Growing uncertainty about future shipping patterns when Panama Canal expansion is completed

I’ve been spending a lot of time over the last couple of years reading about TEUs, about hub-and-spoke models for cargo transport, about tidal delays, about canal tolls, and on and on and on

With the widened Panama Canal likely to open the way for much larger ships around 2015, it’s clear that most East Coast U.S. ports will not even be able to accommodate some very large ships. And it’s becoming less clear by the day precisely what will happen from there.

The Corps of Engineers’ economic analysis of the Savannah Harbor Expansion Project, which would deepen the Savannah River to 47′ from 42′, found that the amount of cargo coming into the port would increase by the same rate for the next couple of decades no matter whether the river was deepened or not. The deeper channel would result in some dramatic cost savings, however — those savings would boost the economy in a variety of ways.

But many simply don’t believe that the Savannah port would see as much cargo if the river isn’t dredged. If those people are right, then it seems increasingly likely that the approved 47′ depth will be nowhere near deep enough for the Georgia ports to compete with deeper channels that are closer to the open ocean.

If you’re into wonky stuff like this, I highly recommend this post at Dredging – Key Factor for US Container Port Call Strategies. From that piece:

Where the maritime community seems to have reached a fair consensus is on the size of the ships that will be deployed on All-Water Asia/US East Coast (USEC) through Panama (AWP) services. Once the widened Canal opens, ship sizes are anticipated to increase quickly from the current average 4,500 TEU up to around 8,000 TEU – similar to the size of ships presently deployed on All-Water Suez (AWS) services. There is also general agreement that despite the considerable increase in ship size and the respective reduction in shipping costs, the AWP route is likely to see only a modest increase in market share relative to its main rivals, the AWS and the US West Coast (USWC) landbridge.

Where opinions start to diverge more sharply is on the impact of Canal expansion on carriers’ North American service patterns and, especially, whether the present approach based mainly on direct port calls will be replaced, at least in part, by a hub and spoke system. […]

But, the locks of the expanded Panama Canal are designed for New-Panamax (NPX) ships, which are forecast to initially have capacity of 13,500 TEU and eventually 15,000 TEU. Following worldwide trends, it is quite likely that NPX will be deployed on AWP as well as on AWS services within 5 years or so following the expansion. Interestingly, this possibility was considered unlikely in channel-deepening studies undertaken by the US Army Corps of Engineers, the Federal agency in charge of US ports’ channels. Accordingly, the design ship for these channels is just 8,000 TEU! The Corps also dismissed the possibility that in the longer term, ships bigger than NPX, such as the 18,000 TEU Maersk Triple-Es recently deployed on the Asia-Europe trade, could be used on AWS services; and that in the even longer future ship size may reach the 28,000 TEU Malacca-Max (MLX).

It is not unfeasible that that introduction of ships too large for USEC ports’ newly-dredged channels will trigger a change in the service pattern of both AWP and AWS to hub and spoke. In this case, USEC ports would find themselves served by feeder services based on foreign hubs in the Caribbean region for AWP and Canada for AWS. This change in service pattern could be avoided by further deepening of USEC ports’ channels. However, considering the arduous process of the recent deepening projects, the prospects for this happening look pretty dim.