Panama Canal Update: Early Signs Show Positive Momentum

In July 2016, the Panama Canal officially opened its expanded locks and began allowing the 50-mile waterway to handle vessels roughly 2-1/2 times larger than it could previously accommodate. Since then, the expanded waterway has been setting new tonnage records and exceeding expectations.

According to the American Journal of Transportation’s  Expanded Panama Canal performance exceeds expectations, the Panama Canal has attracted 15 new liner services and welcomed an average of six Neopanamax daily transits (when forecasts originally anticipated two to three transits a day for its first year of operation).

“The impact of this strong performance has been reflected in other parts of the world as well, principally in the ports of the East Coast of the United States,” AJOT reports, “which are in various stages of deepening and expanding their channels to meet the growing number of Neopanamax vessels now transiting the Canal.”

More to Come

According to American Shipper, the Panama Canal saw 1,016 vessels pass through its locks in April. That number represents a 7 percent increase over April 2016.  By comparison, a total of 949 oceangoing vessels transited the canal in April 2016, prior to its expansion. Soon, the expanded canal will receive its first 13,000-plus TEU container ship – part of one of the newly re-routed liner services to the Canal – which will call in the ports of Virginia, Charleston, and Savannah.

At that time, maximum vessel size in the canal could accommodate roughly 5,000 TEUs (107-foot-beam), compared with 14,000 TEUs today, Elizabeth Landrum writes in Panama Canal transits up 7% in April. And while 162 of the 1,016 vessels transiting the canal were of the larger “neopanamax” size in April, vessels of 5,000 TEUs and under still account for the majority of the Panama Canal transits.

Numerous East Coast ports are seeing activity increases due to the Panama Canal expansion. Mediterranean Shipping Co. (MSC), for example, recently began a weekly freight route to Philadelphia, hauling grapes, blueberries, other various fruits, and cargoes from Chile, Peru, and Ecuador in August, according to Philly.com. “The MSC ships sail through the larger set of Panama Canal locks, and are the largest cargo ships ever to come up the Delaware River.”

Spurring New Growth

In an interview with Pilot Online, the Panama Canal Authority’s deputy administrator Manual Benitez, discussed the Port of New York/New Jersey’s ability to accommodate the 14,000- or 15,000-TEU ships that can now use the Panama Canal—and whether this development will spur the cascading of ships off of the Asia-Europe route.

“…one of the advantages of the Panama Canal, especially for the lower East Coast ports and the Gulf Coast ports is that we’re closer to Asia,” Benitez pointed out. “Probably, Suez has an advantage with New York. But the ports in the Gulf, even in Miami, have made investments to improve their channels and improve their infrastructure and are very competitive ports. And I think they have done their homework and have made investments and have other investments in line to continue improving.”

John Nikolich, Odyssey Logistics’ VP of international transportation management, expects the positive momentum associated with the Panama Canal expansion to continue throughout the rest of the year. “A long time coming, this expansion is positive for shippers of oceangoing freight,” he says, “and for larger ships that now have more direct access to and from their destinations.”

Odyssey will keep you posted on the latest developments concerning the expanded Panama Canal and how its expansion is impacting the shipping and logistics environment.