Expert weighs Panama vs Suez for Asian cargo, and impact of mega ships
DREDGING stands to be the key factor driving long-term US container port call strategies on both Suez and Panama all-water services, but it's doubtful the US has what it takes to do the job, according to Asaf Ashar, research professor with the US National Ports & Waterways Initiative (NPWI).
The US Army Corps, the federal agency governing dredging, failed to see ships larger than 8,000 TEU coming to the US east coast ports, a decision making these ports inaccessible to increasingly common 13,000 - 18,000-TEUers now in Asia Europe service, said Dr Ashar, also an independent consultant.
"The corps also dismissed the possibility that in the longer term, ships bigger than NPX, such as the 18,000 TEU Maersk Triple-Es recently deployed on the Asia-Europe trade, could be used on all water Suez services; and that in the even longer future ship size may reach the 28,000 TEU Malacca-Max (MLX)," said an synopsis of his views by Newark's Journal of Commerce.
What Dr Ashar sees is great, if not insurmountable, political and legal obstacles, not to mention the enormous expense, of dredging to a depth needed by much ships more than twice the size of those anticipated.
Should that become a non-starter, he says, then the natural deepwater ports of the Caribbean and eastern Canada ports, may well develop into super hubs offering feeder services to the smaller US east coast harbours.
"In this case, USEC ports would find themselves served by feeder services based on foreign hubs in the Caribbean region for all-water Panama and Canada for all water Suez. This change in service pattern could be avoided by further deepening of USEC ports' channels. However, considering the arduous process of the recent deepening projects, the prospects for this happening look pretty dim," he said.
"A recent review of all-water Suez rotations on the US east coast indicates that they are still based on the assumption of direct calls even at relatively small ports like Boston - handling 190,000 TEU a year - and at ports with relatively shallow channels like Savannah with 12 metres alongside," said the report.
"How the Panama Canal expansion will impact shipping and port networks across the Americas has been a topic of intense debate for years now and while there is some agreement, the jury is still out on other questions," said Dr Ashar, who will chair a debate on Panama vs Suez and prospects for direct call vs transshipment at the TOC convention on Tuesday, October 1 in Miami.
"There is general agreement that despite the considerable increase in ship size and the respective reduction in shipping costs, the Panama route is likely to see only a modest increase in market share relative to its main rivals, Suez and US west coast landbridge," said the JOC report.
"Where opinions diverge is on the impact of canal expansion on carriers' North American service patterns and, especially, whether the present approach based mainly on direct port calls will be replaced, at least in part, by a hub and spoke system," said the report.
"But the locks of the expanded Panama Canal are designed for New-Panamax (NPX) ships, which are forecast to initially have capacity of 13,500 TEU and eventually 15,000 TEU. Following worldwide trends, it is quite likely that NPX will be deployed on Panama as well as Suez services within five years of the expansion," Dr Ashar said.
"It is not unfeasible that that introduction of ships too large for USEC ports' newly-dredged channels will trigger a change in the service pattern of both all water Panama and all water Suez to hub and spoke.
"If the all water transforms into hub and spoke, it is reasonable to assume that the feeders will call at smaller ports previously bypassed. Additional calls may have a limited impact at ports with captive hinterlands, such as New York, but it may have a critical impact on ports like Miami, which has invested heavily in water, road and rail accesses hoping to be a first-in and last-out for all water Panama services," he said.
DREDGING stands to be the key factor driving long-term US container port call strategies on both Suez and Panama all-water services, but it's doubtful the US has what it takes to do the job, according to Asaf Ashar, research professor with the US National Ports & Waterways Initiative (NPWI).
The US Army Corps, the federal agency governing dredging, failed to see ships larger than 8,000 TEU coming to the US east coast ports, a decision making these ports inaccessible to increasingly common 13,000 - 18,000-TEUers now in Asia Europe service, said Dr Ashar, also an independent consultant.
"The corps also dismissed the possibility that in the longer term, ships bigger than NPX, such as the 18,000 TEU Maersk Triple-Es recently deployed on the Asia-Europe trade, could be used on all water Suez services; and that in the even longer future ship size may reach the 28,000 TEU Malacca-Max (MLX)," said an synopsis of his views by Newark's Journal of Commerce.
What Dr Ashar sees is great, if not insurmountable, political and legal obstacles, not to mention the enormous expense, of dredging to a depth needed by much ships more than twice the size of those anticipated.
Should that become a non-starter, he says, then the natural deepwater ports of the Caribbean and eastern Canada ports, may well develop into super hubs offering feeder services to the smaller US east coast harbours.
"In this case, USEC ports would find themselves served by feeder services based on foreign hubs in the Caribbean region for all-water Panama and Canada for all water Suez. This change in service pattern could be avoided by further deepening of USEC ports' channels. However, considering the arduous process of the recent deepening projects, the prospects for this happening look pretty dim," he said.
"A recent review of all-water Suez rotations on the US east coast indicates that they are still based on the assumption of direct calls even at relatively small ports like Boston - handling 190,000 TEU a year - and at ports with relatively shallow channels like Savannah with 12 metres alongside," said the report.
"How the Panama Canal expansion will impact shipping and port networks across the Americas has been a topic of intense debate for years now and while there is some agreement, the jury is still out on other questions," said Dr Ashar, who will chair a debate on Panama vs Suez and prospects for direct call vs transshipment at the TOC convention on Tuesday, October 1 in Miami.
"There is general agreement that despite the considerable increase in ship size and the respective reduction in shipping costs, the Panama route is likely to see only a modest increase in market share relative to its main rivals, Suez and US west coast landbridge," said the JOC report.
"Where opinions diverge is on the impact of canal expansion on carriers' North American service patterns and, especially, whether the present approach based mainly on direct port calls will be replaced, at least in part, by a hub and spoke system," said the report.
"But the locks of the expanded Panama Canal are designed for New-Panamax (NPX) ships, which are forecast to initially have capacity of 13,500 TEU and eventually 15,000 TEU. Following worldwide trends, it is quite likely that NPX will be deployed on Panama as well as Suez services within five years of the expansion," Dr Ashar said.
"It is not unfeasible that that introduction of ships too large for USEC ports' newly-dredged channels will trigger a change in the service pattern of both all water Panama and all water Suez to hub and spoke.
"If the all water transforms into hub and spoke, it is reasonable to assume that the feeders will call at smaller ports previously bypassed. Additional calls may have a limited impact at ports with captive hinterlands, such as New York, but it may have a critical impact on ports like Miami, which has invested heavily in water, road and rail accesses hoping to be a first-in and last-out for all water Panama services," he said.