetheless, will permit bigger capability publish panamax ships to achieve East Coast ports, making East Coast ports extra price aggressive contemplating the decrease price of transport items over water than over land. The report notes that West Coast ports will nonetheless stay the vacation spot of selection for shippers who want to make use of the quickest routes potential.

“With the Panama Canal’s expansion, shippers will have more options and carriers will compete to provide those options,” stated Peter Ulrich, a BCG associate and the chief of the agency’s transportation and logistics subject space in North America. “Rail, truck, and ocean carriers will all have to reconsider their routing and investment decisions. And shippers will need to make fundamental choices, such as where to locate distribution centers and how to segregate their cargo heading for the heartland.”

Following the opening of the expanded Canal in 2016, the analysis confirmed that the battleground area wherein East and West Coast ports compete for patrons will possible develop and shift a number of hundred miles west towards Chicago and Memphis, encompassing a area that accounts for about 15 p.c of U.S. GDP.

In 2014, about 35 p.c of container site visitors from East Asia to the U.S. arrived at East Coast ports. According to the report, present progress tendencies even with out the Panama Canal growth are anticipated to push that share to 40 p.c by 2020, however with the canal growth in place, the East Coast’s share may attain 50 p.c — a ten p.c enhance in market share.

The report additionally analyzed 4 further situations to assist outline the boundaries of how a lot container site visitors will swing from West Coast to East Coast ports below totally different circumstances for vitality costs, canal tolls, infrastructure investments, and financial progress. High vitality costs, for instance, encourage fuel-efficient water journey and favor East Coast ports. Depending on the situation – akin to excessive vitality costs encouraging fuel-efficient water journey for instance – the shifts ranged from 0 to 10 p.c.

Under any situation, the report notes that every one main U.S. ports can have better container site visitors in 2020 than they do right now. But the biggest of the West Coast ports, the Los Angeles–Long Beach advanced, will deal with much less site visitors than if the growth had been to not happen. That advanced will possible expertise progress at a median charge of 5 to 10 p.c per 12 months via 2020, in contrast with double-digit progress charges at some East Coast ports, the report stated.

On the East Coast, the New York–New Jersey port advanced and the Southeastern ports of Norfolk, Savannah, and Charleston are the perfect positioned to realize site visitors on account of their proximity to the battleground areas and intermodal networks. As the East Coast’s largest ports, they’re additionally more likely to be on the routes of the post-Panamax vessels, which are inclined to make fewer, longer stops than smaller vessels, the report stated.

“Companies accustomed to shipping to the West Coast and relying on relatively fast rail service to cover most of the country will need to take a much more segmented and dynamic approach,” stated Sri Laxmana, the director of ocean companies at C.H. Robinson. “When time is of the essence, that routing may continue to make sense. But for other products, the savings of shipping through the Panama Canal will likely outweigh the extra time in transit.”

The full report could be discovered on the BCG Group website.