The Panama Canal Authority is experiencing every company's dream-a steady influx of business with more than it can handle in the wings. Fueled by the rapid growth of Asian exports, the canal has to expand to remain viable. And when it does, it will ensure that the fleet of post-Panamax (PPX) ships, which grew 143 percent since 2002, can finally transit the canal-raising the threshold of trans-Pacific trade up a magnitude.
Today, ships carrying more than 4,000 TEUs generally are too big for the Canal's existing locks. In planning a new lane, with longer and wider locks and deeper channels, the Panama Canal Authority (ACP) expects to double cargo transiting capacity. With that capacity, say industry observers, should come reduced overall shipping costs and expanded shipping options after the new lane opens in 2014, in time for the canal's centennial.
Rodolfo Sabonge, vice president of research and market analysis for the Panama Canal Authority, suggests this all-water route may also reduce pollution, help distributors to locate distribution centers closer to the population, and boost the economies in states where those new facilities may be located.
U.S. carriers and businesses, while less ebullient, are optimistic.
A spokesman for Procter & Gamble Coffees, notes that although most of our coffees don't come through the canal, it could help with our Asian imports, namely coffee beans from Vietnam or Indonesia. As an alternative to landing at West Coast ports and being hauled to processing plants in New Orleans, Kansas City and Sherman, Texas, shipments could come into New Orleans directly. It's too far out, cautions Lars Atorf, to figure a cost/benefit analysis.
For Tokyo-based container ship operator Kawasaki Kisen Kaisha Ltd. (K Line), seven years isn't too far ahead to start planning. Last June, it launched a weekly container service linking Asia with the East Coast of South America, to meet fast-growing market demand, and as a prelude, say observers, to pushing northward up the Atlantic.
Another very large Asian shipping line, which asked to be unnamed, sees other benefits, too. It will let us get rid of uneconomical vessels, an executive notes. The company expects to take delivery on 5 PPX ships by about 2010. But, he adds, terminals, cranes, capacity and infrastructure all need improvement. Some ports will have to grow.
Port improvement is, in fact, a recurring theme when discussing the Panama Canal expansion. APL's Bob Sappio, senior Vice President, Transpacific Trade, says the new lane will allow economies of scale possible with PPX ships of 8,000 to 10,000 TEUs to be passed on only if the terminal infrastructure in the U.S. is capable of handing them. APL is hammering that message home at every opportunity. If the terminals are incapable of handling the volume, the benefits of the expanded canal will be less.
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