Americas News
Expanded Panama Canal Could Mean a 10% Shift in East Asia Box Traffic from U.S. West to East Coast
The Boston Consulting Group (BCG) says that the completion of the Panama Canal expansion could mean as much as 10 percent of East Asia container traffic currently going to the U.S. West Coast would switch to East Coast ports by 2020.
"Rerouting that volume is equivalent to building a port roughly double the size of the ports in Savannah and Charleston," said BCG.
The news comes as a result of research conducted by BCG and C.H. Robinson, said to be the most comprehensive public study of how the canal's expansion is to alter the flow of cargo.
"The $5 billion expansion will permanently alter the competitive balance between ports on the East and West coasts," said BCG.
"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."
BCG says once larger box ships are able to transit the canal, it will be come more cost effective, but slower, to ship to the East Coast.
"The canal's expansion will permit big, efficient 'post-Panamax' container ships - which have two to three times the capacity of current vessels - to reach the East Coast," stated BCG.
"Those 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," added BCG.
In 2014, a reported 35 percent of container traffic arrived to the U.S. East Coast ports from East Asia, which BCG says current growth trends would push that share to 40 percent by 2020 without the canal's expansion, and 50 percent with the expansion.
The report is also said to have examined four additional scenarios to help define the boundaries of how much container traffic will swing geographically under different conditions for energy prices, canal tolls, infrastructure investments, and economic growth.
"High energy prices, for example, encourage fuel-efficient water travel and favour East Coast ports," said BCG.
Overall, BCG says the the Los Angeles–Long Beach complex will receive less traffic than if the expansion were not to occur, experiencing growth at an average rate of 5 to 10 percent per year through 2020.
Last week a survey found that almost half of participating shippers indicated plans to shift cargo from U.S. West Coast ports to East Coast ports because of congestion earlier in the year caused by an extended labour dispute.
