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Mar. 2015

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20A THE JOURNAL OF COMMERCE MARCH 2015 COOL CARGOES T HE MUCH-ANTICIPATED COM- PLETION of the Pa na ma Ca na l expansion project is just months away, having reached the 85 percent mark in January. Profound changes to global trade flows and the major ocean carriers using the canal soon will emerge, with some interests likely to benefit much more than others. U.S. West Coast por ts are among those that could experience a measur- able negative impact as ocean carriers in the eastbound Asia-U.S. trade lane opt for all-water services to the U.S. East and Gulf coasts, bypassing U.S. West Coast ports altogether, according to a report last May from the Pacific Maritime Asso- ciation, entitled Competitive Uncertainty and the Widening of the Panama Canal. The report's authors, Michael Nacht, a professor of public policy at University of California at Berkeley and a former assis- tant secretary of defense for global affairs, and Larry Henry, founder of Container- Trac, said some cargo is already making that move. Nonetheless, major U.S. West Coast ports are investing heavily to hold onto market share. "The ports of Los Angeles and Long Beach a re continuing to implement infrastructure improvements that will minimize throughput bottlenecks. More backland behind berths and larger capa- ble cranes to speed up unloading/loading are forthcoming," the report states, while bigger 12,000- and 13,000-TEU vessels are already calling at LA-Long Beach. At the Port of Oakland, rail capabili- ties, especially intermodal connections for imports headed to the East Coast, are a plus, while the Seaport Alliance between the ports of Seattle and Tacoma could boost competitiveness. As it turns out, the smaller ports along the U.S. West Coast could be the most "adversely affected" by the shift to all-water routes, the report said. U.S. East Coast and Gulf Coast ports invested nearly $30 billion over the past two years on infrastructure projects to accommodate anticipated rising cargo volumes brought on by the expanded canal. Coupled with automation upgrades, these measures are expected to provide a $50-per-box stevedoring cost advantage over West Coast ports to unload an indi- vidual container. In another example, the report esti- mates the price to ship Asian cargo transiting the Panama Canal and bound for Chicago will fall 12 to 14 percent, from $3,200 to $2,800 per 40-foot container in the three to seven years following the expansion of the canal. North-south reefer trade also is feeling the impact. The widened canal will make it tougher for specialized reefer carriers to compete with post-Panamax vessels such as those operated by Hamburg Sud with 9,200-TEU capacity and as many as 2,100 reefer slots — equal to the total number found on eight specialized reefer vessels. Mea nwh i le, " t he Pa n a m a Ca n a l Authority is wooing assembly of prod- ucts in Panama and building a new airport three times the current size to entice a one-stop shopping experience for poten- tial shippers and ocean carriers," the report said. CC Contact Lara L. Sowinski at PROMISES, PROMISES Panama Canal expansion lifts hopes of East and Gulf Coast ports for Asia-US all-water services By Lara L. Sowinski

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