Impact on trade on expansion of panama canal a dissertation

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  • 1. IMPACT ON TRADE ON EXPANSION OF PANAMA CANAL Dissertation
  • 2. Do Not Copy/HEISENBERG/2014/ORIGINAL TABLE OF CONTENTS 1. CHAPTER-1 (INTRODUCTION)…………………………………….…… 2. CHAPTER-2 (THE PROPOSED EXTENSION)……………………….…… 3. CHAPTER-3 (THE AIM AND THE NEED OF THE STUDY)…………..… 4. CHAPTER-4 (REVIEW OF THE LITERATURE)………………...…….. 5. CHAPTER-5 (PROGRAM FOR THE FINANCING OF THE PANAMA CANAL)……………………………………………......................................... 6. CHAPTER-6 (FINDINGS AND CONCLUSION)…………………….…. 7. CHAPTER-7 (METHODOLOGY OF RESEARCH)…………………….. 8. CHAPTER-8 (REFERENCES/BIBLIOGRAPHY)……………….……….…
  • 3. Do Not Copy/HEISENBERG/2014/ORIGINAL Chapter – 1 Introduction The Panama Canal was in 1914 as a result of direct investment by the United States, channel of Panama is only controlled and managed by the United States because construction began under the administration of the American President Roosevelt as 1904. Geographically, channel proved to be a strategic point for the United States in the First World War, the channel is ability, quick dispatch American ships and the staff of the Pacific region in the region Atlantique. More than 815,000 vessels transit the Panama Canal during the 99 years' service. The Panama Canal is with a very good service small ships during the larger vessels, in order to any South America . The load through capacity of Canal is continuous improvement, we see that in 2012, 333.7 million PC/UMS39 tonnes of freight transit through the Panama Canal a increase of 3.6 % in 2011. The income of the toll rose to a large extent, reaching maximum value of USD 1.8 billion in 2012 revenue and are likely to rise in the near future, such as the Panama Canal is constantly on the stage of the expansion. The Panama Canal grows in phases. In July 2009, the competent authority of the Panama Canal, the decision, Canal capacity to ships Post-possible can, and a Panama, as a large port multimodal and the decision of the competent authority of the Panama Canal in the extension of the Panama fully takes over President office. Since then, the Authority has several protocols signed understanding (EP) with the ports of the United States and the North Atlantic coast of the Gulf on areas such as joint marketing, the exchange of data, market studies, modernisation and improvement of training and technology exchange. Port of Halifax was the first Canadian ports to communicate with the signing of a protocol of the Panama Canal 19. September 2012. The thoughts of the supervision of the Panama Canal , the Panama Canal program was a great success for expansion could partnerships and protocols without understanding (EP) with the main ports of the United States. The investment that has to be made in number occur in the expansion of the Panama Canal of 5.2 billion should be financed by several banks and other
  • 4. Do Not Copy/HEISENBERG/2014/ORIGINAL financial institutions. The justification for 5.2 billion dollar expansion of the channel based in the main on the perspective of the immediate lose large-scale cases (post-possible) container ships capacity bottlenecks Canal and the growth of electronic transpacific trades have done within. It was thought that the concern about the reliability of the United States and ports of the West Coast terrestrial route could be used by providing a range of water on a post-possible container ships. The reliability of the Panama Canal is more than the distance terrestrial by the operator of the vehicle has taken in America. The opening of the Panama Canal in 2015 now was expected, up until recently, to increase the Asian Freight transit through the channel with increasing quantities of consignment for the view port in the Atlantic and inland ports in North America. Such as the Panama Canal is development of trade between the provinces in the Atlantic and the Pacific Ocean. Canal advanced ships will begin Post-possible can carry up to 12 000 TEU compared to the ships of the transport category possible 4,800 TEU. The ability of the channel but no recording extended super post-possible or ultra -large container ships arrive on the line and control with large air carriers could be a setback, the the authority of the Panama Canal and the impact of these large container vessels with more than 18 000 TEU TEU capacity on world trade routes greatly facilitated the Suez Canal with their greater capacity compared to the Panama Canal in its extended hurdles capacity. The Suez Canal is, however, a number of advantages, such as it is on the main roads trade relationship in the world, and this is a very large capacity and geographical shift in North America expect increasing quantities of goods at ports on the Atlantic Ocean. The quantity of cargo safely increase in North America in Ports of the Atlantic Ocean. The expansion of the Panama Canal, the first element of Panama the strategy for the conversion of the small countries of Central America in a regional economy similar logistics in Singapore on the spoke in South East Asia and in the spoke in Dubai in the Middle East. The objective of the United States is clearly the statement above he is aiming in the area of logistics Panama spoke of the problem of the world. The second element is the project Panama, a 3600 acre development on the site of a former Howard U.S. Air Force as the Panama Canal might have high strategic point for the United States in time of war than the Panama Canal
  • 5. Do Not Copy/HEISENBERG/2014/ORIGINAL controlled by the United States and can capital to its strategy on Panama Canal in time of war. The former landing military is used as a other airports in the Tocumen International Airport . Panama Pacific master plan is divided into two, several national parks business via an international different types of parks logistics, a Zentrum-Stadt , General masses can live, an airport shift divisions of the airport will act as air freight harbor, green zone ( the Panama Canal competent constantly monitor the impact on the environment resulting from the development of the Panama Canal and the surrounding area), Forest Business Park and the hills of kobbe. From the statement above, it is clearly that the American government considers strategic point as an advantage of the United States and constantly make sure development Panama Canal . Any strategic location of the Panama Canal, stable.., and provide efficient administrative processes to be carried out affairs provide enough support for the development of the Panama and the surrounding area as the regional logistics of the spoke. The Panama behind Singapore and Dubai in the quality of their work, the infrastructure (ports and intermodal transport services), and attracting foreign investment , because it is in Dubai and Singapore are already a large logistics center. The expansion of the Panama Canal will undoubtedly improve the logistical infrastructure, making Panama a lot more competition with other ports logistics in North America and in the south. The main criteria can Panama the future development rather than a mere transit navigation link, as initially proposed by scientists a few years ago. The government valuable not only the development of the Panama as the only Navigation transit link, but work together to build Panama global region, such as the large "logistics in Dubai and Singapore . The expansion of the Panama Canal , has a significant impact on the routes, the development of the ports in and around Panama Canal , the distribution of goods and a plethora of other maritime safety system in the United States. As a consequence, increase the revenue of the state and it is envisaged that the State can to a logistics center in Dubai and Singapore . One of its effects, if any, that the main tracks in the rapid growth in trade in containers, the expansion is the great ships for the transit of Canal. Since the
  • 6. Do Not Copy/HEISENBERG/2014/ORIGINAL vessels larger could transit through the Panama Canal to the shipping companies will be an important role, such as the quantities so what are we calling the economies of scale. The vessel calls to the east coast of the coast of the Gulf also expect a significant increase in the load away from the west coast congestion Panama Canal. Since its opening in 1914, the Panama Canal was a great success in connection with the maritime transport between the Pacific and Atlantic oceans. Vessels, although in Panama Panama Canal goes directly in the Atlantic Ocean and thus efficiently offers a road commercial policy of the vessels. The people and Panama Canal about 49 miles long and consists of artificial lakes, channels and the locks. These channels and the hurdles are very useful by the Canal will take these hurdles can agree with the ship and water and the level of the water can be increased or decreased. He takes the time to Panama Canal, but the ships are able save thousands of gallons fuel hold baggage after the reduced the operating costs of the company in the maritime transport sector. In the course of a given year is more than 12 000 ships through the Channel good more than 270 million tonnes of freight. 70 % OF THE channel of 100 billion US dollars were in containers is either to or from the United States as well as the Panama Canal is located in the United States and the major disadvantage but only load is used the ports of the United States in the last few years and the increased throughput of the Panama Canal have extremely that globalisation has increased, and there are very strong overload of the west coast of the United States and thereby forcing the freight forwarders, the water supply for the benefit of all. Therefore, the Panama Canal has become a significant part of the transport of containers is under the leadership of the east coast of the United States and this proportion is expected to increase in the near future. During the high season it together for ships, wait for 10 to 15 days before traveling through the channel for the process of transit through the Channel slowly and other vessels have to be expected. As far as he can in money consignor $50.000 per day seat in the idle to a complex system of invitation to tender. The shipping companies offer of Transit first and pay for the Panama Canal competent so that your ships in transit can first, and in 2006 a British oil tanker paid $221,000 (excluding the costs of transit) a qualitative leap from 83 other vessels. We can see from the statement above on the competition in the Panama Canal a must-have for any budget line of the shipping to save time and money. In addition, a large part of container ships is too large for channel. channel, the major disadvantage of the
  • 7. Do Not Copy/HEISENBERG/2014/ORIGINAL vessels to other payment for your travel through Panama Canal slightly faster than all other ships, arrival in the port.
  • 8. Do Not Copy/HEISENBERG/2014/ORIGINAL We see clearly in the picture above the definition of the Panama Canal and its hurdles. Vessels that are running over the Panama Canal Canal, this street and hurdles the vessels to transit Panama Canal and hurdles the level of water rises or falls, so that ships can pass through Panama Canal and registration of your time and money. But one thing to note is that ships through the Panama Canal the Panama Canal and the payment of the additional registration fees authorities that a ship can by Panama Canal at a given date in any page. The construction of new locks, and expansion of the Panama Canal does not increase the global trade system, but also the vessels can then by Panama Canal efficiently and the ships not to be expected also to appear or that you no costs for additional Panama Canal authorities to transit the Panama Canal. With the expansion and construction of new vessels will be allowed on Panama Canal locks in one sense or another.
  • 9. Do Not Copy/HEISENBERG/2014/ORIGINAL Chapter – 2 The proposed extension:- In the course of the history of the Panama Canal many extensions have been proposed, but until recently the plans never formalised in an adequate system. The Panama Canal planned expansion has officially begins on 3. September . In accordance with the supervision of the Panama Canal and the project should fall 2014 with the celebration of the 100. Anniversary of the channel. The details of the planned expansion includes the following elements integrated:-  The construction of two complex blockade - one on the other side of the Atlantic, and on the coast of the Pacific - each with three chambers comprises three water saving coalfields (that is to say, a new way of Navigation); this more on each side ( D are two sides)  The excavations and new means of access for new hurdles and the enlargement of the possibilities of shipping;  Deepening of the approach of the shipping industry and raising of the Lake Gatún) as they travel, the altitude of the maximum use. The design of a capacity expansion will cost approximately $5.2 billion and will be financed by a sophisticated-toll as well as funds abroad.
