Shippers See Panama Canal as Alternative to U.S. West Coast Ports

The Panama Canal expansion could provide a much needed complement to U.S. West Coast port capacity, suggests John Carver, executive vice president, Port, Airport and Global Infrastructure Services at Jones Lang LaSalle Real Estate Services. As the global economy recovers and volumes return to prior levels or grow even larger, the U.S. West Coast ports of Los Angeles and Long Beach could again face capacity constraints, he notes.

The greatly expanded Panama Canal will be capable of handling larger vessels with a deeper draft, a class of ship being called “Super Panamax.” Super Panamax ships coming from Asia and passing through the Panama Canal face draft limitations at some of the Caribbean and U.S. ports on the Atlantic side. That’s where a development Jones Lang LaSalle is working on comes in. The Panama Canal Colón Port at the Atlantic entrance to the Panama Canal will provide transshipment services to reach U.S. Gulf Coast and East Coast ports as well as some Caribbean and South American ports. In addition to the feeder services using smaller vessels to carry portions of the cargoes of the Super Panamax ships that will be offloaded there, those ships will have lightened their loads and decreased their draft requirements. This should give them greater access to U.S. and Caribbean ports.

The Colón Port terminal operation is being built on freehold land, a former U.S. Navy base that was in private hands since the U.S. turned over Canal operations to the Panama government and vacated the facility. The $687 million private sector project will be among the largest new maritime infrastructure developments to commence in Panama, says Carver. “The new port has been designed to complement the Panama Canal expansion project currently underway,” he continues. That project has a reported cost of $5.25 billion and is targeted for completion in 2014. The Panama Canal Colón Port is expected to accommodate a through-put capacity of 1 million twenty foot equivalent units (TEUs) in its initial phase, and a total of 1.6 million TEUs upon full completion in 2015.

Carver didn’t view the Canal expansion and terminal project at Colón Port as competition with the Ports of Los Angeles and Long Beach as much as he saw it as a complement. He fully expects those ports to exceed previous volumes and reach their capacity as the economy recovers and trade flows resume growth. U.S. East Coast and Gulf ports are expanding as well, he said, and ports like Jacksonville, Savannah, Norfolk and others are adding container capacity. Even ports that have not had significant container operations in the past are expanding that capability, he says, pointing to Mobile, Ala., as an example.

The Panama Canal includes the world’s second largest free trade zone, says Carver (Hong Kong is first). It is served by a rail company owned by the Kansas City Southern. The Port Colón project plans to add the rail connection and become part of the free trade zone. With most of the cargo coming off the ships that dock there being transshipped to other destinations, the initial terminal project will be fully utilized for transshipments. There is room for expansion, Carver points out, and that could include logistics and value-add services. One concept includes exhibit and merchandising space where goods can be displayed and demonstrated and trade fairs hosted.

This article originally appeared in the Logistics Today digital magazine. To read other articles from that issue, click here:

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