Panama Canal Expansion

The much awaited Panama Canal expansion is set to be operational in the final quarter of next year. This $5.25 billion dollar investment has been predicted to go one of two ways. It is most likely to boost the East and Gulf coast container trade, however, there is speculation surrounding this as certain reports have predicted that the Panama Canal Authorities will be disappointed with the trading figures. Moreover, the opening of the larger docks is already increasing exports. This is due to the coal and grain cargo that is travelling from Asia to the US Gulf ports of LNG.

Panama-Canal-Expansion
The construction process is well underway but has been recently been set back due to faulty cement

It is no secret that the Panama Canal industry has suffered greatly due to the changes in the world’s shipping lanes,  losing its position to the Asian Suez Route. This has been a direct result of the shift in global sourcing patterns to South and South East Asia. The Chinese Industry is no longer the cheap production house that it once was. Increasing product standards, like those at Shanghai Metal Corporation are a testament to this, but by no means should anyone count China out. It will remain an important source for U.S. manufactured imports because of its modern port infrastructure and efficient logistics. Therefore, the adaption of doubling the canal space is an obvious attempt to resurrect some of the lost trading lines and will help to further the US – Chinese trade relationship.

Panama Canal May 2013

The evolution of the mega ships was the driving force behind this expansion. The average Panama carry is limited to around 5,000 TEU,s. Whereas this development is set to increase this towards 13,000 TEU’s. This would help to remove the price deficit that has developed between the Suez and Panama. For the average 4,8000 TEU ship from Hong Kong to New York, via Suez, the cost per TEU is $850. For the same ship to travel via Panama it rockets to $1,250.

Suez canal Q2 2013

“The new locks will be a game-changer,” said Oscar Bazan, the canal authority’s marketing manager. “Once the new lane is open, we expect to recapture some of the volumes that have shifted to Suez.” He said U.S. trade with Northeast China will continue to grow, even if trade with Southeast Asia shifts to the Suez route.

PANSUEZ_photo
the present day canal is unable to cope with the industries ever increasing ship size and TEU capacity

There are very positive  signs of private investment and development with Panama. It appears that many wealthy investors have put there faith into this project in providing the regeneration that Panama requires. Although spot rates on the two routes are set by the market, lower slot costs on the Suez route enable carriers to offer much more favorable annual contract rates, which are likely to come into play in next year’s trans-Pacific contracts. “Cargo will flow downhill to where cost is the lowest and service is the best,” John Vickerman, president of maritime and port consultant Vickerman & Associates, reminds us. However, the proposed plans for an alternative canal through Nicaragua will certainly pose as an economic threat.

 

Shanghai Metal Corporation currently provides a variety of new shipping containers that can be custom tailored based on customer requests. We hope that this article will encourage all to explore their own ideas for shipping container use.

If you already have an idea, but need shipping containers check out our current offerings, click here

To view metal and construction products as well as SMC company information check out our website: click here

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