PortandTerminal.com, July 19, 2019
Nearly three years since the Panama Canal Expansion opened, TEU volume continues to grow – especially for East Coast ports.
Nearly three years since the Panama Canal Expansion opened, TEU volume continues to grow – especially for East Coast ports according to data published on Thursday, July 18 by the real estate and logistics services giant JLL, Inc.
Since 2008, TEU volumes on East Coast ports’ have increased by 46.8 percent. The West Coast is seeing growth as well, albeit at a much slower rate of 18.4 percent over the same period.
What’s driving the East Coast’s impressive volume growth?
1. The Panama Canal expansion
The expanded Panama canal began commercial operation on 26 June 2016.
The expansion of the Panama Canal doubled its capacity by adding a new lane of traffic allowing for a larger number of ships to pass through it. Importantly, the expansion also increased the width and depth of the lanes and locks allowing larger ships to pass.
The new larger ships, called New Panamax, are about one and a half times the previous Panamax size and can carry over twice as much cargo. This makes it more cost-effective for Asian shippers to bypass West Coast ports and ship their cargo directly to East Coast ports instead.
2. East Coast ports are now big-ship ready
East Coast ports saw the writing on the wall and prepared themselves for the big ships the Panama canal expansion brought into play. They have invested in the equipment to handle the larger, New Panamax ships with capacities up to 15,000 TEUs, compared with the 5,000 TEUs previously.
3. It makes sense to ship more of America’s cargo to East Coast ports than to West Coast ports
Nearly two-thirds of the U.S. population lives east of the Mississippi River. In the past, cargo from Asia bound for America’s eastern cities was offloaded at a port on the West Coast and sent by rail eastwards. The Panama Canal expansion makes it cost-effective to bypass the West Coast ports and ship by sea to directly to the East where more people live.
The outlook? With the rise of e-commerce and the population base, JLL Inc predicts that TEU volumes on the East Coast to continue the upward growth trajectory.