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Texas Ports and the Panama Canal: presentation to the Azerbaijani delegation

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The Texas division of the U.S. Department of State (USDS) invited CTR, in partnership with the LBJ School of Public Affairs, to provide presentations to an Azerbaijani delegation concerning CTR’s port and transit corridor research. Read the article: http://ctr.utexas.edu/2017/09/06/ctr-meets-with-azerbaijani-delegation-helps-shape-possible-trade-transit-corridor/

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Texas Ports and the Panama Canal: presentation to the Azerbaijani delegation

  1. 1. September 6, 2017 Policy Research Project Presentations Presented and prepared by the LBJ School of Public Affairs for the Texas Department of Transportation
  2. 2. September 6, 2017 Panama Canal Utilization By Chi-Hsiang Chu & Nina Ledermann
  3. 3. September 6, 2017 Panama Canal and Suez Canal Expansion The $5.4bn Panama Canal expansion project has doubled the canal’s capacity by creating a new set of locks that facilitates the expanding trade between North America and the Far East. The expanded canal can now accommodate Neopanamax vessels carrying up to almost 14,000 TEUs. The $8.5bn Suez Canal expansion project added a new 35km long lane to allow two-way traffic for the first time. Overall, the Panama Canal is increasing its competitiveness relative to the Suez Canal.
  4. 4. September 6, 2017 Panama Canal Utilization Doubled Fleet Capacity - 79% of global fleet Neopanamax Vessels – 5.9/daily New Market Segment - LNG
  5. 5. September 6, 2017 Effects of Panama Canal Expansion  The Asia-US maritime trade via the Panama Canal is expected to see growing profit.
  6. 6. September 6, 2017 Effects of Panama Canal Expansion  Texas LNG and LPG export industries are likely to benefit from the expansion due to reductions in transit time and costs.
  7. 7. September 6, 2017 Takeaways  Both the Panama Canal and the Suez Canal improved their services but the Panama Canal is significant for Texas.  Several shipping companies have started rerouting some of their Asia-US East Coast services through the Panama Canal and could transload for Gulf ports.  The Panama Canal expansion will benefit Texas exports to Asia, especially the LNG and LPG exports.
  8. 8. September 6, 2017 By Alex Payson & Chase Porter Texas Ports and the Panama Canal: Commodities and Infrastructure From TxDOT Project 5-6690-01: Impact to Texas’ Multi-modal Freight Networks: Panama Canal and South American Markets
  9. 9. September 6, 2017 Key Takeaways and Findings  Locks opened in June 2016Rebound in transits, cargo at canal, general rebound in Asian trade at Texas ports  Impacts at Texas ports will be commodity, port specific  Location of cargo’s ultimate origin/destination  Seaside accessibility and infrastructure  Terminal operations  Rail and road connectivity, efficiency, and reliability  Imports: Locks will facilitate increased containerized trade  Exports: Larger locks present new economy of scale for bulk cargo
  10. 10. September 6, 2017 Containerized Imports  “Anything that fits comes in a container.”  Organic increases due to population growth in the Texas Triangle  Possible shift of existing or would-be traffic from West Coast to Atlantic-side  Disagreement, uncertainty if Texas will be effected  Increases will (almost) exclusively be seen at the Port of Houston’s Barbour’s Cut and Bayport Terminals  Unclear if there will be more vessels, larger vessels, or a combination thereof  Transshipment is a possible outcome  POHA upgrading infrastructure to handle larger vessels; expanding Bayport Terminal to increase capacity
  11. 11. September 6, 2017 Transshipment Shipping Patterns  Conventional – call at all ports  Direct – region specific  Dominant pattern  Transshipment – feeder loops How Viable is Transshipment?  Ports vs Shipping Companies  Containerized goods only  Transshipment policy of Panama Canal Authority
  12. 12. September 6, 2017 TransshipmentTransshipment Opportunities  Transshipment Triangle  Benefits: Proximity to trade routes and port productivity  Windward Passage Cluster  Benefits: Proximity to Gulf and East Coast ports  Panama Gateway Cluster  Little deviation from the transatlantic and transpacific services  Corozal, Panama  Benefits: Closeness to Canal  Mariel, Cuba  Benefits: Development Space
  13. 13. September 6, 2017 Bulk Exports  Expanded locks favor commodities with “large-vessel” global fleets  Bulk energy liquids and other petroleum and natural gas related exports  LNG  Plastic resins  Dry bulk: Grain  Corpus Christi case study exemplifies that exports will be driven by industrial developments, including land availability, and seaside accessibility  Development trending towards La Quinta on north side of Corpus Christi Bay (oil refineries, LNG export terminal, ethylene producers, etc.)  Port hopes to lengthen, deepen ship channels and build new Harbor Bridge, but most development will come as industry demands it
  14. 14. September 6, 2017 Plastic Resins  Commodity driven growth  4th largest exporter of plastic resins (2014)  Greatest demand in Asia and EU  Asian demand for plastic resins rise from 20.5 million metric tons to 25.3 million by 2020  Houston and Freeport – all water route Challenges:  Tight supply of empty containers  Competition with rail
  15. 15. September 6, 2017 LNG Producing Areas ▪ Anadarko Basin in the Texas Panhandle ▪ Barnett Shale in the Dallas/Fort Worth and Arlington region ▪ Bossier/Haynesville Shale of East Texas ▪ Eagle Ford Shale in South Texas  37 active storage facilities  Existing: Import – Sabine Pass, Freeport  Approved: Import – Corpus Christi; Export – Freeport, Corpus Christi, Sabine Pass  Proposed: Brownsville, Port Arthur, Freeport  LNG net exporter by 2020  Growth of exports to Asia and Mexico

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