Conference told expanded Panama Canal yet to fill box ship transit goals
SHIPPING lines speaking at the recently held TOC Americas Container Supply Chain event in Cancun, Mexico, say the expanded Panama Canal is under-utilised.
The Panama Canal Authority (ACP) has created slots for a total 12 transits per day for container vessels. But fewer than a third of have been used, according to Hamburg Sud vice president Matthias Dietrich.
"Bookings for the neopanamax (up to 14,000 TEU) vessels have been slow to come "last month, there were a few days which saw four vessel transits, but on most days it has been two or three transits", he said.
"There is still a lot of room," he continued, adding that this would mean it unlikely that the ACP would be able to increase transit fees in the short term, according to a conference press release.
While the larger locks have led to Panama winning back considerable volumes from Suez - especially in respect of its role as a key artery on the Asia-US east coast trade - this has failed to translate into more vessel transits, as the larger dimensions allow more cargo to be carried on fewer ships.
MSC's west coast South America planning manager Hernan Salazar told delegates that prior to the expansion, there were 16 weekly service strings through the Panama Canal, which has subsequently been reduced to 13.
MSC itself has reduced the number of its vessels transiting the waterway from 18 per week to nine, while the average size of vessels transiting the waterway, previously 4,600 TEU (effectively the panamax limits) has now increased to 6,400 TEU.
Panama Canal expansion has hit traffic through Suez, said Mr Salazar. This time last year the waterway connecting the Indian Ocean and Mediterranean Sea saw 52 per cent of the traffic between Asia and the US east coast, with Panama controlling the remaining 48 per cent. Today, Suez has a 43 per cent market share and Panama 57 per cent.
"After the new locks Panama was able to offer carriers the same economies of scale and it is a much shorter route," he said.
Subsequently, Suez has issued rebates to try and lure some lost business back - as much as 60 per cent according to Rodolfo Sabonge, vice president of Research and Graduate Studies at Panama Maritime International University.
The primary target of that pricing policy was backhaul traffic returning to Asia via South Africa under extreme slow steaming, but Mr Salazar warned the ACP that it would also need to develop some strategy in response.
But the prospect of Panama seeing large chunks of new business coming through its most important national asset in the short term was unlikely, warned Hamburg Sud's Mr Dietrich, especially while demand for container transport remains so muted.
However, over the medium term, traffic could well see a significant increase if US shippers in the mid and eastern parts of the country decide to redesign their container supply chains from Asia.
In that context, US Federal Maritime Commission Chairman Mario Cordero told delegates that the expansion represented a fundamental change in trade patterns. "It is going to give US shippers more options about where their cargo enters the US - if port productivity is low on the west coast shippers have more options open to them than before," he said.
And Mr Sabonge claimed it was still early days in terms of the relatively low level of neopanamax bookings. "It was never meant to be full the day after the expansion was opened - we have already had 162 transits of container ships since then, and there are 159 already booked for next year," he said.
SHIPPING lines speaking at the recently held TOC Americas Container Supply Chain event in Cancun, Mexico, say the expanded Panama Canal is under-utilised.
The Panama Canal Authority (ACP) has created slots for a total 12 transits per day for container vessels. But fewer than a third of have been used, according to Hamburg Sud vice president Matthias Dietrich.
"Bookings for the neopanamax (up to 14,000 TEU) vessels have been slow to come "last month, there were a few days which saw four vessel transits, but on most days it has been two or three transits", he said.
"There is still a lot of room," he continued, adding that this would mean it unlikely that the ACP would be able to increase transit fees in the short term, according to a conference press release.
While the larger locks have led to Panama winning back considerable volumes from Suez - especially in respect of its role as a key artery on the Asia-US east coast trade - this has failed to translate into more vessel transits, as the larger dimensions allow more cargo to be carried on fewer ships.
MSC's west coast South America planning manager Hernan Salazar told delegates that prior to the expansion, there were 16 weekly service strings through the Panama Canal, which has subsequently been reduced to 13.
MSC itself has reduced the number of its vessels transiting the waterway from 18 per week to nine, while the average size of vessels transiting the waterway, previously 4,600 TEU (effectively the panamax limits) has now increased to 6,400 TEU.
Panama Canal expansion has hit traffic through Suez, said Mr Salazar. This time last year the waterway connecting the Indian Ocean and Mediterranean Sea saw 52 per cent of the traffic between Asia and the US east coast, with Panama controlling the remaining 48 per cent. Today, Suez has a 43 per cent market share and Panama 57 per cent.
"After the new locks Panama was able to offer carriers the same economies of scale and it is a much shorter route," he said.
Subsequently, Suez has issued rebates to try and lure some lost business back - as much as 60 per cent according to Rodolfo Sabonge, vice president of Research and Graduate Studies at Panama Maritime International University.
The primary target of that pricing policy was backhaul traffic returning to Asia via South Africa under extreme slow steaming, but Mr Salazar warned the ACP that it would also need to develop some strategy in response.
But the prospect of Panama seeing large chunks of new business coming through its most important national asset in the short term was unlikely, warned Hamburg Sud's Mr Dietrich, especially while demand for container transport remains so muted.
However, over the medium term, traffic could well see a significant increase if US shippers in the mid and eastern parts of the country decide to redesign their container supply chains from Asia.
In that context, US Federal Maritime Commission Chairman Mario Cordero told delegates that the expansion represented a fundamental change in trade patterns. "It is going to give US shippers more options about where their cargo enters the US - if port productivity is low on the west coast shippers have more options open to them than before," he said.
And Mr Sabonge claimed it was still early days in terms of the relatively low level of neopanamax bookings. "It was never meant to be full the day after the expansion was opened - we have already had 162 transits of container ships since then, and there are 159 already booked for next year," he said.