Impact of bigger canal yet to be scene at ports
Views on the Panama Canal expansion’s impact on container shipping patterns tend to vary according to geography, experts say.
Ports along the East Coast of the U.S., which stand to gain from the expansion, are clamoring to take advantage of it, said Ken Eriksen, senior vice president of transportation for Informa Economics.
Ports on the West Coast, which stand to lose business if more containers move through the canal, say the hype over the expansion is overblown, he said.
The truth probably lies in the middle — all U.S ports will be needed to handle growing trade, so a dramatic shift away from the West Coast isn’t likely, Eriksen said. “It’s not going to be a switch we turn on overnight.”
Logistics experts generally fall into two camps: They either believe the expansion’s effects will be muted, or that container shipments from Asia directly to the East Coast will increase, said John Vickerman, a consultant with Vickerman & Associates.
Some believe that the move to bypass West Coast ports is already reflected in global trade, with more ships traveling through the Panama Canal or the Suez Canal in Egypt, which offers a similiar distance between Asia and the East Coast, he said.
In this view, the Panama Canal expansion has already been accounted for and won’t have a significant impact, Vickerman said.
Other experts believe that congestion in West Coast ports and improvements to facilities along the East Coast will drive more container ships to travel from Asia entirely by sea, avoiding the rail bridge across the U.S., he said.
Even if the East Coast does gain the upper hand from the expansion, West Coast ports are unlikely to be marginalized — there will just be more competition, Vickerman said.
“The shipper will move the product from origin to destination at the least cost,” he said.
Jean-Paul Rodrigue, a professor of transport geography at Hofstra University, said the ports in Los Angeles and Long Beach likely face the biggest threat from the expansion.
“The more north you move, the lesser the impact,” he said.
However, it shouldn’t be forgotten that California is a major consumption zone of Asian products, Rodrigue said. “You have a captive market. That’s not going to change.”
East Coast ports may also be overestimating how many large container ships will travel there directly from Asia, he said. Big ships may be used primarily for long distance routes, with cargo then trans-loaded in the Caribbean onto smaller ships with routes to the East Coast.