The Panama Canal Expansion
Global trade patterns are expected to dramatically shift due to the recently expanded Panama Canal. The new set of locks, which opened in June, nearly triple the capacity of ships transiting the canal, from those able to carry 5,000 containers to up to 14,000 containers.
Traditionally, West Coast ports have handled about two-thirds of container cargo, which is then moved onto rail and trucks headed east across the U.S. Thanks to the expansion, mega ships carrying finished goods and raw materials from Asia can now take an all-water route past the West Coast ports directly to East Coast ports. This, coupled with lingering labor issues at West Coast ports, have experts predicting a major shift in trade from West to East Coast ports.
In fact, research shows that East Coast container traffic arrivals from East Asia have already been increasing. Over the period 2010 to 2014, market share grew from 32 percent to 35 percent. According to Los Angeles-based commercial real estate and investment company CBRE Group’s April 2016 North American Seaports and Logistics index, last year’s West Coast ports labor dispute was a contributing factor in sending more business to the Port of New York & New Jersey, the Port of Savannah, as well as the Port of Houston.
Additionally, by 2020, up to 10 percent of container traffic bound for the U.S. from East Asia could be diverted to the East Coast ports, according to a research project undertaken by The Boston Consulting Group (BCG) and C.H. Robinson.
Brian Taylor, CEO of the Jacksonville Port Authority (JAXPORT) says, “I firmly believe the trend will continue and that we will see more freight coming to the East Coast ports now, especially since the economics are going to be better for the carriers using larger ships through the Panama Canal.”