American ports gear up for Panama Canal expansion

The expansion of the Panama Canal is just half complete, but the expected windfall in trading volumes has already spurred billions of dollars of investment in port expansion and associated projects in the US and elsewhere, reports say, as businesses resize to accommodate the much larger ships that will pass through the Canal. Analysts say that the opening, post expansion, of the Panama Canal will be a game changer for maritime trade and the industry.

One of the biggest construction projects in the world, The Third Set of Locks Project will double the capacity of the Panama Canal by 2014 simply by allowing much larger ships to transit. The planning, that started in 2006 after a referendum in Panama overwhelmingly voted for the expansion of the Canal, will result, when the project is completed, in a new set of locks being constructed and a new lane of traffic opened. Two sets of lock complexes at either end of the Canal and the widening or deepening of existing navigational channels are on the cards. Panama expects a windfall in tolls after spending a staggering $5.25 billion or so on the expansion.   

Shipping experts say that the Panama Canal expansion will revolutionise traffic between the East and West coasts of North America and give a new meaning to the term economies of scale, and will result in a major boost to the economies of those countries that are prepared, logistically and otherwise, to handle many of the mammoth ships of tomorrow.  

“A deeper, wider Panama Canal with its two new flights of triple locks will double existing canal capacity and allow transit for vessels with three times the cargo when the upgraded passageway opens for business in early 2015,” says a report in the Washington Post. “So important is the race to be ready for the more voluminous ships that the Port Authority of New York and New Jersey is spending $1 billion to raise the Bayonne Bridge to let the taller vessels pass through.” It adds that US ports may spend up to $8 billion a year to modernise.

It is not just port infrastructure that is being revamped. With the demand for double stacked trains set to spike in the US, in the pipeline are projects such as a $90 million rail transfer facility at Baltimore. Also on the anvil, a $180 million dredging project at Miami. Outside the US, countries in South America are racing against time to modernise their ports to be able to service the new, larger ships. Amongst them are the Jamaica, Brazil, Colombia, Chile and Peru.

The exact outcome and the flow of supply chains are difficult to predict, as nobody is sure how things will pan out. "This is going to take several years to sort out as the shipping industry experiments with new routes and hubs, but it is a very big deal, and there will be some winners and losers," says consultant economist Paul Bingham. Many ports in the region, however, are going full steam ahead, expecting a significant increase in bulk fertilizer, grain and containerised cargoes. No doubt ripples will be felt across the world if trade readjusts.

“Experts stress that the global shipping industry seeks a ruthless, penny-pinching efficiency, and routes and cargo flows will evolve,” concludes the Washington Post, referring to shipping in the post-Canal expansion era.

.

.

US Gulf Ports gear up for 2014 Panama Canal expansion

“When it gets good again, it's really going to get good."

The United States Gulf Coast has started gearing up for the Panama Canal expansion project slated to complete in 2014. Proposed port expansion projects in the Gulf of Mexico total over $1 billion, media reports say. The Gulf ports hope that they will get a much larger share of the boxship pie as the US economy recovers and larger container ships call ports in the East Coast directly from Asia instead of transiting containers via West Coast ports.

About five percent of global cargo passes through the Panama Canal today. The $5.25 billion Panama Canal expansion project will allow the largest container ships to cut through to the eastern side of North America. Analysts say this may be a game changer; US West Coast ports will no longer enjoy a monopoly on big boxship calls.

Called ‘The Third Set of Locks Project’, the expansion of the Panama Canal will double the canal's capacity and allow more traffic. Two lock complexes, one each on the Atlantic and Pacific sides, will be constructed. New access channels, dredging and widening of existing channels will create a new lane of traffic along the Canal. The new locks will be 426.72 m long, 54.86 m wide and 18.29 m deep. They will connect to the existing channel system through new navigational channels and use rolling gates instead of the miter gates now in use. They will also use tugboats instead of locomotives to position vessels. The canal is limited at present to container vessels with about 5,000 TEUs capacity; post 2014, the Panama Canal will be able to accommodate behemoths that can carry more than 14,000 TEUs.

Although some US Gulf Port officials admit that pumping in money into port development is risky, they say that delaying investment in expansion could cost some US ports dearly. "There are some ports throughout North America that have said, 'Let's wait and see how long term this economic environment is going to last,'" says Don Allee, chief executive of the Mississippi State Port Authority at Gulfport. "But if a port decides to wait, it could be a costly decision."

Many are not willing to wait. The Port of New Orleans plans to pump in $237 million for expansion of its container terminal. Mobile will spend $75 million on a new facility and a turning basin to manoeuvre bigger ships; the port believes that the Gulf Coast will eventually become a better alternative to the West Coast, despite the additional 4,500 miles ships from Asia have to travel to reach the Gulf of Mexico. "Instead of bringing a container into Long Beach, and dragging it by rail all the way to Memphis, they'll be able to bring it into Mobile, then send it to Memphis,” says Head Jimmy Lyons.

Gulfport is spending $570 million in federal funds to elevate the port to 25 feet above sea level. Tampa is expanding berths and stacking areas, buying two cranes at a cost of $17 million. Tampa's new container terminal hopes to attract freight that would otherwise have to be brought by rail from West Coast ports to Atlanta or St. Louis and put on trucks before coming to Florida, said Richard Wainio, the port's CEO.

Some experts are uncomfortable with the money being spent on expansion of the Gulf ports. Economist Marc Levinson says that there are many post recession factors that could affect shipping negatively. Some of these are known: congestion in the US freight system, new environmental laws and the fact that post recession economics is still murky. In addition, some point out, Gulf ports do not have deep channels, and transfer of containers into smaller ships will cost money. However, many ports believe that the time to expand is now. As Gary LaGrance, executive director of the Port of New Orleans says, “When it gets good again, it's really going to get good.
.

.