NEWS

>> MDST's projections for 2017.more.

>> SM Line - its first months.more.

>> North American East Coast Port Expansion.more.

>> Japan-EU Trade Deal.more.

>> The Ocean Network Express.more.

>> The Qatar crisis: impact on container shipping services.more.

>> Maritime Professional Services Award.more.

>> Invest in rail freight to cut road congestion.more.

>> South Bradford Lorry Parking Study.more.

>> New Mega Alliances.more.

>> Businesses have their say on freight transport in the Marches.more.

>> Free trade zones at UK ports & airports.more.

>> Non alliance shipping lines.more.

>> New mega alliances.more.

>> Transpacific - port coverage from April 1st.more.

>> Are direct services becoming less attractive for shipping lines?. more.

>> What happens to the small ships post Panama Canal expansion?. more.

>> Maersk to acquire Hamburg-Sud and reinforce its presence on the Latin America routes. more.

>>£0.5 trillion of trade passes through UK ports. More.

>> The future of rail freight and private investment. More.

>> The Northern Freight and Logistics report. More. 

>> Oxford Cambridge Expressway Study. More.

>> The potential impact of Brexit on trade. More.

>> India - the impact of shipping lines’ consolidation and the cabotage rule change. More.

>> Iran – changes in maritime services post-sanctions. more.

>> 'India: The only way is up' say MDST in an article published by Lloyds List. More.

>> Hanjin’s collapse - A wake-up call to the industry? More.

>> Peak season 2016: could the seemingly more rational shipping lines restore stability to the market?. More.

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North America East Coast post Panama expansion

The enlargement of the Panama locks, completed in June 2016, provides a combination of opportunities as well as challenges to East Coast North American ports. The most important challenge for port authorities and terminal operators is to expand and upgrade their own infrastructure to benefit from the main opportunity of being able to handle larger vessels offering greater scale economies to shippers. This would translate into more competitive East Coast ports, aiming to reduce the gap with their competitors on the West Coast that are unaffected by the challenges associated with the increase in ship size observed in the last few years.  Another opportunity of the new Panama Canal locks is the possible improvement in transit times (and bunker costs) compared to Far East – East Coast North America services via the Suez Canal.

In this Briefing Note, we present an analysis of how the new Panama Canal locks have affected the ports on the two US coasts and the services on the Far East- North America EC trade lane.

West Coast North America ports continue to dominate, accounting for 70% of all Far East – North America deployed capacity. Comparing 2016Q3 with 2017Q3, the deployed capacity on the Transpacific East Coast has increased by 2% whilst the West Coast capacity has declined by almost 3%. In terms of average vessel size the East Coast has experienced an increase of 14% whilst vessel sizes on West Coast Transpacific services have risen by 2%.

Figure 1: Average vessel size (TEU) on the East Coast and West Coast Transpacific trade lane 2016Q3 vs 2017Q3


Source: MDS Transmodal, Containership Databank September 2017

The enlarged Panama Canal locks initially began accepting the first 10,000 teu Hyundai vessels on the G6 Alliance - NYX service in June/July 2016. A little more than a year later the maximum capacity of vessels navigating the canal has grown with the introduction of CMA-CGM’s 14,400teu vessels deployed on the Ocean Alliance – SAX service. The increase has been made possible with upgrading of infrastructure such as the raising of the Bayonne Bridge in New York.

In terms of port calls over the last 12 months for the transpacific trade lane, New York and Savannah have actually seen a reduction while smaller ports on the Eastern seaboard such as Boston, New Orleans and Wilmington have experienced increases in the number of services.

On the West Coast, the ports of Los Angeles, Oakland, Seattle and Tacoma experienced a reduction in number of weekly transpacific calls, whilst Long Beach has gained an additional call.

Taking into account the current and newbuild fleets, the Ocean Alliance has the largest number of New-Panamax vessels accounting for some 91 (44% of the total fleet), with 2M Alliance and THE Alliance operating 80 and 37 respectively. Outside of the three main East-West alliances, PIL has the largest number with 14 x 11,800teu vessels on order as it aims to expand its network to the Transpacific East Coast trade. Similarly, the newly formed SM Lines has revealed its plans to enter the Transpacific East Coast trade by Q2 2018 albeit with smaller vessels of approximately 8,500teu.

Table 1: Current and Newbuild *New-Panamax fleet by alliance/shipping line

Alliance/Operator

Current

Newbuilds

Grand Total

Ocean Alliance

82

9

91

2M Alliance

69

11

80

THE Alliance

37

 

37

PIL

 

14

14

Unknown

2

8

10

Hyundai

8

 

8

ZIM

4

 

4

HDS Lines

 

4

4

Hamburg-Sud

3

 

3

Grand Total

205

46

251

Source: MDS Transmodal, Containership Databank September 2017

*New Panamax criteria – 10,000teu + Length 294-367m Beam32.2-49m, Draft 12.04-16.04

Comparing 2016Q3 with 2017Q3 the number of Far East – USEC services transiting the Panama Canal has increased from 13 to 14, whereas the Suez has seen a reduction from 10 to 9. There also has been a significant difference in deployed capacity on the two different routes with Transpacific East Coast services via the Panama increasing by 34% whilst those through the Suez has decreased by 8% compared with a year ago. In terms of average vessel size deployed once again Panama transits have increased by 28% whilst Suez traffic has experienced a small growth of 3% as vessels become larger and cascading occurs. In a bid to claw back lost traffic, the Suez Canal Authority has recently offered ship owners discounts of between 3-50% depending on the number of boxes carried on their containerships.

Figure 2: Far East – North America East Coast deployed capacity (MTEU), 2016Q3 V 2017Q3
Source: MDS Transmodal, Containership Databank September 2017

The enlarged Panama locks have exposed two competitions, namely North America West Coast ports vs East Coast ports and the battle of the two canals, Suez vs Panama. Whilst the overall picture remains the same with North America West Coast ports receiving most of the deployed TEU capacity from 2016 to 2017, the East Coast ports have experienced a high growth in terms of both capacity and average ship size. There has been only one more weekly Far East – North America East Coast service transiting the Panama Canal since 2016Q3, however the capacity increase of 34% from a year ago has been more significant, attributed to the larger capacity Panamax vessels that can be handled both at Eastern Coast ports and the Panama Canal.  The impact of the Panama Canal may not be fully realised, however, until the remaining New-Panamax vessels are delivered and ports have finished upgrading their facilities and infrastructure.