Americas News
Migration of Asia-U.S. Traffic Hurts Panama Canal
The Panama Canal Authority expects the volume of goods moving through the canal to fall 2.4 percent this fiscal year as shipping firms switch their routes to use the Suez Canal, Reuters reports.
Jorge Quijano, the head of the authority, told Reuters the drop in traffic will reduce revenue from the canal by about $40 million a year.
"It's something we knew was going to happen," he said.
Container line APL recently announced a new Asia-U.S. service starting in May that will use the Suez to accommodate post-Panamax vessels, although it will also use the Panama Canal for smaller vessels, Latin American news site BNamericas reported.
"In the past few years, the transpacific east coast trade has seen a general migration of services from Panama to Suez," said Kenneth O'Brien, senior vice president for trans-Pacific trade at APL.
"At current rates, the Panama Canal transit is non-remunerative, and while it does present a shorter voyage for Asia-US east coast trade, the Suez Canal allows carriers to deploy larger ships that yield lower slot costs,"
Maersk Line announced in March that it was switching its Asia-U.S. route from the Panama to the Suez so it can use larger, more fuel-efficient ships.
Shipping lines CMA-CGM and MSC both also told BNamericas they have switched at least some Asia-US East Coast routes to the Suez.
An expansion project currently underway which will allow the Canal to handle larger ships.
It is currently expected to open in mid-2015, six months later than originally planned.