  • 10. Do Not Copy/HEISENBERG/2014/ORIGINAL Chapter – 3 The aim and the need of the study:- The main objectives of the study are as follows:-  For the determination of the substantial change of the flows of Panama Canal.  SUCH AS THE EXTENSION OF THE Panama Canal is directly or indirectly on the container bulk SEC and trade oil tanker.  To test the program on the extension of the United States its Panama Canal  To answer the question, "Is it correct that the extension of the current Panama Canal are proving to be a game improved for containers, bulk materials SEC and tanker trade?"  As Panama Canal be used strategically by the United States?  The changes to the project could in world trade.  The expansion of the Panama Canal had an impact on the transportation and logistics industry?
  • 11. Do Not Copy/HEISENBERG/2014/ORIGINAL Chapter – 4 Review of the Literature The Panama Canal Expansion: potential impact on the logistics and supply chains By around C. Sanchez, Office for research and market analysis, June 2012. http://caribgrowth.competecaribbean.org/content/OnesimoSanchezKingstonpanam acanaljune2012_.pdf The construction of the Panama Canal proved to be a game improved in world trade.  From 1915 to 2011  Nbre total journeys:- 1,015,656  Freight:- 8,810,111,605
  • 12. Do Not Copy/HEISENBERG/2014/ORIGINAL Expansion of the Panama Canal potential impact on Asia - East Coast/Gulf trade Rodolfo sabonge, Vice President of Marketing, Research and Analysis office authority of the Panama Canal http://www.fhwa.dot.gov/planning/freight_planning/talking_freight/talkingfreight1 0_21_09rs.pdf  Panama Canal 50 nautical miles (80 km length between the Atlantic and the Pacific Oceans.  Lake Gatún) as they travel to 85 feet (26 m) above the level of the.  The water used for increasing and reducing the fishing vessels in each series of locks is of the Lake Gatún) as they travel through heavy (approximately 52 million gallons in the transit system)  The Republic of Panama moved at noon 31. December 1999.  Relationship with Panama Canal boat the maximum length of 965 feet (294 m), depth maximum of 39.5 feet (12 m) and bundle not more than 106 feet (32.5 m). Users FY 2007 FY 2008 FY 2008 ( %) United States 136.8 133.7 64 China 43.7 43.7 21 Chile 22.0 26.7 13 European Union 26.5 26.1 12 Japan 29.2 24.7 12 South Korea 17.3 17.3 8 Peru 14.1 14.1 7 Large ports worldwide network connections via services as the transit of the Panama Canal and/or appeal is to port:-  Antwerp  Arica  Auckland  Antofagasta  Altamira, MEX  The Balboa  Baltimore MD  Barcelona
  • 13. Do Not Copy/HEISENBERG/2014/ORIGINAL  Barranquilla  Bilbao  Boston My  Büsum  Brisbane  It  Pusan  Callao.  Cartagena  Dubai Jabal Ali  Felixstowe  Freeport, Bahamas  Halifax  Hamburg  Havana  Hong Kong  Houston - TX  Jacksonville  Long Beach  Los Angeles  Melbourne  Miami  Mumbai (World Nhava Sheva)  Mundra  New York  Ningbo,  Oakland  Osaka  Port Pelabuhan Kelang  Port of Spain  Port Said, Egypt  Rotterdam  Shanghai  Sydney  Tokyo  Tuticorin, India  Vancouver, C. -B.
  • 14. Do Not Copy/HEISENBERG/2014/ORIGINAL  Xiamen.
  • 15. Do Not Copy/HEISENBERG/2014/ORIGINAL The Panama Canal Expansion: business as usual or improved? Dr. Jean-Paul Rodrigue, Hofstra University, New York, USA, & Dr. Theo notteboom, President itmma, University of Antwerp, Antwerp, Belgium http://people.hofstra.edu/jean-paul_rodrigue/downloads/PT51-10_3.pdf 2014 The Panama Canal will be celebrating its centenary, an event that not only facts, but also corresponds to a new phase of the business, according to the plan when it is estimated at US$ 5.25 billion dollars for the expansion project is new series of locks and ancillary equipment (dredging projects and extension) the act 12 000 TEU container ships in the -15.000 after for the design of ships and loading the configuration. That is certainly what impact on world trade, and large vessels in bulk Schiffe-Mutter could via this channel. This triggered a wide range of speculation, from a "change game " event essentially a overall effect distribution of goods a wide range of assessments, the extension had been little or no appreciable impact. This is the divergence stresses that global distribution of the goods, the strategy of the companies of the maritime transport and the operators and management of the supply chain are has become so complex and interdependence, it is difficult for a large number of stakeholders such as the expansion is step-by- step . While we know, it is very easy to do so, such as the operational features of the channel be expanded, it is supplemented by a lot remains uncertain is-in-, trade, Lfrs shipping configurations network and the growth in the volume of transhipment in the region. It is also foreseen that the Panama Canal can grow as the transhipment of spoke world, such as in the Atlantic and retrieve it in the Pacific, where the loads/containers and the transhipment takes place in the Panama Canal. The problem for the assessment of the potential impact of such a project is to increase the capacity in reality the consequences are lack and require the impact of feedback, some of which can even unforeseen consequences. There are so many unknowns in this equation is to say how the different actors will react and to what extent, the variety of convergence and of the different strategies leads to the performance of the dispatch. For example, how do you the strategic importance of Asia in the Pacific Ocean, north American trade segment will be repaired? As the load is divertible the west coast, the east coast, due to the distance from the water? The extent to which North and Sud-Amerikaner importers and exporters will be provided for the availability , the cost and reliability of services in the Post-area Expansion? In the extent to which transport costs will be reduced?
  • 16. Do Not Copy/HEISENBERG/2014/ORIGINAL It is also clear that the enlargement of the Panama Canal is a game improved, but the new rules of the game are not clear. This article contains a summary a funded study of the Van Horne Institute of the University of Calgary. This is an attempt, light in the key factors have an impact on the results of the global expansion of transport networks and trade flows. It focuses on the macro-economic factors, in particular , it provides for the world as a whole, and the report includes the impact of the enlargement of the Panama Canal on world trade, in particular, the expected changes in the structure of the production of the industry operating factors can extend the maritime transport is to say economies of scale and bake slowly and competitive factors, such as other transport chains can anticipate and respond to changes by the enlargement, in particular the cost structure.
  • 17. Do Not Copy/HEISENBERG/2014/ORIGINAL Impact of the Panama Canal the extension of the distribution networks Fortna, www.fortna.com http://www.fortna.com/whitepapers/Article_Viewpoint_PanamaCanalExpansion_F INAL_EN.pdf The long-awaited Panama Canal expansion, the draft will be completed in 2014, is qualified " Don improved" is the transformation of the supply chain distribution networks. Enlargement brings enlargement of the locks, for the treatment of large vessels and after channel pontifes, change how are transfer from west to east. Shipping on the Panama Canal could be a risk if the normal trade road disturbed. The freight forwarders may remember Los Angeles lockdown 2002 want to limit your risk. But the real issue is the long-term effects of the Panama Canal as a supplier gradually source differently. For example domestic kingdom of the Host Party many clothing from individual suppliers, the increased, partly due to the traditional water commercial streets. In the course of time the Panama Canal expansion could be the provider of a re-assessment of their supply chains to best customers as their customers. The Panama Canal is the best possible way. The customers can consignor, importers, transporters, such as the number of drops and you will be taken to freight transport of their products to the end provisions very easy. You talk about their major customers for retail sale for the understanding of the distribution of the demand letters anywhere in the United States, indicating whether or not it is incumbent upon,, the imports of certain West Coast, certain east coast) whether the east coast road in the water quantities justify a comprehensive Panama Canal. The line of the low are the fluctuations in the demand for food and in various sectors of the transport industry is one of the price volatility and the creation of opportunities for the carriers, benefit of the additional competition on the inclusion of the whole trade in water way of the east coast. Logistics and transport costs for certain basic products could suddenly fall and new markets and commercial opportunities. But this potential dynamism of Teams slowed down somewhat by an economic slowdown. And, of course, the real winners are the ports of the East coast, the recording of the largest ship ready from road transport, the airlines as a service port and place this radius of 3pls, if they begin to prepare themselves now.
