When the $5.25 billion expansion of the Panama Canal is completed in 2015, it will allow ports up and down the East Coast to accommodate super-sized container ships known as “Panamax” vessels. These ships can carry nearly triple the capacity of traditional cargo ships, but require deeper trenches and upgraded port facilities.
As a result, ports from Miami to Maine currently are expanding their capacities in anticipation of these bigger, more efficient vessels that will be serving China and other major Asian trade partners.
But that impact of the historic Panama Canal expansion project are also being felt throughout the supply chain, from the construction of bigger distribution centers to the green-lighting of rail line improvements to increased federal spending on seaport infrastructure.
Expanded East Coast Capacity
When Panamax ships can pass through the canal, it will be a game-changer for the US supply chain, according to Rosalyn Wilson, senior business analyst at Declan Corporation.
“China’s economy, along with the economies of other Asian trading partners, has been picking up steam lately, which should translate into higher exports to those countries,” Wilson told Logistics Management. “US ports will need to accommodate carrier with the outbound move when this happens.”
Panama voted by referendum in 2006 to improve the 100-year-old canal by deepening it, widening it and upgrading its locks and other facilities. When it is completed, Panamax ships — which have a 13,000 twenty-foot-equivalent units (TEUs) compared to standard cargo ships that typically max out at 5,000 TEUs — will be able to pass back and forth through the canal, which bisects the North and South American continents.
Currently, these super-sized ships had to use West Coast ports such as Long Beach, Portland or Seattle — which already have naturally deeper trenches to accommodate them — when transporting cargo to and from Asia.
But now East Coast ports such as Charleston, Savannah, Baltimore and even Philadelphia are preparing to welcome the gigantic cargo ships by deepening their trenches and upgrading their infrastructure. Even inland ports — such as those found in Chicago, Dallas, Atlanta and Columbus — are preparing for an increase in cargo traffic as a result of the changes.
Rail, Distribution Centers Affected
Rail traffic upgrades also are underway and some major retailers such as Urban Outfitters and others have begun construction on mega-distribution centers near both East Coast cities and cities in the Midwest such as Chicago, which already has efficient air, rail, truck and water transportation routes.
Last month, the US Congress passed a $1.1 trillion consolidated appropriations bill that funds several high-priority programs related to improving the seaports.
West Coast Ports React
Not to be outdone, operators of the West Coast ports are also planning improvements and expansion, some of which are already beginning to pay off. The Port of Portland has reached a deal with the Ford Motor Company, for example, to facilitate the shipment of 30,000 of its vehicles per year to China for the first time ever.
“We’re proud to be serving as the primary gateway for exports of new Fords to China and furthering our mission to provide access to international markets,” said Bill Wyatt, the port’s executive director. “This fulfills a national role for Ford vehicles manufactured in plants throughout North America.”
The Panama Canal expansion’s impact on the US supply chain is expected to be felt for many years to come.