Increased Traffic from Expanded Panama Canal Will Be a "Major Challenge" for New York-New Jersey, Says BMI

Tuesday August 16, 2016

BMI Research (BMI) Monday said that the port of New York-New Jersey will face a "major challenge" in the short term in taking advantage of an increase in traffic that was long expected to result from the recently opened expanded Panama Canal.

As Ship & Bunker reported last year, the completion of the Panama Canal expansion was anticipated to result in as much as 10 percent of East Asia container traffic currently going to the U.S. West Coast to switch to U.S. East Coast ports by 2020.

"However, becoming able to handle this increase in trade volumes will be a major challenge for New York-New Jersey," said BMI, adding: "one of the major obstacles facing the port is the slow progress on a project to raise the Bayonne Bridge, which is not expected to be completed until late 2017."

The project, which is intended to enable the port of New York-New Jersey to accommodate the larger 14,000 TEU vessels that can now transit the Panama Canal, is said to have been faced with numerous delays and has caused large shipping companies, such as A.P. Moller–Maersk Group (Maersk) and Hapag-Lloyd AG (Hapag Lloyd), to defer changing their routing to the port as a result.

BMI says that the port will need to see an improvement in labour relations in order to ensure the ability to handle an increase in traffic throughput, noting that some labour issues remain unresolved, which contributes to congestion at port terminals - even if labour disruptions are small.

"Labour unrest is likely to continue as the port attempts greater automation, a process which is opposed by trade unions," said BMI.

The research firm also says that congestion on inland transportation routes in the New York-New Jersey area poses a significant risk of delays within the supply chain, further challenging the port's ability to accommodate traffic growth.

"It will be some time before more efficient unloading and dispatch of containers is developed by port authorities, and both congestion in the terminals themselves and on surrounding roads will likely increase in the short term," explained BMI.

Last year, 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.