  • 18. Do Not Copy/HEISENBERG/2014/ORIGINAL The potential impact of the Panama Canal expansion and development post- possible /Super Post-possible ship container routes on Michigan freight and logistics of the spoke August 2013 J. D. Snyder Kevin Doyle http://knowledgeplanning.org/upload/Panama%20Canal%20Expansion%20Paper %20%20FINAL%20AUG%2030%20w%20authors.pdf The current trends in the logistics in the maritime transport sector can be used to create the possibilities of supply chain and logistics development spoke in Michigan. Direct Current trends in the field of logistics and the supply chain industry to Michigan a logistics center of America. Section describes the logistics in the maritime transport sector trends with a focus on Asia trade on the world market on roads in development; the supervision of the Panama Canal and extension Canal ability to think Recording post-possible container ships, the potential impact of the extension of the channel and the transition road commercial ports in the Atlantic and impact on the logistics of the Michigan; the potential impact of the Arctic opening streets of the trade as a result of the reduction in the melts of the global climate change and what are the most important changes may occur as a result of the enlargement of the Panama Canal. The expansion of the Panama Canal, the first element of Panama the strategy for the conversion of the small countries of Central America in a regional economy similar logistics in Singapore on the spoke in South East Asia and in the spoke in Dubai in the Middle East. The second element is Panama draft Pacific, a 3,500 acre development on the site of a former Howard U.S. Air Force basis. This line we can be sure that the United States will close this Panama Canal as a strategic point in time of war. It is development of the region not only to improve the logistics but also for the position of the war. The research and investigations in accordance with the provisions of this document have been designed for the understanding of the changes planned for the future Global Freight patterns as a result of the enlargement of the Panama Canal and the use of post-possible (and super post-possible) ships and their impact on the Michigan freight and logistics hub. On the basis of a short review of the literature and semi-structured interviews with North America Atlantic ocean port authorities and experts for the logistics, our main conclusion is that the changes in the freight Asian models could a significant increase in the quantity of the goods in North
  • 19. Do Not Copy/HEISENBERG/2014/ORIGINAL America in ports in the Atlantic ocean, but the impact of the Panama Canal Expansion on these ports should be low (paragraph single annual increase). It is clear: if there is a change of the tariffs were in the whole of the Asian continent- , there is a huge expansion of trade on Panama Canal, the Panama Canal connections directly with region of Asia. It is increasingly clear that Super ships Post-possible to a large game for improved global maritime transport and logistics because of the concept of economies of scale. But it is not clear how these changes will play in the future, except that the science of logistics hubs are being developed and refined with intermodal what is much more on the world market. The body of engineers of the U.S. army also has the uncertainty regarding the future impact of the Panama Canal expansion of US ports and volume of the dispatch and reasons in response to a request of the congress with a study. Such as.. Changes to the planned expansion can now a hault, the main reason is a political instability in the country. The choice, the impact on the extension of the channel and changes in the structure of trade is carried out by a variety of actors in the private sector (the consignors, the transmission lines, providers of logistics, ports and other). As your data, the deliberations and decisions not divided, the accuracy of the trajectory of the total size of the decisions is not clearly predict or just as it is impossible for us is very precise and clear prediction of future freight rates but despite the uncertainty about the impact of the Panama Canal enlargement spoke of the Michigan logistics, the state appears, are strategically benefit from other parts of the world trade from the use of large container ships and the transition from trade routes Asia with the help of the Suez Canal. This document is intended to make a modest contribution to the discussions of the State and the regional logistics spoke and strategies for planning. At the beginning of this year, MSU dfge Team of the project has two regional logistic strategies can contribute information to the global approach. The key to success is the use of more efficient state of its far-reaching resources knowledge and resources and the exploitation of the knowledge of the status of the most important higher education institutions in order to ensure that regional strategies to the state as a logistics center. Multi-sectoral and multi-judicial cooperation significantly to the right.Development of public-private partnerships as a tool for the support for the creation of solutions for the logistics and challenges in the area of infrastructure and the position of the state of the success of the growing world markets.Inventions and innovations to this reader during strategic process. Public-
  • 20. Do Not Copy/HEISENBERG/2014/ORIGINAL private partnerships The best ways for the development of the region within a logistics center. More research needed, what the Michigan can benefit from the development of the schedules global commercial and new trading opportunities and new jobs in the areas of growth, in particular for small and medium-sized enterprises. More specifically, the research for understanding the needs of the logistics and requirements of the small and medium-sized enterprises need support with success of the competition on the world markets. And a greater understanding of certain foreign markets a significant step in the development of a calibration object, more detailed information on the strategy. The decision-makers of the state should be further efforts for the promotion of exports of small and medium-sized enterprises in the Michigan and the various stages to SMES can value with a lower cost for the dispatch partner the team the route now that the trade seem to North American exports. Michigan decision- makers should also the various stages for a better position, the capital of the state of the export and market opportunities associated with new world markets, particularly in South America and Asia (including China, Korea and Japan) and South East Asia is provided (including Vietnam, Singapore and Indonesia). The Michigan allowed the benefits companies only if measures taken to ease the export and import policy by the State, and the extension of the Panama Canal is the complement of the benefits resulting from the reduction in freight rates and more traffic hour for Panama Canal.
  • 21. Do Not Copy/HEISENBERG/2014/ORIGINAL The impact of the Panama Canal expansion of ports of the United States and coastal economic analysis Kevin Knight - Institute for Water Resources http://www.iwr.usace.army.mil/Portals/70/docs/iwrreports/WhitePaperPanamaCan al.pdf Ability of the expanded Canal:- Insight global forecasts of 2025 Canal transits pcums, revenue, and cargo tonnes long shows that the forecasts are consistent with the assumptions of the World Trade model the trade flows, expectations of the tariffs of tolls in the time of changes of the fleet including the competition of the container, and the way the costs of mediation. Several reports have shown that the construction of a third game reasonably locks of the channel , to 600 million pcums, almost double as much as possible current sustainable capacity. Load growth:- In the most likely scenario of the application creates the ACP States, cargo should increase by an average of 3% per year and a doubling of the 2005 tonnage in 2025. The interest rate is largely in line with the World Trade forecasts, but this far below the expected value 6.9 % growth in the container trade in the course of the next 20 years.
  • 22. Do Not Copy/HEISENBERG/2014/ORIGINAL Panama Canal Expansion study report of the level I: the development of trade and the economy, and the World November 2013 www.marad.dot.gov/.../Panama_Canal_Phase_I_Report_-_20Nov2013.pdf The Panama Canal is an important part of the world trade can take approximately five percent of global scope cargo. One of the largest construction projects in the world, the Panama Canal expansion could have a significant impact on US ports and terrestrial infrastructure. The Panama Canal materially affect the trade flows of America. Expansion of the Panama Canal, for the transition from largest container ships, potentially reducing the cost of shipping by the Trans- Ocean was to reduce the rate of freight transport, in particular for commercial services provide westbound routes between the Far East and the United States and ports of the coast of the Gulf of Mexico, which is especially important for the container shipping services have developed in the past half-century the trade between Asia and the western countries dominate request came Panama Canal. United States exports of goods containers and bulk goods these regions also transported through the Panama Canal, especially agricultural products are shipped from the United States of Asia ports of the coast of the Gulf of Mexico. more profitable services with the help of the tall ships in the innermost the excluded, could improve the capacity of certain of the support of the US-exports competition in world markets for agricultural products and energy. The prices for agricultural products will be competitive, the freight rates are on the decline and we will be involved in the sale of their products the location at competitive prices. Panama Canal extension will be the conversion of vessels size. The competent authority of the Panama Canal (PCA) keeps the interaction allow between 12 and 14 large vessels daily in the new locks and using the existing locks for smaller vessels, Canal dual capacity. The increase in the size of the ships, in particular in container ships with a capacity of up to 13 000 TEU- play a decisive role in the Extension Canal flow capacity of 300 million tonnes 600 Million pcums pcums tons. The present report focuses on the illegal lines, a segment of the Panama Canal traffic the best see economies operating costs due to the enlargement. There are, however, other foods such as cereals exported American defended and new opportunities for the export, such as coal, crude petroleum and petroleum products and liquefied natural gas (LNG), can also be able use expanded Panama Canal,
  • 23. Do Not Copy/HEISENBERG/2014/ORIGINAL especially if port of the golf of the United States are to cope with large vessels. The United States is to import coal from Australia and Indonesia in the lower interest rates as a result of the enlargement of the Panama Canal. On the basis of a research work on this report, the potential impact of the Panama Canal the extension of the external trade of the United States are as follows:-  The air carriers operated directly all the waterways between east coast of the United States and the Gulf States and ports foreign ports (in particular in Asia and the West Coast South America) could be more comprehensive and more efficient competitive services in use by the channel fleet.  The transition from 5 000 TEU vessels of up to 13 000 TEU Asia in the north-east - U.S. East/Cote Golf roads over the Panama Canal can savings for the carriers; however, a significant amount of the transport cost savings associated with the use of ships of the size should be absorbed by the providers of important services.  As the average size of the vessels operated port on the west coast also increases with the time of an average of 6 000 TEU per ship today on 13 000 TEU (or more), the cost of transport from ports on the west coast of Asia would also be reduced, with a part of this economies on the freight forwarders as passed.
  • 24. Do Not Copy/HEISENBERG/2014/ORIGINAL Impact of the expansion of the Panama Canal to US regions:- The effects of which can significantly different geographical region and the nature of the product being transported. The study shows the areas in which the United States, where net cost of reductions hardly affect trade. The study also shows regions that have a large proportion of their imports from Asia, in particular for products of low value, via the Panama Canal. These areas will benefit, the most reductions of the associated costs to the channel of the expansion. The geographical area of the impact of the Panama Canal expansion depends on a number of factors, in particular: the ability of individual ports of the USA and its infrastructure to cope with the transition trade flows, the response of the shipping companies in the ports and terrestrial infrastructure capacity building, the adjustment of the supply chain and use methods for the management of economies of scale offered by the channel enlargement and the distribution of the economies of the costs between the different domestic and foreign players.
  • 25. Do Not Copy/HEISENBERG/2014/ORIGINAL Panama Canal expansion program - March 2013 www.pancanal.com/eng/expansion/rpts/components/2013.pdf Program to expand Components:- 1. Post Panama suggest:- construction of the new in the Pacific Ocean and the Atlantic locks for ships Post-possible transit journeys. Each complex consists of three chambers, three water saving coalfields by chamber side and as a filling system for the draining and eight rolling gates. 2. Pacific Ocean & Canal access: - for a new canal for networking of the new Pacific altogether with Corte Culebra. The project to almost 50 million cubic meters of materials. She was divided into four phases, the first three have already been completed. 3. Derdging ways of Navigation - the deepening and widening of the possibilities of the navigation at sea entries for channel, Corte culebra and Gatún) as they travel, Lake. 4. Improvement of the water supply: -the increase in the size of the Lake Gatún) as they travel, work a maximum level for the improvement of the water supply to the channel for food and draft of the reliability. Since September 2007, 6.1 kilometers long Pacific Canal access, the parallel to ( lake, but separate is currently to the networking of the new hurdles on the coast of the Pacific and the Corte Culebra. The design, requires the withdrawal of 50 million cubic meters substances, was divided in four phases, where the first three have already been completed. Consortium ICA-FCC-Meco, instructs the fourth phase was the depth required for the deep draft Navigation Vessels along the canal and continue with the construction of a dam 2.3 kilometerlong necessary to compensate for the 9-meter difference with ( Lake. Activities under this project have been also the deletion of 400 hectares of contaminated land of unexploded ordnance (were) left by the US military in their use in the territory of the Panama Canal.
