Florida Ports Partner with Mexican Ports to Expand Global Opportunities
The Florida Chamber of Commerce today attended a Memorandum of Understanding (MOU) signing between Florida Ports and Mexican Ports – an effort that will further strengthen Florida’s competitive edge in the global economy by expanding trade opportunities between Florida and Mexico.
The signing included representatives from: PortMiami, Port Everglades, Port Manatee, Port Panama City, Port Pensacola, Port Tampa Bay, Florida Ports Council, the Consul General of Mexico in Florida as well as Bill Johnson, President and CEO of Enterprise Florida, and Alan Becker, Vice Chair of Enterprise Florida.
The signing took place in Mexico City on the first day of the Florida Chamber’s multi-day economic development trade mission to Mexico. Taking place in coordination with Enterprise Florida, Team Florida also met today with the Governor of the state of Yucatan to discuss international trade partnership opportunities.
Mexico is currently the third largest trading partner for the United States and ranks 10th among Florida’s trading partners, with more than $1.6 billion exported to Mexico in 2015. As such, Mexico provides tremendous growth opportunities for Florida businesses.
Join us for a Global Florida: Trade Topics and Trends webinar on Tuesday, June 7, 2016 at 3:00 p.m. as we discuss trade and logistics in anticipation of the Panama Canal Expansion opening on June 26.
The New Suez Canal
With 90 percent of the world’s trade moving by sea, the expanded Suez Canal will be a game changer.
- $8 billion, 44.7 mile extension to the Suez Canal will for the first time allow two-way traffic on the canal
- The new channel allows for a reduction in transit times from 18 to 11 hours
- Provides increased capacity for vessels with drafts over 45 feet (prior to the opening of the new channel, only eight vessels with drafts greater than 45 feet could be accommodated on the canal at any one time)
- The extension to the canal has seen 72 kilometers (44.7 miles) of new canal created, parallel to the current channel. The projected included 35 kilometers (21.7 miles)of dry digging and 37 kilometers (23 miles) of deepening
- The average size of ships on the Far East-U.S. East Coast route via the Suez Canal has increased by 73 percent since 2005 to 7,800 twenty-foot-equivalent units, while vessels on the same trade via the Panama Canal have grown by only 12 percent in capacity to 4,600 TEUs due to size restrictions.
What Does This Mean for the East Coast and Florida?
The Suez Canal has benefited from delays to the Panama Canal expansion as a number of carriers with larger ships in excess of 8,000 TEU ships, have taken advantage of the larger capacities the Suez Canal and have switched to this route. For a brief period during the U.S. West Coast ports disruption, the ratio of Asia-U.S. East Coast through the Suez surpassed those via the Panama Canal. That ratio is now slightly back in Panama’s favor as carriers are preparing for the opening of an expanded Panama Canal.
The Asia-U.S. East Coast route is undergoing a period of dramatic changes based on strong eastbound demand, Beneficial Cargo Owners (BCOs) lack of confidence in West Coast ports, a changed shipping alliance structure and new services have helped boost the Suez route. Drewry, a specialist research and advisory organization for the maritime sector, estimates that extent of cargo shift from the west to east coasts was at 375,000 TEUs between January and June and shows no sign of reducing. U.S. east coast ports have proven to be able to absorb this additional volume with minor disruptions.
The expanded Suez Canal and look forward to continuing to increase its service to the U.S. East coast market, but the degree to which it will increase service will depend on macro events such as how competitive it will remain against an open and expanded Panama Canal in April, Chinese export growth and South East Asian export growth to name a few.
A Tale of Two Canals
The opening of these two expanded Canals within a year of each other will deepen the rivalry between the two, particularly for services connecting Asia with the U.S. East Coast, which is now intensified in light of West Coast – East Coast cargo shift. This is the route where the two canals are in in direct competition with each other.
The new expanded Panama locks, which are due to open in April 2016, will further the rivalry as trade may shift back in favor of an expanded Panama Canal. The Panama Canal’s decision to temporarily reduce its draft from September 8 due to the draught caused by El Nino is not expected to have any significant impact on Far East-U.S. East Coast services, as it will affect less than 20 percent of the transits.
