2015 Center for Transportation Studies Research Conference, University of Minnesota The Panama Canal Expansion: Myths and Realities for the North American Economy Jean-Paul Rodrigue Professor, Dept. of Global Studies & Geography, Hofstra University, New York, USA
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Potential Impacts of Transoceanic Passages and Canals Operational Impacts Improved capacity, reliability and transit time. Lower unit costs. Substitution Impacts Cargo diversion. Changes in routing and transshipment. Induced Impacts New and expanded trade relations. Development of transshipment hubs and logistics zones.
The Panama Canal Expansion: Myths vs Realities MYTHS Exaggerating the benefits More port traffic (each port capturing 100% of the growth) Creates trade (boost for exports) Larger ships calling the East Coast (dredging urgent ) REALITIES Underestimating the costs Economies of scale (lower shipping costs; will they be passed on?) Changing trade relations (mostly in Latin America) New shipping routes (likely more transshipment)
Main Routing Alternatives between the Pacific and Atlantic
Tonnage and Number of Transits, Panama Canal, 1915-2014 18,000 350 Transits 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 300 250 200 150 100 50 Millions of Panama Canal Tons 0 1915 1919 1923 1927 1931 1935 1939 1943 1947 1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 0 Transits Tonnage
Main Routing Alternatives between East Asia and Northern Europe
Tonnage and Number of Transits, Suez Canal, 1975-2014 25,000 1200 20,000 1000 Transits 15,000 10,000 800 600 400 Millions of tons 5,000 200 0 0 Transits Net Tonnage
Global Exports and Container Throughput, 1980-2013 700 R² = 0.98 600 Container Throughput (in millions of TEU) 500 400 300 200 1980-1996 1997-2007 2009 2008 2010-100 0 0 5 10 15 20 Merchandise Exports in Current $US Trillions
Global Trade Stalling and Diverging 180.0 160.0 140.0 World Trade Imports (Advanced Economies) Exports (Emerging Economies) Latin America (Exports) CPB World Trade Index by Volume, 1991-2014 (2005=100) 120.0 100.0 80.0 60.0 The main driver has lost momentum Regionalization of trade? 40.0 20.0 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
The North American East and West Coasts Dominate
but Growth has Shifted to South America / The Caribbean
Monthly Container Traffic at the Port of Los Angeles, 1995-2014 450,000 400,000 350,000 Out Loaded In Loaded In Empty Out Empty 300,000 250,000 200,000 150,000 100,000 50,000 0 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14
Monthly Container Traffic at the Port of New York, 2005-2014 300,000 250,000 200,000 150,000 100,000 50,000 0 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 In loaded In empty Out loaded Out empty
Main Trade Routes Using the Panama Canal, 2012 Asia 84.3 M tons US West Coast WCCA US East Coast 9.7 M tons 14.4 M tons Europe 12.2 M tons 27.6 M tons WCSA WCCA: West Coast Central America WCSA: West Coast South America Source: Data from Panama Canal Authority.
Shipping Rate from Shanghai to Selected North American Ports for a 40 Foot Container, Mid 2010 $2,300 $2,110 Vancouver Montreal $4,040 $3,950 New York $2,620 $1,400 Los Angeles 62% 46% $3,700 $1,830 Houston $3,510 $2,560 $1,300 $2,100 Inbound Outbound
The North-American Container Port System and its Multi-Port Gateway Regions
Evolution of Containerships: The New Panamax A Early Containerships (1956-) 500 800 TEU Fully Cellular (1970-) 1,000 2,500 TEU 137x17x9 meters (LOA Beam Draft) 200x20x9 215x20x10 6 containers across 4 containers high on deck 4 containers high below deck 4 4 5 4 6 8 10 B Panamax (1980-) 3,000 3,400 TEU Panamax Max (1985-) 3,400 4,500 TEU 290x32x12.5 250x32x12.5 6 5 8 6 13 13 C Post Panamax (1988-) 4,000 5,000 TEU Post Panamax Plus (2000-) 6,000 8,000 TEU 285x40x13 300x43x14.5 9 6 9 5 15 17 D New Panamax (2014-) 12,500 TEU 366x49x15.2 10 6 20 E Post New Panamax (2006-) 15,000 TEU Triple E (2013-) 18,000 TEU 397x56x15.5 ; 22 10 8 (not shown) 400x59x15.5 10 8 23
Main East and Gulf Coasts Port Infrastructure Developments Associated with the Expansion of the Panama Canal Channel Clearance Most directly related to the Panama expansion. The 50 feet magic number. Port Infrastructure Dealing with a new operational environment. Super-post-Panamax cranes, improved piers, and yard equipment. Hinterland access Indirectly linked with the expansion. Setting of intermodal corridors and inland ports.
Channel Depth at Major North American Container Ports
Channel Depth at Selected North American Ports (in feet) Philadelphia Jacksonville Miami Savannah Oakland Houston New Orleans Charleston New York Baltimore Hampton Roads Seattle Tacoma Vancouver Los Angeles / Long Beach Halifax Prince Rupert New Panamax Panamax 0 10 20 30 40 50 60 Current Under way Planned
Baltic Dry Index and Container Shipping Rates, 2000-2014 (2000=100) 900 800 700 600 500 400 300 200 100 0 Baltic Dry Index Container Shipping Rates
Average TEU per Port Call by Containership Size along a Maritime Range 12,000 10,000 TEUs per Port Call 8,000 6,000 4,000 First post-expansion phase Second post-expansion phase 2,000 0 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Containership Capacity (TEUs) Minimum Required 3 Calls 4 Calls 5 Calls
Impacts of Larger Containership Calls on Port Hinterland Traffic Panamax (4,500 TEU) Post Panamax (8,000 TEU) 13 containers wide 17 containers wide 290x32x12.5 meters 300x43x14.5 meters 1,700 TEU per port call 3,500 TEU per port call 1.7 hectares of stacking 3.5 hectares of stacking 850 Trucks (2 TEU each) 14 km 1750 Trucks (2 TEU each) 28.8 km 4.25 Trains (400 TEU each) 8.75 Trains (400 TEU each) 8.5 km 17.5 km
Central Atlantic North Atlantic South Atlantic / Gulf Conventional Direct Central Atlantic North Atlantic Central Atlantic North Atlantic South Atlantic / Gulf South Atlantic / Gulf Caribbean Transshipment Triangle Transshipment Circum-Equatorial
AMAX Round-the-World Route, 2005-2007
Proposed Routes for the Nicaragua Canal Constructions costs? Political risks? Market potential? Competition?
Conclusion: Pragmatism Will Prevail West Coast too pessimistic and East Coast too optimistic Labor issues on the West Coast remains an important factor. Changing trade structure in Latin America; declining importance of the East Coast. Growing importance of the Suez Canal. What does this means for the region? Limited significant direct impacts; NOT MUCH. Slightly lower container transportation costs. Reinforcement of hinterland services (corridors and inland terminals). More shipping options. Neglect of the impacts of disadvantages of scale