  • 26. Do Not Copy/HEISENBERG/2014/ORIGINAL The Panama Canal dredging now
  • 27. Do Not Copy/HEISENBERG/2014/ORIGINAL The Panama Canal extension and port of a Member State - Special Series Report http://www.slcatlanta.org/Publications/EconDev/ports_web.pdf Background The trends will continue to play an important role in the understanding of the role of the Panama Canal, a highway for trade not only with the transfer of the goods to and from the United States, but also in the entire world trade. If the Panama Canal a formal doors in 1914, the new capacity of ships traveling with a facility between the Pacific and Atlantic Oceans mentioned an important impetus in the context of international trade and shipping routes. That was the most important American President Roosevelt has been force behind the completion of the Panama Canal, the 50 nautical miles long canal of the bissectrice Panama after all the nation thousands of workers often obliged in accordance, work under the terms of this Agreement such difficult conditions. It was 34 years and 639 million dollars in 1914, finally, by the time of the introduction in the years 1930, proposals for an extension of the channel with the introduction of a game more hurdles the momentum generated. But for a variety of reasons, there is no real movement in this Front during the six or seven decades. The Treaty Carter-Pau , signed by President Jimmy Carter in 1977 for determining the level of the Panama Canal and all of the properties in the context of be relocated again in the Republic of Panama by the United States before the end of the century. The transfer took place peacefully in 1999. The time before and after the full control of the Panama Canal Panama coincided with a huge increase in globalisation and the role of the increasingly important role of China in the world trade system. growing number of ships in transit through the Panama Canal (mostly were entrusted from China), at the side of the traffic jams growing blockages and delays of ships, the demands for an extension of the channel. The delays were not unusual for such a comprehensive it ships with, they will have to wait for up to 10 days in high season in the amount of tens of thousands of dollars per day transit of the canal. Therefore, the decisions can be taken quickly on an extension of its takeover by the Government of Panama and, later, in a referendum by the end of October 2006 with an overwhelming majority of the people. After the vote in September 2007, the preparatory work on the draft expansion, with a first estimate of the costs 5.25 billion dollars, although there are more a recalculation almost USD 10 billion) initiated. Basically the extension of the Panama Canal includes the key elements:
  • 28. Do Not Copy/HEISENBERG/2014/ORIGINAL  The creation of a new way of transport along the canal in calculating constructed two locks on the other side of the Atlantic, and on the coast of the Pacific Ocean with three chambers, including three water saving coalfields ;  Excavating new channels access to new hurdles and the enlargement of the possibilities of the shipping industry;  Deepening of the approach of the shipping industry and the raising of the Lake Gatún) as they travel, * Maximum amount of work. FACTORS , the Panama Canal effort to expand:- In addition, expected increase in world trade in the next few years there were several factors lead the expansion of the Panama Canal. This comprised the following elements:  The objective of the use of the extended channel (and the foreseeable increase in the maritime transport) as the most important mechanism for fixing the high economic growth and generate enough wealth to the internal drive determines Panama in the ranks of the advanced economies.  The fact that the concentration in the industry of shipbuilding to build increasingly larger vessels - for the creation of economies of scale - the tendency is to the end of this decade, in spite of the slowdown in world trade temporarily due to the great recession. Maximum size of the vessel may pass through the Panama Canal in industry as a ship .
  • 29. Do Not Copy/HEISENBERG/2014/ORIGINAL Report of the Panama Canal working group consisting of representatives from the participating. November 2012 http://ftp.dot.state.tx.us/pub/txdot-info/panama/final_report.pdf The Panama Canal in years 5.25 billion dollars for the enlargement is expected to be completed in early 2015 or 2014. The new hurdles will be added in the context of enlargement the largest recording and larger ships. More than these vessels Post- possible , the expansion is today a reduction of congestion in locks, allowing more reliable and faster time for the transit of ships of all sizes. The hurdles wider this recording of liquefied natural gas (LNG) carriers do not use channel today. The expansion of the Panama Canal a impact on world trade, including impact on Texas ports. Texas) Ministry of Transport (in Texas) formed a working group consisting of representatives from the participating Panama Canal (pcswg) at the beginning of 2012 and will host a Study Research Texas A&M transport Institute (also) for the assessment of the possibilities the Panama Canal for the extension and study of the potential impact on Texas ports and terrestrial infrastructure, including roads, railways and the equipment terminals. The pcswg has been charged with examining short-, medium- and long-term improvements in Texas carriage, better use of the position of the State of Texas for the extension and improvement of Panama Canal Texas' role in the world trade. The Panama Canal connection criticism in global system of maritime transport. Open in 1914, 51-mile Canal connects in the Atlantic, Pacific in the Isthmus of Panama. The channel is currently in years 5.25 billion dollars for the extension, should be at the end of 2014 or beginning of 2015. The Panama Canal enlargement is to the influence of the nature of the consignment. The extension of the channel along the population growth and the development of energy in Texas, provides opportunities for the development of world trade Texas port. The opening of the Panama Canal in 1914, by making a connection between the Atlantic and the Pacific in the Isthmus of Panama. 51-Mile channel has significantly improved the global maritime transport system with the vessels no longer travel to the top of the South America to Asia. Property of the channel was in Panama 1999 transfer of the United States as a result of a change of the company model for the operation of a public service a trading company.
  • 30. Do Not Copy/HEISENBERG/2014/ORIGINAL The competent authority of the Panama Canal (PCA), operates channel has extensive work to modernise and an investment program. The transition from a 2006 referendum in so far as funding requirements for a extension violence of the channel. The objectives of the program include the expansion to maintain the competitiveness of the channel and the value of the street, to increase capacity and allow ships size and reducing water consumption. Further aims are to improve the safety and efficacy and the maintenance of the tonnage and increase profitability. The new hurdles will be added in the context of enlargement the largest recording and larger ships. The ceiling of the ship size increases from 5 000 20 ft equivalent (TEU) 13 000 TEU with the extension. More Accommodation this large fishing vessels Post-possible , ships of all sizes are the experience faster and more reliable transit time due to the reduction in congestion in the hurdles. In addition, the hurdles can include wider is liquefied natural gas (LNG) tankers, which are currently not use of the canal. The impact of the Panama Canal expansion of world trade and ports of the United States continued discussed and analyzed in detail. For many owners and non- owner models are used in this process. There are different schools worry about the consequences. Some claim that it hardly changes logistics patterns worldwide. Others are in favor, it is a change of the ships largest maintenance East Coast and ports of the coast of the Gulf of Mexico. Others have proposed that new transhipment centers be developed Jamaica or other locations of the Caribbean. The east coast ports, including New York, the savannah, Miami, are extensive investment in the deepening of the harbor and combat SEP improvements of the infrastructure for the inclusion of the largest ships in the future.
  • 31. Do Not Copy/HEISENBERG/2014/ORIGINAL
  • 32. Do Not Copy/HEISENBERG/2014/ORIGINAL Chapter – 5 Program for the financing of the Panama Canal The financing of the program listed below is the Panama Canal - 9 December 2008:- The 2.3 billion dollars financing programs include a part of the 5.25 billion dollars. Total cost of the project will be assigned as follows:-  European Investment Bank----------------------------------------------------500 m  Bank of Japan for the international cooperation----------------------------800 m  Inter-american development bank--------------------------------------------400 m  Society International Financial------------------------------------------------300 m  Corporación has de Fomento (CIF) -----------------------------------------300 m  ACP----------------------------------------------------------------------------2,950 m  ---------------------------------------------------------------------------Total 5,250 m The locks of the Panama Canal:-  The vessels with a maximum can receive up to 4 400 TEU.  Length 294.1 m  Bundle of 32.3 m  Traditional hurdles may manage more than 304.8 m The new locks of the Panama Canal:-  Can receive up to 12,600 TEU vessels with a maximum  Length 366 m  Bundle of 49 M.  The new locks will be able vessels maximum up to 427 M.  The saving of water catchment areas use new lock is 7% less water supply and existing locks. Forecasts:-  In 2010, the Panama Canal Treaty 6.6 million TEU  2015 The Panama Canal is to deal with 8.4 million TEU
  • 33. Do Not Copy/HEISENBERG/2014/ORIGINAL CHAPTER – 6 FINDINGS AND CONCLUSIONS The Panama Canal is currently undergoing an expansion project that will allow larger ships (10,000 or more Twenty-Foot Equivalent Units (TEUs)) to pass through, and will increase the Canal‟s annual capacity by more than 75 percent when completed in 2014. After the Panama Canal opens (projected for 2014), it is projected that the number of containerships and bulk carrier transits will actually fall as larger ships displace smaller ones. Yet the total cargo – in TEU or Panama Canal/Universal Measurement System (PC/UMS) tons – will increase. While the demand for trade freight movement through the West Coast is expected to remain substantial in coming years, the West Coast ports face physical constraints to their expansion, as well as a growing number of labor and community restraints. This may result in significantly more cargo being brought into Texas ports; in particular, from cargo diverting from the increasingly congested West Coast ports. In 2008, Texas ports handled 61 percent of all foreign imports to U.S. Gulf Coast ports (261 million tons) and 40 percent of all U.S. Gulf Coast exports (92 million tons).1 The Panama Canal Authority has estimated total volumes transiting the new Canal will reach 508 million tons in 20252. Even if this growth is just evenly distributed, Texas ports can expect to receive an additional 6.6 million tons of cargo arriving from the Pacific via the Canal, and to export an additional 15.0 million to destinations in the Pacific. In reality, shifts from West Coast ports could increase this share substantially. One indicator that suggests that more traffic will flow through the Panama Canal to the Gulf and East Coasts is comparing the planned capacity at ports in Asia and on North America‟s West Coast. During the next five years, approximately 40 million TEUs of capacity are planned at eight major Asian intermodal export terminals. By comparison, less than 4 million TEUs of capacity are planned for West Coast ports, including the port at Prince Rupert in British Columbia. This uneven growth suggests that Gulf and East Coast ports will benefits from the limited capacity at West Coast ports. Despite the current economic slowdown, carriers have continued to place orders for 10,000 TEU plus containerships, which will initially service Asia-Europe