The average size of ships on the Far East-U.S. East Coast route via the Suez Canal has increased by 73 percent since 2005 to 7,800 twenty-foot-equivalent units, while vessels on the same trade via the Panama Canal have only increased by 12 percent in capacity to 4,600 TEUs due to size restrictions.
The opening of the new Panama locks will allow carriers to transit larger ships through the Panama Canal which will position it to recapture some market share lost the Suez Canal since 2008.
The Panama Canal’s share of the Far East-U.S. East Coast trade has decreased from approximately 90 percent before 2008 to a low of 48 percent in 2014 before recovering to 51 percent currently as a result of the recent launch of five new shipping services.
The Panama Canal’s share is expected to increase to over 70 percent by the end of 2016 as most of the Suez market share from China will likely return to the shorter Panama Canal route. Trade from South East Asia is expected to preserve the Suez Canal route as that is the shorter route to the U.S. East Coast.
What Does This Mean for Florida?
The West Coast-East Coast cargo shift occurred earlier than anticipated due to the west coast port disruptions and delays in the opening of an expanded Panama Canal. The Suez Canal has grown in importance to the U.S. East Coast as manufacturing shifts from China to South East Asia have boosted trade to the U.S. via this shorter route. Florida ports have captured some of this shift but opportunities remain to capture more. An expanded Panama Canal will rebalance Asian trade bound for the East Coast in its favor. Florida will have the first U.S. port of entry at 50 ft depth to receive the larger ships by the time the Panama Canal opens. Our ability to capture this trade and demonstrate the strength of our connectivity due to our intermodal investments to increase capacity and connectivity to the larger U.S. market will be crucial to this effort.
Florida ports have experienced cargo growth since the West Coast Ports shut down, as shown in the below news articles:
- Containerized cargo shipments through PortMiami increased 12 percent during the first six months of fiscal 2015.
- Port Everglades’ containerized cargo up 8 percent during half-year
- Diversion from the West Coast Ports drove some of the 20 percent year-over-year gain in Asian traffic that Jaxport saw last year
The above are just a few recent headlines. In order for Florida to continue to remain competitive, continued investment in ports, transportation and logistical infrastructure is key for Florida to remain competitive.
THERE ARE SEVERAL WAYS TO GET INVOLVED:
- Join our legislative “Fly-In” in Washington, D.C. on September 9-10 and lend your voice to our advocacy efforts at the Federal level for these strategic investments in Florida’s future.
- Register today and share your voice with Florida’s transportation infrastructure leaders at the Florida Chamber’s Transportation Summit in December.
- Download and share the Florida Chamber Foundation’s most recent Trade and Logistics study.
Did You Know Florida Exports $1.1 Billion in Goods to Panama?
Did You Know?
From 2008 to 2010, $1.1 billion in Florida goods were exported to Panama? In addition, Florida is home to more than 60,000 exporting companies, meaning one out of every five of the nation’s exporters are located in Florida
The Florida Chamber of Commerce is currently visiting business leaders in Panama to strengthen our trade relationship and further drive our state to becoming the global hub for trade to and from the U.S.
Joined by Florida Secretary of Commerce Gray Swoope, Florida Department of Transportation Secretary Ananth Prasad, and several Florida Chamber partners, we are actively advocating to become a global leader in international trade.
Representatives from the Florida Chamber and Enterprise Florida tour Gatún Locks at the Panama Canal.
Pictured from left-to-right: Florida Chamber Executive V.P. David Hart, Enterprise Florida V.P. of Trade Development Services Ivan Barrios, Enterprise Florida Senior V.P. of International Trade and Development Manny Mencia, Florida Chamber Director of Global Outreach Alice Ancona and Florida Secretary of Commerce and Enterprise Florida President and CEO Gray Swoope.
With the expansion of the Panama Canal and the Free Trade Agreement, Panama presents Florida companies with tremendous opportunities. Post-Panamax vessels are nearly three times the size as current vessels being used. Florida is poised to have the first port south of Virginia, PortMiami, which can receive the post-Panamax ships that will be coming from Asia through the Canal. Florida’s gateways are better prepared at being able to facilitate the trade relationship between Florida and Panama.
