Panama Canal Expansion Impact

The Panama Canal Expansion project will double the capacity of the Panama Canal and is on schedule to be completed by July 1, 2014.  The expansion will allow more traffic and bigger ships to pass by creating a new lane with a new set of locks.  The project is expected to transform Panama into a First World country, creating enough jobs and revenue to decrease poverty from around 30% down to 8%.  Now the question is how is the canal’s success going to affect East coast and West coast ports in the US?

Ship traffic now is mostly going to the West coast ports.  The shipments are delivered in the West, and then sent by truck or rail to the East where it is needed.  When the Panama Canal is expanded, shippers may start to favor the East coast ports where prices are lower.  Plus, it would also save money on transporting goods once they’ve left the port.  The extra distance that they’ll have to travel wouldn’t really be that much further, so West coast ports are worried about the impact that this will have on their jobs and communities.

“The Panama Canal expansion is one of those issues that everybody talks about, yet nobody is clear on the implications for the Southern California ports,” said Marianne Venieris, executive director for the CSULB Center for International Trade and Transportation (CITT).  ”When the expanded canal opens, importers will have to be aware of other trends that are emerging that could threaten cargo growth through the ports of Los Angeles and Long Beach.  On the other hand, some of these trends could end up favoring west coast ports.”

One of the things that West coast ports will be happy about is the reduced traffic.  They are currently spending a lot of money on reducing pollution and they expect that the lowered number of ships will take care of a lot of that for them.

 Others are worried about reduced job availability and having to reduce their rates to compete.

The new Panama Canal will be able to handle bigger supertankers, which raises concerns for East coast ports.  They are making plans to excavate, making their passageways deeper (more than 48 feet) to accommodate these larger ships.  They may also have to spend a lot of money to raise their bridges high enough for the ships to pass.  Studies are being done by ports and ocean shipping companies to see what is necessary.  East coast ports may not have to deepen the passages as much as they originally thought, because the ocean freight supertankers will burn a lot of extra fuel getting there, and won’t ride as deep as they would coming into the West coast.

About the Author: Nelson Cabrera is the Business Development Manager of Lilly & Associates International, a transportaion and logistics company specializing in ocean freight and ocean shipping services. For more information, please visit http://www.shiplilly.com/.

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