  • 34. Do Not Copy/HEISENBERG/2014/ORIGINAL strings. These vessels will displace existing 6,000 to 8,000 TEU ships will be relocated to routes served by the Canal, including Asia to the Gulf, South America, and South Atlantic ports. The expansion is likely to have significant impacts on many Texas ports – some of which may develop feeder services connecting them to larger hubs. In advance of the Panama Canal‟s expansion, some of Texas‟ largest ports – including Port of Corpus Christi, Port of Galveston, and the Port of Houston – are undertaking major capacity enhancement projects to enhance their ability to attract a portion of the Canal‟s new traffic. The Panama Canal Authority (ACP) sets rates for passage based on ship type, size (capacity), cargo carried, and whether the vessel owner pays a “regular fee” (and is subject to delays), or a higher fee, which guarantees a time slot in the bidirectional system. As discussed earlier, ship types are classed by their design: containers, grains, liquid bulk, other dry bulk, cruise, ro-ro, reefer, general cargo, and others. When the Canal functioned under U.S. authority, the pricing rule was based on a cost-plus method, with some exceptions based on apparent social welfare factors. ACP has been slowly rationalizing the fee structure since the Canal moved back to Panamanian authority. It recognizes the financial support given by the State of Panama by pricing the facility at a market basis to generate revenue for the government – not unlike the Suez Canal Authority, which has also abandoned the cost-plus method. Fee Structure Ships are first classified by type as noted above, whether the ship is loaded or empty; and whether or not the vessel is a containership, cruise ship, or cargo carrier. For container-ships, the capacity of the vessel is expressed in TEUs. However, that term can be misleading, as ships are rated both on a nominal basis, where each TEU is loaded to 14 metric tons; and on their capacity when normal commercial conditions are in place. In this latter state, the container mix comprises empties and a range of loads depending on the commodities carried. This raises the TEU measure significantly as demonstrated by ships, such as the Emma Maersk, which can carry more than 14,000 TEUs. Fifteen years ago, a typical Panamax ship (the largest ship that can fit through the Panama Canal) had a nominal capacity of around 3,500 TEUs. This increased to a current value in excess of 5,000 TEUs, in part by stacking more containers on deck. The ACP wants to ensure that the fee
  • 35. Do Not Copy/HEISENBERG/2014/ORIGINAL structure reflected both the actual TEUs carried, as well as the volumetric capacity of the ship. If the Canal had based its fee system solely on cargo carried, it would be potentially disadvantaged by the trade imbalance between Asia and the United States, in which many ships return to Asia only partially loaded. The rate effective on May 1, 2009 was $72.00 USD per TEU of capacity, a value that is currently under review. The toll is lower for cruise and container ships carrying no cargo (“in ballast”), which in May 2009 was $57.60 USD per TEU of capacity. Further planned rate increases have been repeatedly delayed due to the global economic slowdown. Passenger vessels (cruise ships) exceeding 30,000 tons pay a rate based on the number of passengers that can be accommodated on a berth/passenger basis. The per-berth charge is currently $92 for unoccupied berths and $115 for occupied berths. This charge, which began in 2007, has greatly increased tolls on the larger cruise ships, while those under 30,000 tons, or less than 33 tons per passenger, are charged on the same “per-ton” schedule as freighters. Finally, most cargo ships pay a fee based on a PC/UMS net ton basis, where one ton is equivalent to a volume of 100 cubic feet. The calculation of tonnage for commercial vessels is quite complex but forms the metric reported by ACP for all noncontainerized passages. As of fiscal year 2008, this toll is $3.90 USD per ton for the first 10,000 tons; $3.19 USD per ton for the next 10,000 tons; $3.82 USD per ton for the next 10,000 tons; and $3.76 USD per ton thereafter. As with container-ships, a reduced toll is charged for freight ships “in ballast.” The magnitude of the fees for passages through the new locks is, at this time, unknown, but they will almost certainly be derived from a market-based method, incorporating the state of the global economy, price of fuel, and the fees charged for similar sized ships by the Suez Canal Authority. While the demand for trade freight movement through the West Coast is expected to be substantial in coming years, the West Coast ports face physical constraints to their expansion, as well as community demands that the volume of port-related truck and rail movements and their associated congestion, noise, and air pollution impacts be reduced. One indicator that suggests that more traffic will flow through the Panama Canal to the Gulf and East Coasts because of limited capacity at West Coast ports is the
  • 36. Do Not Copy/HEISENBERG/2014/ORIGINAL planned capacity at ports in Asia and on North America‟s West Coast. During the next five years, approximately 40 million TEUs of capacity are planned at eight major Asian intermodal export terminals. By comparison, less than 4 million TEUs of capacity are planned for West Coast ports, including the port at Prince Rupert in British Columbia. Not all the capacity of the Asian ports will be dedicated to trade with the Americas and the recession will slow plans for capacity expansion; however, the comparison suggests that the U.S. West Coast ports may not accommodate all the anticipated trade, and that a significant portion of that trade could divert to the Panama Canal to reach Gulf and East Coasts markets. Prior to 2006, shippers sending Asian containerized imports to the U.S. strongly relied on Southern Californian terminals – particularly those at Long Beach and Los Angeles – and Class 1 railroads which, in turn, saw unprecedented growth between 1990 and 2005. Around 2006, a greater number of shippers began to use other trade corridors to move containers to the large metropolitan markets of the Midwest and northeastern U.S., causing the Southern California ports to lose market share. It was estimated, using a basic cost model, that Southern California would remain the main corridor for deliveries to Texas, unless the import industry continued to add costs to containerized freight movements within the port hinterland. The Panama Canal came next, followed by the Port of Lazaro Cardenas on the Mexican pacific coast. It was argued that if Asian trade grew as predicted then all trade corridors would be needed to carry the traffic most suited to the commodities; and that a variety of trade corridors serving Texas was better than depending on one single corridor, even when this was feasible. The results are striking and indicate that a large part of the current U.S. population can be served by larger containerships using the new Panama Canal locks, given a moderate market-based fee structure. The results are estimates and are subject to the assumptions and costs chosen to drive the models. But even accepting this caveat, it appears that the Canal will prove to be a strong contender for Asian trade serving not only the East Coast, but also most of Texas and the Midwest after 2014. The ability of the Panama Canal Authority to stay on the multistage, critical path construction schedule13 suggests that the new locks will be opened in 2014 – the
  • 37. Do Not Copy/HEISENBERG/2014/ORIGINAL centennial year of the Canal. Two observations can be made about routes that will be operating at that date. First, many will not change in the short to medium term, 2016 to 2020. This is particularly true for imports if the U.S. economy recovers slowly. Where the demand justifies higher cargo volumes, steamship companies will move to larger ships at some cost inflection point. The Drewry work suggests that two inflection points are 6,400 and 8,000 TEUs for the current Panamax containership. The displacement of ships within that broad class by the 10,000-plus TEU ships now entering service on the Pacific and Suez routes suggests that steamship companies will have available vessels to put on the Panama routes, if justified by demand. The marine shipping sector remains weak and is still struggling with the consequence of new ships, ordered when demand was high, now being delivered by shipyards. Data taken from a 2009 Global Insight webinar described the situation that the industry faced at the peak of the overcapacity crisis. The second observation is that, if routes change because of larger ships, the shape of the routes – particularly the number of port calls – may diminish. The final section considers some of the key characteristics of post-2014 Canal routes. Due to the cost, time, and supply chain implications of modal selection, shippers are generally conservative when it comes to switching transportation modes. Therefore, as a general rule, shippers will change routes and ships incrementally and carefully. Economies of scale can profoundly reduce ton per mile cargo costs, irrespective of cargo type or mode. Trains, planes, and ships have all benefited over the past two decades from economies of scale, although there are con- sequences to routes as modal units get bigger. The most profound, as applied to ships, is that they call at fewer ports. Simply stated, ships make money when they are sailing, and lose it when in port. If larger ships use the new locks, they will stop less frequently if they are to be profitable. This opens an interesting debate as to the form this takes. Some contend that such ships would hub in the Caribbean, and smaller feeder vessels would complete the routes to Gulf ports. The benefits of this system centered on reducing sailing distance across the Gulf, taking advantage of off-shore, low-cost, 24/7 port operations; and concentrating on the trade lanes carrying high volumes of trade, such as from South America. Furthermore, smaller vessels could serve a wider variety of Gulf ports currently limited by channel depth. More recently, direct service to key ports like Houston appears commercially feasible based on the 6,000 to 8,000 TEU ship class – technically not a true Mega-ship. The tipping point
  • 38. Do Not Copy/HEISENBERG/2014/ORIGINAL between hub and spoke and direct service is demand. If a Gulf port is a true load center – which none is at the moment – direct service is viable. Load centers have several key characteristics:  They are the gateways to regions, not states;  They generate high volumes of trade, which, in the case of containers, exceeds 4 million TEUs; and,  They have strong landside connections linking multiple modes, and they can offer steamship companies a fast turnaround to keep ships sailing. As such centers emerge in the next two decades in the U.S. Gulf and South Atlantic, direct service will grow. At this moment, route development following the new Panama Canal locks is speculative and imprecise. They should maintain scrutiny on how the marketing of steamship companies changes from 2013 onwards in the build up to the opening of the expanded Panama Canal for business. Clearly, due to the many uncertainties described previously, it is impossible to determine with certainty how much additional freight movement in Texas will result from the expansion of the Panama Canal. However, it is possible to estimate the amount of freight moving within the State that has arrived at Texas ports from the Pacific via the Canal, and the amount of freight being exported from Texas that is likely to pass through the Canal on the way to its final destination. According to the ACP, approximately 84 million tons of cargo transited the Panama Canal from the Pacific to the Atlantic, while approximately 123 million tons transited the Canal from the Atlantic to the Pacific in 2009. Of this, the Gulf Coast handled approximately 21 percent of the Pacific-Atlantic cargo (17.7 million tons) and roughly 50 percent of the Atlantic-Pacific cargo (61.1 million tons). This is in contrast to U.S. ports on the East Coast and on the Great Lakes, which handled roughly 35 percent of the Pacific-Atlantic freight (28.9 million tons) and 15 percent of the Atlantic-Pacific freight (18.8 million tons). In 2008, Texas ports handled 61 percent of all foreign imports to U.S. Gulf Coast ports (261 million tons) and 40 percent of all U.S. Gulf Coast exports (92 million tons).17 Assuming Texas ports have an equivalent share of freight transiting the Panama Canal, it is estimated that, in 2009, Texas ports received approximately 10.8 million tons of freight that had passed through the Panama Canal (Pacific to
  • 39. Do Not Copy/HEISENBERG/2014/ORIGINAL Atlantic), and exported approximately 24.4 million tons of freight that passed through the Canal (Atlantic to Pacific). Given the top commodities transiting the Canal in 2010, the estimates of Texas‟ waterborne freight moving through the Canal appear reasonable, based on Texas‟ strong export base and commodity mix. The top commodities moving through the Canal from Atlantic to Pacific – particularly grains, petroleum products, and chemicals – are among Texas‟ top waterborne exports. The ACP estimated that with expansion, total volumes transiting the Canal would rise from a total of 279 million tons in 2005 to 508 million tons in 2025, a 3.0- percent annual growth rate. If this growth is evenly distributed, Texas ports can expect to receive an additional 6.6 million tons of cargo arriving from the Pacific via the Canal, and to export an additional 15.0 million to destinations in the Pacific.