Florida’s 15 deep-water seaports are well-positioned to lead the way to attract new international trade and commerce. Thanks to unprecedented support from the Florida Legislature, our ports can boast state-of-the-art infrastructure investments and increased connectivity from strategic projects such as on-dock rail and intermodal container transfer facilities. These new opportunities are outlined in the Florida Chamber Foundation’s Florida Trade & Logistics 2.0 Study, which offers recommendations that will help fuel Florida’s competitive growth.
But realizing our state’s global potential requires vision.
“As the global marketplace doubles in size over the next 20 years, we ignore the importance of international trade at our own demise,” said Doug Davidson, Market Executive at Bank of America Merrill Lynch and Chair of the Florida Chamber’s Trade & Logistics Institute. “We have to continue to shed light on the opportunities, and with leadership from the business community, policy makers, and organizations like the Florida Chamber Foundation through their Florida Trade & Logistics 2.0 Study, we can secure tens of thousands of high-wage jobs and guarantee that our state is globally competitive in 2030 and beyond.”
Team Florida Prepares For Economic Mission Trip to Panama
Global trade is now, more than ever, at the forefront of Florida’s recovering economy. we cannot deny that global trade is big business in Florida. Global trade means high-wage jobs and economic prosperity for Florida. The Sunshine State is home to more than 60,000 firms dedicated to bringing their goods and services to consumers around the globe. International business and foreign direct investment accounts for approximately 17 percent of Florida’s economic activity, and directly supports more than one million Florida jobs.
Solidifying Florida’s position as a global hub for trade is a key strategic initiative of the Florida Chamber of Commerce. Florida has long been an important consumer market and a gateway for trade between the United States and Latin American and Caribbean nations.
With the expansion of the Panama Canal and the Free Trade Agreement, Panama presents Florida companies tremendous opportunities. The Florida Chamber Foundation’s original Trade and Logistics Study (2010), identified the Panama Canal expansion as a seminal moment and called for our state to take advantage of this once-in-a-generation opportunity to invest in ports and infrastructure. Governor Rick Scott and the legislature stepped-up with significant investments, and now Florida is poised to have the first port south of Virginia, PortMiami, that can receive the post-Panamax ships that will be coming from Asia through the Canal.
Post-Panamax vessels are nearly three times the size as current vessels being used. Florida’s gateways are better prepared at being able to facilitate the trade relationship between Florida and Panama.
Currently, Panama is one of the strongest economies in Latin America. The country boasts the second fastest growing GDP in the region, expected to reach a 6 percent growth in 2015. Total merchandise trade between Florida and Panama totaled $2.3 billion in 2013 and is expected to grow.
For these reasons, the Florida Chamber of Commerce- lead by Florida Secretary of Commerce Gray Swoope- will be joining partners Port Tampa Bay, Gulf Power, Keiser University, Port Miami, Tampa Hillsborough EDC, Bank of America, St Joe Company, Port Everglades, Tampa International Airport Florida Department of Transportation Secretary Ananth Prasad, and Doug Wheeler of Florida Ports Council on an Export Sales Mission to Panama October 5-7.
The widening of the Panama Canal, together with the growth in Latin American and Caribbean markets, will realign global trade lanes and increase flows through this region in the coming decades.
Today the state of Florida is a global hub for trade. It took decades of innovative efforts, resourcefulness and entrepreneurship from the private sector, strategic investments from the public sector and capitalizing on opportunities like free trade agreements and the expansion of the Panama Canal to claim this title.
Florida’s international relationships are invaluable to our economy. By working to create opportunities with nations like Panama, and fueling massive economic development projects like the Panama Canal expansion and the dredging of PortMiami, we can diversify our own economy and fuel long-term investments by global businesses. Everything we do, we do on a global scale.
Florida’s future prosperity and our growth as a global hub for international trade are inextricably linked. In order for Florida to continue on its mission to be a global hub for trade, the business community must unite and policymakers must remain committed to Florida’s trade future. We hope you will save the date for International Days 2015, April 7-9. Contact firstname.lastname@example.org for more information.