WORK on the proposed Nicaragua Inter-Oceanic Canal could commence this year and take six years to complete as a consultancy report asks if this means big trouble for the Panama Canal - and a game changer for container shipping.
Cargo from many trades pass through Panama, much of which is transshipped at ports at either end, says a report by Andy Line and Charles Moret, partners in CTI Consultancy, of Richmond, Virginia.
"With the transit time between Nicaragua and Panama limited to one to two days, some are better through Nicaragua, others through Panama. But again, transshipment and connectivity mean that only Panama can be selected," said the report.
"We should not expect ferocious cost competition between Panama and Nicaragua. Panama has a country to feed and Nicaragua a US$40 billion investment to pay off,"
The big question in the consultants' minds is what happens if or when larger vessels are deployed, beyond that of new panamax size, In that case, they will be forced to use Nicaragua.
Having quality transshipment ports in Panama creates opportunities for network optimisation. It also creates the ability to send as few highly utilised services as possible through the canal, they said.
"We might expect lower growth on the larger Asia-US east coast trade, especially when compared to the expected high growth of the developing South American countries," said the report.
Turning to growing near-shoring and re-shoring trends, the report said: "If the main growth is west of Hong Kong, then it is faster and cheaper for this cargo to reach the US east coast via Suez.
"So canal competition is clearly global, and although not suited to containers, in time we might also see dry and liquid bulk shipping favouring the northern passages, at least seasonally," said the report.
WORLD SHIPPING
19 September 2014 - 21:11
With bigger ships, a Nicaraguan canal could mean big trouble for Panama
WORK on the proposed Nicaragua Inter-Oceanic Canal could commence this year and take six years to complete as a consultancy report asks if this means big trouble for the Panama Canal - and a game changer for container shipping.
WORLD SHIPPING
19 September 2014 - 21:11
With bigger ships, a Nicaraguan canal could mean big trouble for Panama
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