  • 40. Do Not Copy/HEISENBERG/2014/ORIGINAL While the expansion of the Panama Canal is targeted toward serving container traffic – in particular consumer goods originating in Asia and bound for markets on the East Coast of the U.S. – the Canal also is likely to continue carrying a large amount of exported bulk freight from Texas ports to destinations in the Pacific. Though only a handful of ports in Texas serves significant volumes of containerized traffic or will be able to accommodate the very large ships newly able to transit the Canal, the impact of the Canal expansion will not be limited to only those facilities. Rather, the expansion is likely to have significant impacts on
  • 41. Do Not Copy/HEISENBERG/2014/ORIGINAL many Texas ports – some of which may develop feeder services connecting them to larger hubs, their surrounding communities, and the highways and rail lines that serve them. Key factors likely to impact Texas as a result of the Panama Canal‟s expansion include:  Accelerated growth at Texas ports;  Higher volumes on intermodal connectors;  Increased development of distribution and warehouse facilities in port areas;  More distribution centers focusing on Asian trade;  New competitive pressures on ports to increase channel depths;  More extensive communication with other Gulf and Atlantic ports;  More communication with Caribbean Transshipment hubs;  Inquiries from Midwest shippers in Texas ports and Texas-based distribution centers;  Resistance from environmental advocates and/or regulatory agencies to pro- posed new dredging projects; and  Air quality and other environmental impacts. There are several steps that the Texas transportation stakeholders can take in order to maximize the benefits accruing to Texas as a result of the Panama Canal‟s expansion, including the following:  Deepening channels and berths, where necessary, to accommodate larger vessels – The Port of Houston is one of several Gulf and East Coast ports with the greatest potential to handle post-Panamax vessels; the largest vessels passing through the Canal are likely to call only at the largest ports, while most Texas ports are expected to receive calls from these new mega- ships as frequently, the Port of Houston has already received light-loaded vessels with capacity of more than 8,000 TEUs.21  Improving intermodal truck and rail connections between the ports and the major U.S. consumer markets – Better regional highways and port connector roads (typically, the “last mile” of roadway between the port and the nearest interstate highway) are needed to handle trucks draying containers between the port and local and regional markets, and additional rail capacity and services also will be needed. Capitalization of the Texas Rail Relocation and Improvement Fund would allow the State‟s railroads to
  • 42. Do Not Copy/HEISENBERG/2014/ORIGINAL improve their infrastructure and operations, improving freight mobility and economic competitiveness for shippers. Since its creation in 2001, no funding has been appropriated for the Port Access Account Fund, which was originally set up to enhance port competitiveness and economic development. Yet, if a funding stream can be identified, the fund could serve as tool to coordinate and finance the $673 million of future capital projects that have been identified by Texas port authorities.22 In addition, they should work closely with its district and metropolitan planning organization (MPO) partners, private-sector freight stakeholders, and neighboring states, as appropriate, to identify key bottlenecks on the highway and rail systems that may be exacerbated by the anticipated growth in container traffic derived from both imports and exports caused by the Panama Canal expansion.  Responding creatively and effectively to environmental and community concerns regarding the impacts of port activities – Added freight through-put to the Texas port system will generate many legitimate environmental and community concerns regarding emissions, noise, and changes in land use. Even prior the Canal‟s expansion, Texas had seen periods of rapid cargo growth and facility expansion in recent years and is, therefore, in a good position to anticipate the types of issues that will be raised. Given current trends in logistics, Texas could see more distribution centers shifting to 24-hour operation, which will create the potential for community impacts. They should work with the Port Authority Advisory Committee, other stakeholders in the maritime community, MPOs, districts, and other planning agencies to ensure that potential environmental issues related to the Panama Canal expansion and other global maritime trends are identified and accounted for within the transportation planning process at the statewide, regional, district, and metropolitan levels.  Integrating freight and land use decision-making at the local and regional levels – they should encourage MPOs and other local planning agencies to work closely with ports to ensure that land use and master planning activities or strategies are coordinated. they should identify those areas near ports or freight corridors that are most likely to require future expansion, and inform the public regarding the location of strategic freight corridors in order to lower the potential for incompatible development in these areas. They should also work with ports, port authorities, motor carrier
  • 43. Do Not Copy/HEISENBERG/2014/ORIGINAL associations, and local planning agencies to develop a better understanding of how port-related drayage movements affect the performance of the transportation sys-tem; the overall mobility of people and goods in and around key port facilities; and how drayage movements are expected to change as a result of the Panama Canal expansion.  Developing transloading and marine highway services to feed traffic from the major, deepwater hubs to smaller ports across the Gulf and East Coast – Most Panama Canal traffic will not be moving in the largest post-Panamax vessels for some time into the future. Much of the traffic will continue to move in smaller vessels that can provide point-to-point service for medium-sized markets. Small and medium-sized Texas ports have the opportunity to maintain or capture this traffic, possibly through employing feeder collection and distribution networks to and from the larger hubs. Texas is well positioned to take advantage of the emerging network of marine highways for domestic maritime shipping. An expansion of domestic short sea services could help to relieve pressure on other modes. In order to accommodate larger ships that can carry more TEUs, the Panama Canal Authority (ACP) is adding a third set of locks and deepening the channel through the canal and Lake Gatun to allow post-panamax ships to be able to transit the canal. The new Panama Canal will be able to handle a post-panamax ship of up to
  • 44. Do Not Copy/HEISENBERG/2014/ORIGINAL 11,000 TEUS with a 51 foot draft. These vessels which will then be the largest vessels able to transit the Panama Canal are being referred to as new panamax (NPX) vessels or “E Class” vessels. The expanded Panama Canal is expected to open in 2014, coinciding with the 100th anniversary of the original opening of the canal. It is uncertain what effect the expanded canal will have on U.S. East Coast and Gulf Coast ports. However the expansion of the Panama Canal will have some effect on operations, including relieving congestion at the canal entrance and allowing the canal to remain competitive in the international shipping market. The goal of the canal expansion is not to compete with alternative routes, but instead to have enough capacity for the users of the canal to better compete (Johnson, 2007). This research provides some insight into some of the possible effects the larger ships transiting the canal will have on U.S. East Coast and Gulf Coast ports. The analysis contained within this report is limited to container shipping and looks at three primary research questions. First, what is the existing intercontinental flow of container freight across the U.S. “land bridge” from the West Coast to the East Coast. Second, what are the benefits and limitations of the all water route through the Panama Canal vs. the intermodal route by truck or rail across the United States. The expansion of the Panama Canal is expected to have a significant impact on canal operations and the ships that transit the canal. The Panama Canal is no longer a option in the international shipping market but rather an important component of a worldwide shipping network. Expansion in advance of a trend of larger ships is going to prevent clogging and possible irrelevance of one of the world‟s most important trade arteries (Gellman, 2006). To illustrate the importance of the Panama Canal in the overall worldwide shipping network, currently the Panama Canal handles five percent of the world‟s trade with approximately 14,000 ships passing though the canal each year (Wilson, 2009). The largest effects at the canal itself are expected to be an expanded capacity and an increase in cost to shippers. For containerized traffic, Traffic World (2007), an international shipping magazine, reports financial impacts that include an increase in TEU fees by about twelve percent per year over a period of three years. This is approximately a nine dollar (U.S.) increase per TEU in the toll for 2008 and 2009. There will be other similar increases in tolls for bulk tonnage, car carriers and other segments of the shipping market (Traffic World, 2007).The Panama Canal Authority has said they plan to double tolls by 2025 (Dupin, 2006).This is an
  • 45. Do Not Copy/HEISENBERG/2014/ORIGINAL estimated three and a half percent increase in tolls each year from 2005 to 2025 (Leach, 2006). Prior to the expansion, the average toll for the Panama Canal was $32,000 per vessel and the canal was working at 93% of capacity. In addition to the regular toll, the final slot of the day is sold at “auction” to the highest bidder. For example, a spot that typically would have been $45,000 went for $230,000 in auction at the end of one day. There is concern over the increase in canal tolls and there is a fear that the Panama Canal Authority will raise tolls so high to pay for the expansion project that shippers will look for alternate, cheaper, routes to the East Coast. “The tolls are really high now, and if they are doubled, it will force carriers not to want to use the canal and seek alternative routes like the Suez Canal” (Leach, 2006). Vessels typically won‟t plan to transit the canal unless they know they will have a slot. However with the expansion of the canal, there will be an increased capacity. One estimate is daily traffic will increase from 38 to 51 vessels per day. In 2003, there were approximately 13,000 canal transits, moving 260 million tons of freight (Bijo, 2004) and by 2025, some expect this number to increase to 15,000 transits (Dupin, 2006). Kevin Knight from the U.S. Army Corps of Engineers Institute for Water Resources estimates that freight volume is expected to increase by an average of 3 percent a year from 2005 which will double the 2005 tonnage by 2025. Currently, the container ships transiting the canal today carry 4,500 to 5,000 TEUs each. However, with the expansion of the canal, ships carrying up to 12,000 TEUs will be able to pass through the corridor. “The World Shipping Council estimates that in 2006, about ten percent of the world‟s container slots are on ships larger than 5,000 TEUs by 2011, 50% or more of the capacity of the world global fleet will be comprised of these larger ships” (Dupin, 2006). EFFECTS ON PORT AND PORT EXPANSION:- Much of the literature on the effects of the Panama Canal expansion on ports indicates that some ports will be easily ready for larger ship visits, while others will not. Hampton Roads, Virginia and Baltimore, Maryland have a history of handling vessels capable of navigating the Cape Horn of South America, which allows them to easily accommodate the New Panamax (NPX) vessels. Many ports are acquiring land and putting out contracts to increase capacity and operations at their facilities. These ports are expecting, in the long term, their business will come
  • 46. Do Not Copy/HEISENBERG/2014/ORIGINAL back and that expansion will be necessary to increase operations. Some ports are looking to privatization as the solution, due to the shift from West Coast to East Coast ports (Dupin, 2009). Virginia and Baltimore will be ready to accept larger ships that have transited the canal in 2014 because they already have 50 foot shipping channels while other ports such as New York / New Jersey may not due to existing limitations. Although New York will continue to be a major port because of the large population it serves, it may not be able to handle the NPX ships due to height restrictions on the Bayonne Bridge (Dupin, 2009). Many ports are not ready, due to similar problems they face with their draft depths. However some analysts expect many ports will dredge their channels and purchase large post-panamax cranes to be able to accommodate larger ships (Dupin, 2006). Although, this is not an immediate answer because dredging is a lengthy process and can take many years before a project is approved and completed. CSX and Norfolk Southern are also helping to improve the intermodal route with their Southern Heartland Corridor and National Gateway projects to allow double stacked trains to reach the Midwest quickly. There has also been a growth of distribution centers in the region and it is becoming more expensive to do business on the West Coast. This may lead to a possible increase in shipping of freight to the East and Gulf Coast (Dupin, 2009). Some researchers feel that in addition to new distribution centers on the East and Gulf Coast, escalating rail costs and new population concentrations will make the East Coast ports more effective as a port of call in the next ten years (Miller, 2008). Additionally, with increasing fleets of larger vessels and a growing market in Asia, East Coast ports can expect larger vessels to arrive via the Suez Canal (Dublish, 2005). Additional Challenges In addition to physical limitations of the canal and ports, there are external factors that may be responsible for future changes in shipping. Recent reports have indicated there may be a shift in manufacturing from Northeastern China to Western India which causes New York to be 3,308 miles closer via the Suez Canal, over the Panama Canal. This westward movement in the production of goods will favor movement to the East Coast through the Suez, making the East Coast more appealing (Knight, 2008). Additionally, Los Angeles and Long Beach are
