Curiously, there’s no mention of the impending expansion of the Panama Canal in this week’s piece from Bloomberg, Container Lines Losing Price Battle As Costs Overwhelm: Freight.
But it’s hard for anyone here in Savannah — at least anyone who is serious about empirical data that might impact projections for Georgia ports business with or without a deeper channel — to read the piece and not wonder about unforeseen consequences.
From the article:
The worldâ€™s container lines canâ€™t raise freight rates fast enough to cover soaring fuel prices as persistent overcapacity works against the industry.
Hapag-Lloyd AG, Europeâ€™s fourth-biggest container company, said Aug. 14 that further increases are â€œcrucialâ€ if itâ€™s to offset rising bunker costs — the price of fuel used on ships — and generate an operating profit this year. Still, a lack of demand forced the Hamburg-based carrier to delay a rate increase this month on routes between east Asia and northern Europe and cut a planned peak-season charge by more than half.[. . .]
â€œWeak fundamentals are making successful rate-restoration programs harder to implement,â€ Richard Ward, an analyst with ICAP, said in an e-mailed reply to questions. â€œCarriers are facing a struggling battle, as cargo volumes will drop off and capacity wonâ€™t be adjusted quickly enough.â€
With so many East Coast ports rushing headlong to expand capacity and with such uncertainties in global trade, I’m left wondering if the complex economic analysis of the Savannah Harbor Expansion Project by the Corps of Engineers adequately took into account various scenarios that might have seemed unlikely a few years ago.