The expansion of the Panama Canal has increased its capacity and allowed for larger ships. This will impact global trade routes and ports along the US East Coast. The ports of Charleston and Savannah have expanded to accommodate larger ships that can now pass through the widened canal. The expansion is also expected to benefit upstate South Carolina through increased cargo volumes at the inland port in Greer and more demand for warehouse space near the port.

1. EXPANSION AND RELATED IMPACT
OF THE PANAMA CANAL
With Recorded Audio Slides
Steve Greene
July 10, 2016
Greenville Technical College
Management 101-140
Ron Hofffman, Instructor

2. June 26, 2016
Cosco’s passage inaugurated the expanded
Panama Canal and began a new era in global trade.

3. PRESENTATION OUTLINE
• Need for Canal Expansion
• Expansion’s Size and Scope
• Short-term Market Conditions
• International Shipping of Hydrocarbons
• Impact on U. S. Shipping Routes
• Impact on the Ports of the US Eastern Seaboard
• Question 1: Impact on the Ports of South Carolina?
• Question 2: Impact on Upstate South Carolina?

4. NEED FOR THE CANAL EXPANSION
 Panama’s Economic Survival
 2006 Referendum
 Neo-Panamax Ships
 Competition from Suez Canal
 Reservations now at 170 large cargo ships.
 Annual Revenues should double to
$ 2 B per year in 2021

5. EXPANSION SIZE AND SCOPE
 Locks expansion and waterway dredging cost was $5.4-billion.
 10 year project started in 2006.
 Should double the capacity of the 50-mile Canal.
 Canal now carries about 6 percent of world commerce.
 Neo-Panamax ships now carry 45 percent of the world’s cargo.

6. SIZE AND SCOPE

7. Short-term Market Conditions
 10.2% net cargo decline in 2015 - USA to Asia.
 Suez Canal reduced its rates up to 65%.
 Past reductions in shipping prices led to. . .
 Shipping industry consolidation.
 Wait for other ports to expand for neo-Panamax ships.

8. A big boatload of
the future of
shipping.
Which ship can
sail through the
new Canal locks?

9. Shipping Hydrocarbons through the Canal.
 The new locks would still be too small to accommodate oil supertankers.
The locks would allow for oil tankers that carry 400,000 to 600,000 barrels.
But the economics of shipping oil call for freighters that can carry 1 million
barrels or more.
 LNG tankers carrying gas from America’s Eastern shale beds to Asia will
now be able to pass through the Panama shaving off 9000 miles. These
LNG tankers are expected to account for 20% of US cargo by volume by
2020.

10. Canal’s Expansion Will Reshape U.S. Trade Routes.
 Large vessel shipping will be diverted from the Suez Canal - Persian
Gulf route.
 Now more practical for Neo-Panamax ships to sail directly to and from
the East Coast rather than using busy West Coast ports.
 Shipping costs will decrease not only through shorter routes, but also
that East Coast cities are enlarging their ports, intermodal facilities,
and increasing transportation automation.
 Better East Coast ports will improve shipping with European ports.

11. Canal’s Expansion Impact on the US Eastern Seaboard.
 Asian imports will be more prevalent. The East Coast is China’s most important and
lucrative commercial destination.
 Many East Coast ports, including Charleston and Savannah have announced
projects to enlarge ports and deepen channels.
 Increase and improvements of East Coast supply chain infrastructure, intermodal
facilities, and freight automation.
 Along with natural gas exports, the biggest winner in the short term should be U.S.
agribusiness.
 Larger and more efficient ports and intermodal networks will increase shipping
efficiencies with European ports as well.

12. How does the Canal’s Expansion
Impact the Port of Charleston, SC?

13.  Much of the Charleston Harbor will be dredged from 45 to 50 feet.
 A new intermodal port terminal is under construction in North Charleston.
 Rail lines and new inland ports increase the volume and speed of cargo containers out of
the Charleston port.
 Georgia and South Carolina are co-developing the $500 million Jasper Ocean Terminal.
 Charleston’s port expansion will increase the building of distribution centers in the
Southeast.
WHAT ARE THE IMPACTS ON SOUTH CAROLINA PORTS?

14. How Does the Canal’s Expansion Impact Upstate South Carolina?
South Carolina Inland Port in Greer, SC

15. What Are the Expansion’s Impact on Upstate South Carolina?
 Upstate business will increase with much more cargo shipped to and from Charleston given the
expanded Panama Canal.
 Nearly 95,000 jobs and $26.8 billion in economic output in the Upstate in 2015 was related to the Port
of Charleston.
 Incoming cargo at the South Carolina Inland Port in Greer mostly comes by rail from the Port of
Charleston.
 The 2017 budget of the Ports Authority forecasts a 23 % increase container volume at the Inland Port.
 The Authority plans to spend $2.2 million in 2017 for upgrades and expansion of the Inland Port.
 Over six million square feet of private-sector warehouse space is under construction near Greer.

16. Credits of Sources:
“Panama Canal opens $5B locks, bullish despite shipping woes.”
Juan Zamorano and Kathia Martinez
The Post and Courier of Charleston, SC - The Associated Press, June 26, 2016
http://hosted.ap.org/dynamic/stories/L/LT_PANAMA_CANAL_EXPANSION?SITE=SCCHA&SECTION=HOME&TEMPLATE=DEFAULT
“Wider impact - What the expansion of Panama’s waterway means for world trade.”
Author not listed
The Economist, June 18, 2016
http://www.economist.com/news/business/21700657-what-expansion-panamas-waterway-means-world-trade-wider-impact
“Winners And Losers In Panama Canal Expansion.”
Lorne Matalon-Fronteras
KPBS Public Broadcasting of San Diego State University, June 27, 2016
http://www.kpbs.org/news/2016/jun/27/winners-and-losers-panama-canal-expansion/
“A new era in global trade begins, as $5.4-billion Panama Canal expansion opens.”
Chris Kaul
Los Angeles Times, June 26, 2016
http://www.latimes.com/world/mexico-americas/la-fg-panama-canal-expansion-20160626-snap-story.html
“South Carolina Will Get Boost From Expanded Panama Canal.”
Reno Deaton
Greer Development Corporation, June 25, 2016
http://greerdevelopment.com/sc-will-get-boost-expanded-panama-canal/
“Exceeding projections: Authority plans Inland Port upgrades.”
Robert Montgomery
GoUpstate.com, June 27, 2016
http://preps.goupstate.com/article/20160627/ARTICLES/160629718/1051/news?Title=Authority-plans-expansion-for-bustling-Inland-Port
“Study reveals ties between port, Upstate manufacturers.”
Rudolph Bell
The Greenville News, October 21, 2015
http://www.greenvilleonline.com/story/money/business/2015/10/21/study-reveals-ties-between-port-upstate-manufacturers/74263296/
2016 BIENNIAL OVERSIGHT REVIEW
The South Carolina Ports Authority, Review and Oversight Commission, January 2016
http://scstatehouse.gov/citizensinterestpage/ReviewCommissionOnSCStatePortsAuthority/ROCSPA%202016%20Oversight%20Report.pdf