  • 47. Do Not Copy/HEISENBERG/2014/ORIGINAL becoming “boutique ports” with imports primarily becoming destined for the region immediately around the port (Miller, 2008). Freeport, Bahamas is in the market to become a hub port where large post- panamax vessels could offload their cargo and transfer it to smaller ships destined for U.S. ports. If this were to become a popular mode of freight transport, it is possible that U.S. ports may not need to deepen as many ports or even dredge as deeply as originally thought (Knight, 2008). There are many unknowns related to the expansion of the Panama Canal and its effect on global shipping. Some are concerned that the size of the ships may not be the most important factor, but instead an increase in traffic brought by globalization (Knight, 2008). Also, researchers are concerned that if tolls at the Panama Canal become too high, other routes such as the Suez Canal will become more popular (Knight, 2008). A third and perhaps the most important concern is the readiness of the existing East Coast and Gulf ports. Even ten years after the expansion of the canal, most ports will not have the necessary capacity to accommodate post-panamax ships. In order to accommodate larger ships, infrastructure investments will need to be made. Some of these investments include deeper channels, longer docks, more storage area and the ability to move containers from ships to truck or rail (Knight, 2008). At the present time, there generally is a wide spread belief that the ports just cannot be ready in time to accept an increase in capacity and frequency of ships. Port Expansion The issue of larger post-panamax ships calling on ports is not just a scheduling issue, but also a physical issue. Larger container ships require longer docks, more cranes, deeper water and make on-dock rail even more attractive especially with limited storage space. Additionally, as containers are stacked wider and higher, it requires larger and more cranes to efficiently unload these larger ships (McCray and Gonzalez, 2007). Not all ports are ready to accept larger ships or an increase in the frequency of arrival of these types of ships. Additionally, there is a lot of lead time required to expand to have the necessary capacity to become a port that handles NPX ships. New cranes cost nine million dollars (U.S.) to eleven million dollars (U.S.) and acquiring more land can be costly or possibly, not even an option. Deeper water can take years, including the time for environmental studies, permits and expensive dredging (McCray & Gonzales, 2008). All this indicates
  • 48. Do Not Copy/HEISENBERG/2014/ORIGINAL that if ports are not ready now, they will not be ready in the near future to handle post-panamax ships. The impact to the East Coast and Gulf Coast ports is truly the debated question. Some say “Enlarging the Panama Canal will be one of the most significant logistical „Game Changers‟ in U.S. shipping history, providing East Coast ports positioned to handle larger ships an economic windfall” (Abt, 2008). The key in that statement is “ports positioned to handle larger ships”. The ability of ports to handle post-panamax ships will likely be one of the limiting factors in how much of an increase there will be (Abt, 2008). Ports that want to be a part of this possible opportunity are outlining their plans for upgrades to increase capacity and size of ships that they are able to handle. “Besides increased dredging, the most frequently mentioned plans were investments in rail yard expansion and electric freight handling equipment and larger greener warehouses” (Abt, 2008). Four ports on the East Coast are expanding in preparation for a need for additional capacity as a result of the Panama Canal expansion. These ports include Portsmouth, Virginia; Charleston, South Carolina; Savannah, Georgia; and Jacksonville, Florida (Carey, 2006). A logistics specialist at the University of Tennessee, Tom Mentzer, believes Charleston, Savannah, and Jacksonville will be in a good position to expand because the West Coast ports will be operating near capacity after 2010. This may result in shippers exploring alternate routes via the Suez and Panama Canals (Carey, 2006). “The ports of New York/New Jersey, Savannah, Charleston, Virginia all are going to benefit, while smaller ports like Philadelphia, Baltimore, Wilmington, Boston are poised to become niche, ports rather than compete with bigger ports” (Dublish, 2005). With a possible increase in freight in these locations, both CSX and Norfolk Southern will likely benefit especially as the interstates become more congested (Carey, 2006). A Transportation Research Board (TRB) discussion panel in 2010 focused on this very topic. Laurie Mahon, an independent advisor for Infrastructure and Project Finance, said that many of the ports initially felt that they were going to see an increase in traffic from the expansion project in Panama. However people are realizing that they are no longer going to see ship making four or five ports of call, but, instead, one or two ports of call leading to ports competing for business.
  • 49. Do Not Copy/HEISENBERG/2014/ORIGINAL Additionally, Mahon suggested that even with a decrease in traffic, there is a general East Coast shift to shipping due to congestion and increased port charges in Los Angeles and Long Beach. Even with a shift of traffic to the East Coast, Mahon explained that each port has its own issues. According to Mahon, the dredging program is unorganized without a strategic allocation of resources. This gives ports with deep water an advantage above others, which includes Norfolk-Newport News, Baltimore, Savannah, and Charleston. There is an additional issue with rail connectivity and a lack of federal funding for rail investment. However, Jeffrey Heller from Norfolk Southern at the TRB discussion panel said Norfolk Southern has an “eastern rail perspective” and is investing in a number of large corridor projects, because they feel the capacity will be needed in the future. Norfolk Southern is expecting a growth of 33% between 2010 and 2014 in intermodal shipping. Heller notes that, prior to 2000 most freight moved across the land bridge either starting or ending on the West Coast. However, in 2000, Norfolk Southern noticed a shift towards the East Coast. For various reasons, including the Suez Canal, the East Coast ports have become more attractive. Heller believes on dock rail is one of the key attractions when shippers are looking for a port of call and this is one of the included features in some ports‟ new designs. Heller showed that it is the position of Norfolk Southern that container volume between East Coast ports and inland destinations will be increasing and they have been working on a number of projects that decrease the number of barriers for freight flow and increase the capacity from the East Coast. Russell Adise from the U.S. Department of Commerce at the TRB discussion panel said others tend to describe ports as a window or a doorway with the rail lines and highways being corridors. In order to best use the system, one must look at the whole system and where freight is going. Adise makes the recommendation that users pick ports for the following reasons: cost, congestion, fees, transportation network, access to transportation networks, capacity, frequency of vessel service, quality of roads, quality of on dock rail service, the distribution network, the connecting infrastructure channel and berth depth and width. Adise stated that there is a potential for greater U.S. throughput and a resilience of port infrastructure as a result of the Panama Canal expansion. Additionally, he adds that these benefits can be maximized through the use of dredging, connecting infrastructure and expansion of inland infrastructure. Several of the ports on the Gulf Coast and East Coast have put out literature on why they are ready for the expansion of service as a result of the canal expansion. Charleston in particular has advertisements marketing their abilities as a deep
  • 50. Do Not Copy/HEISENBERG/2014/ORIGINAL water port and their infrastructure abilities that make them able to accept larger ships. Charleston is also promoting information about larger ships regularly calling on the East Coast. What Ports are doing to Prepare Florida In Jacksonville, a new terminal is being built by TraPac, the operating component of Mitsui OSK Lines, a Japanese shipping company, that will double the operating capacity of Jacksonville‟s port. This is one of four ports involved in expansion in preparation for an expected influx of freight to the East Coast ports (Carey, 2006). Virginia The Virginia Port Authority (VPA) was the first member of the Smart Way port traffic retrofit program sponsored by the Environmental Protection Agency (EPA) that provides low interest loans to drayage drivers that want to upgrade equipment. “Many of these steps are aimed directly at preparing for increased freight coming through the Panama Canal” (Abt, 2008). Additionally, the port of Norfolk has an advantage over other ports with a naturally deep channel, at 50 feet (Dublish, 2005). The VPA has purchased cranes that can handle ships 26 containers wide and plans to double its on-dock rail capacity at the Norfolk International Terminal (Dublish, 2005). Maryland According to Kathleen Broadwater of the Maryland Port Administration, the Port of Baltimore has reached an agreement about placement of dredging materials from the harbor deepening project. Additionally, they plan to build a new facility for additional marine terminal service (Abt, 2008). South Carolina Charleston appears to have a significant advertising campaign about what makes their port unique and why they are ready to accept post-panamax ships now. Charleston maintains a mean low water depth of 47 feet at the entrance channel and mean low water depth of 45 feet in the main channel. Additionally, Charleston maintains deep water at their docks so that if a ship can navigate the channel it will
  • 51. Do Not Copy/HEISENBERG/2014/ORIGINAL be able to safely dock as well. They are putting in place a sediment suspension system that will maintain the depths of their berths at a much lower cost. “‟Charleston has a significant advantage over many ports because the channel is such that ships can meet easily without a problems,‟ Bennett said” (Bull, 2004). Charleston‟s channel is 500 to 1500 feet wide. The deep water and wide channel allows ships to safely transit the channel (Bull, 2004). New York/New Jersey NY/NJ has plans for a 1.6 billion dollar investment to improve the infrastructure, including deepening their channel to 50 feet by 2014 (Dublish, 2005). Additionally, they are increasing their rail capacity and putting in to place more intermodal links. However, the port of New York & New Jersey has limitations on ship heights due to the Bayonne Bridge crossing the shipping channel. Georgia Savannah has the rare advantage that it has major highways next to the port and plentiful space for warehousing and distribution centers, unlike many of the other ports (Dublish, 2005). Savannah also has on dock rail with both of the major rail shippers in the South East, CSX and Norfolk Southern. There is plenty of room for expansion in Savannah‟s Garden City terminal and they plan to more than double their annual container load in the future. The Caribbean David Bindler, in his article “Are Mega Ships Coming to the Caribbean?” says that the development of the Panama Canal will have a major impact to the Caribbean ports. Some Caribbean ports, such as Kingston and Freeport, have pursued larger ships, but their ports are already at capacity. The Caribbean ports are being used in a hub and spoke system where large ships transfer their containers to smaller ships with less draft in the Caribbean. However, if they wish to remain competitive, Bindler recommends they are going to need to become more cost effective and have structural and cultural changes (Bindler, 2006). In order to become more cost effective, Bindler‟s recommendations include increasing crane productivity, ensuring Caribbean equipment is in service greater than 95% of the time, reducing truck turnaround times to less than an hour, extending delivery times, upgrading and streamlining their technology, continue training and implement strict safety and security measures.
