With offices in Miami, Florida, we are keenly interested in the progress of the Panama Canal’s third set of locks. The third set of locks, delayed by cost overruns, financing and a few small leaks, look to be opening for business in Q2 of 2016.
It is no secret that carriers are seeking economies of scale by ordering larger and larger vessels. The largest containerships in service carry 19,000 TEU’s, or twenty-foot equivalent units. These beasts are operated by the likes of Maersk, CMA-CGM and China Shipping, the latter of whom is being absorbed by COSCO in a merger still in progress.
The “new” locks, which have been under construction since 2007, are 96% complete. The locks will allow passage of containerships with capacity of 13,000 TEU’s. To give you an idea of the increase in capacity this will offer, the Canal’s two sets of operating locks (keep in mind the waterway is 100 years old) allow passage of containerships with a capacity of 5,000 TEU’s.
Carriers looking to reach the US East Coast now go by way of the Suez Canal with a much longer transit time and, given the volatility of the region, at a much higher risk.
Concurrent with the Canal’s expansion work, ports all along the US East Coast from the Mid-Atlantic to here in Miami have been working hard to woo not only these ships, but those potential 19,000 TEU monsters that require fifty-plus foot drafts, cranes that can reach across nearly twenty rows of containers and have the port side infrastructure to discharge that many containers and reload them as well without causing a complete bottleneck.
We’re waiting to see as well what this does to rates because the larger vessels require less fuel to operate and reduce overall cost per container. After the challenges of the West Coast labor negotiations earlier this year, shippers are continuing to reduce their reliance on a single trade lane and coast, so we anticipate there will be a redistribution within supply chains.
When the Canal opens, we’ll be sure to cover it and let you know about the new and exciting service offerings that we are presented with by our carrier partners.
(Photo Credit: The Panama Canal Authority)