The Promise of the Panama Canal
By: Tracey Lowe
According to Francisco J. Miguez, Executive Vice President for Finance and Administration at the Panama Canal Authority, the Panama Canal locks –now an estimated 96 percent complete— are expected to be ready early in the second half of 2016.
The Impact to Florida: Will There be a Shift?
The impact of the Panama Canal expansion project on U.S. East Coast and West Coast ports is still to be determined, as there are many factors that impact international trade flows.
According to Miguez, container volume from Northeast Asia to the U.S. East Coast now is practically equally divided between the Panama Canal, Suez Canal and intermodal rail.
U.S. Commercial decisions generate two-thirds of the traffic which impact cargo routing such as transit times and costs. The transit time from North Asia to the East Coast is slightly shorter via the Panama Canal than through the Suez — so some of the cargo that comes from that area is expected to shift from the Suez to the Panama Canal.
Intermodal rail is also an important factor. If western railways seek to aggressively retain market share, they have the ability to reduce costs to retain business and remain competitive. What is also yet to be seen are the costs to transit the Panama Canal as well as how the Suez Canal adjusts tolls.
Reliability continues to remain an important factor. The labor issues at West Coast ports remain fresh in the minds of many retailers and the reputation of West Coast ports took a serious hit.
What This Means For Florida:
There are still too many factors to say with any certainty what will happen. The Florida Chamber Foundation’s first Trade and Logistics study appropriately issued a call to action: the Panama Canal is a once-in-a-lifetime opportunity to capture West Coast bound cargo. Florida has certainly headed the call and has made unprecedented investments to be ready. The multiple construction delays for the Panama Canal have favored our state, as has the West Coast port shut down.
Florida ports are in the race and our transportation networks stand ready to prove that we have capacity and are competitive and reliable. It will be a gradual shift, but over time, we stand to win.