  • 52. Do Not Copy/HEISENBERG/2014/ORIGINAL The design and construction of the Panama Canal‟s new locks is the most complex project under the Expansion Program. At a cost of $3.2 billion -60% of the program‟s total budgetthecontract was awarded to consortium GrupoUnidospor el Canal on July 15, 2009. The consortium, formed by SacyrVallehermoso S.A. from Spain; ImpregiloSpA from Italy; Jan de Nuln.v from Belgium and Constructora Urbana, S.A. from Panama, initiated the works on August 25 of the same year. The project involves the design and construction of two locks complexes, one on the Pacific and the other on the Atlantic side. Each one will have three chambers, nine water-saving basins, a lateral filling and emptying system and eight rolling gates. The contractor is currently working on the structural concrete pouring of the walls and conduits of the locks, while embedding metal parts that will later fit control electromechanical equipment. The massive electromechanical parts that will control water flow as part of the locks operations are being built overseas. For instance, the first two shipments of valves arrived in Panamanian waters in December 2012 and January 2013, respectively, from the shipyards of Hyundai Samho Heavy Industries in South Korea. On the other hand, the 16 rolling gates are being fabricated in Italy by Cimolai, SpA. Shipping of the first four is expected by August of this year. An important rationale behind the expansion of the Panama Canal relates to the improvement of economies of scale in maritime shipping. A growing share of the world containerized fleet is unable to use the current Panama Canal, imposing new configurations in maritime services. By 2014, post-Panamax vessels are expected to account for 48% of the global container fleet capacity. Still, maritime shipping companies also expanded substantially ship designs fitting the Panamax specifications. This underlines the importance of the standard, not only because of its capability to use the Panama Canal, but also since many ports around the world have a draft and crane equipment designed with such specifications. Switching away from standards is always a costly and risky endeavor. The canal expansion has the benefit of putting the capacity on par with the level of economies of scale applied in long distance maritime shipping while remaining the de facto ship size standard. Maritime shipping is also highly sensitive to bunker fuel costs as they represent between 45% and 50% of operating costs with limited opportunities to mitigate outside slow steaming. Fordecades, the cruising speed of containerships has been relatively constant, enabling to maintain a level of
  • 53. Do Not Copy/HEISENBERG/2014/ORIGINAL schedule integrity along pendulum routes. Rising bunker fuel prices and excess shipping capacity caused by the financial crisis of 2008–2010 induced several maritime shipping companies to lower the operational speed of their ships. While the standard sailing speed of a containership is in the range of 20 to 25 knots, „normal‟ slow steaming involves speeds between 18 and 20 knots, with super slow steaming reaching speeds as low as 14 knots. Recently, the Maryland Port Authority (MPA) extended the deal with the Panama Canal to generate new business opportunities with Asia. The MPA renewed the Memorandum of Understanding (MOU) for the next five years with the Panama Canal Authority. With the Panama Canal expansion project scheduled to be completed in 2015, the Port of Baltimore will be in the forefront to receive the bulk of increased activity due to its prominent location in the Northeast and proximity to the Midwest. As a result, accommodations are currently underway to handle the increased traffic and larger vessels. In 2010, the Seagirt Marine terminal agreed on a public-private partnership with Ports America Chesapeake to complete capital improvements to Seagirt‟s berth and facilities. A new 50-foot berth, completed in August 2012, is able to host the post-Panamax vessels that can carry more than 12,000 TEUs. In addition, the Seagirt Marine terminal has added long-reaching cranes to load and unload the super-sized container ships. Such upgrades cost approximately $460 million in equipment and additional enhancements.10 Currently, Baltimore and Norfolk will be the only two ports on the East Coast that will be able to accommodate the larger vessels. According to the U.S. Department of Transportation (USDOT), by 2020 there will be a 50 percent increase in total cargo traveling through U.S. ports, and international container traffic will more than double. For many years, the ports on the West Coast have served as the primary docks in the U.S. for cargo transported from Asia. Once the cargo arrives at West Coast ports, it is shipped across the nation to the East Coast via the U.S. “land bridge” using rail or road and trucks as modes of transport. As quick transport of cargo across the country is important, there is a strong need for an alternative strategy, such as a greater use of the East Coast ports. Another factor contributing to this alternative strategy is the limited land area around the 29 major West Coast ports. The West Coast is very congested and has limited land to build the necessary warehouses and distribution centers. However, the East Coast and Gulf Coast ports have nearby areas where construction and expansion can occur.
  • 54. Do Not Copy/HEISENBERG/2014/ORIGINAL In 2002, roughly 7,000 members of the International Longshoremen and Warehouse Union went on strike, impeding the ability of many importers and retailers to ship through several West Coast ports and resulting in service disruptions. Between the years 2004 and 2008, additional labor disputes occurred, causing more closures. Many “importers, retailers, warehouse distributors, shipping companies and state port authorities” joined together to find an alternative trade route for their vessels. The East and Gulf Coast ports were perfect for a less expensive strategy for cargo transportation.” Mississippi River and accounts for 60 percent of the nation‟s GDP. This poses a major limitation for West Coast ports as they have higher costs associated with moving goods inland when the final destination moves eastward. The relationship between time and cost via an all-water route and intermodal transportation route serves as the focal point for the comparative advantage between the East and Gulf Coast and the West Coast ports. On a per-TEU basis, an all-water route is the least expensive transportation option. Intermodal transportation (water/rail) is the best option for container traffic based on both time and cost. Following the expansion of the Panama Canal, the “East and Gulf Coast ports could attract up to 25% of ship traffic that was previously destined for the West Coast.” Considering the comparative advantages that the East Coast ports have over the West Coast ports, the Class-1 railroad company CSX saw this as a beneficial opportunity to market its double-stack rail freight train cars to better serve the Eastern Seaboard. In anticipation of the expanded Panama Canal expansion, companies are likely to soon choose an alternative low-cost route to distribute their freight. Experts in the industry are predicting a shift of containerized cargo from the West Coast ports to the East Coast ports by 20 to 25 percent. With its proximity to the majority of the population, the Port of Baltimore will be in a prime location to capture a significant percent of the market share of maritime business. In addition, inland ports are becoming favorable for ships because of fuel efficiencies and economies of scale. A number of CSX operating facilities are located in Maryland, including Curtis Bay and Jessup. CSX maintains roughly 830 public and private crossings throughout the state and handled 1,156,000 carloads of freight in 2011.22 The CSX operating facilities contribute significantly to the state‟s economy. In 2011, a total
  • 55. Do Not Copy/HEISENBERG/2014/ORIGINAL of 1,770 workers, who received $120 million in compensation, were employed by the CSX in Maryland.23 With the Panama Canal expansion, additional opportunities will be created for the state and Baltimore to capture new container traffic. Current upgrades to transportation infrastructure will be critical for Baltimore to become the central destination for the post-Panamax vessels coming from the Panama Canal. The Maryland Department of Transportation (MDOT) and CSX are working together to conduct upgrades to CSX‟s facilities. Such upgrades include the raising of bridge and tunnel height. The $850 million public-private partnership, called the National Gateway project, will improve the flow of rail traffic by creating new double-stacked trains with the ability to carry two containers on top of one another on a single car.24 A double- stack container train will be able to transport twice the amount of freight. Key states in the project include Ohio, Pennsylvania, District of Columbia, North Carolina, Virginia and West Virginia. When the National Gateway project construction is complete, linkage between mid-Atlantic ports and the Midwest will improve freight efficiency between eastern and western rail networks.
  • 56. Do Not Copy/HEISENBERG/2014/ORIGINAL Chapter – 7 Methodology of Research The methodology of research has been followed as under:- Data collection:- The data for this research is mainly data from secondary sources. The secondary sources of data collected were as follows:-  Internet  Books in the library  Magazines  EXIM News  International Business magazines  New commercial economic times With regard to the secondary data are the following:-  http://caribgrowth.competecaribbean.org/content/OnesimoSanchezKingston panamacanaljune2012_.pdf  http://www.fhwa.dot.gov/planning/freight_planning/talking_freight/talkingfr eight10_21_09rs.pdf  http://people.hofstra.edu/jean-paul_rodrigue/downloads/PT51-10_3.pdf  http://www.fortna.com/whitepapers/Article_Viewpoint_PanamaCanalExpan sion_FINAL_EN.pdf The purpose of the study:- To this research is below:-  For the determination of the substantial change of the flows of Panama Canal.  SUCH AS THE EXTENSION OF THE Panama Canal is directly or indirectly on the container bulk SEC and trade oil tanker.  To test the program on the extension of the United States its Panama Canal
  • 57. Do Not Copy/HEISENBERG/2014/ORIGINAL  To answer the question, "Is it correct that the extension of the current Panama Canal are proving to be a game improved for containers, bulk materials SEC and tanker trade?"  As Panama Canal be used strategically by the United States?  The changes to the project could in world trade.  The expansion of the Panama Canal had an impact on the transportation and logistics industry? Design of the research:- The preparation of the research was both qualitative and quantitative. This was mainly:-  Descriptive research  Explanation research  Quantitative research
  • 58. Do Not Copy/HEISENBERG/2014/ORIGINAL Chapter - 8 Reference  The Panama Canal Expansion: potential impact on the logistics and supply chains By around C. Sanchez, Office for research and market analysis, June 2012. http://caribgrowth.competecaribbean.org/content/OnesimoSanchezKingston panamacanaljune2012_.pdf  Expansion of the Panama Canal potential impact on Asia - East Coast/Gulf trade By Rodolfo sabonge, Vice President of Marketing, Research and Analysis office authority of the Panama Canal http://www.fhwa.dot.gov/planning/freight_planning/talking_freight/talkingfr eight10_21_09rs.pdf  The Panama Canal Expansion: business as usual or improved? Dr. Jean-Paul Rodrigue, Hofstra University, New York, USA, & Dr. Theo notteboom, President itmma, University of Antwerp, Antwerp, Belgium http://people.hofstra.edu/jean-paul_rodrigue/downloads/PT51-10_3.pdf  Impact of the Panama Canal the extension of the distribution networks By fortna, www.fortna.com http://www.fortna.com/whitepapers/Article_Viewpoint_PanamaCanalExpan sion_FINAL_EN.pdf