Are all ports fit for purpose come the Panama push?

Numerous analyses have been put forward offering differing impact scenarios arising from the Panama Canal expansion. Most project substantially greater volumes of container cargo entering the Gulf of Mexico and Caribbean trades. The 15th edition of TOC Americas, taking place in Panama, 13-15 Oct, will scrutinise the ability of ports to cope with these greater volumes and vessel sizes, and assess cargo flow patterns in the wake of Canal expansion, with views from an impressive line-up of senior port and shipping executives across North and Latin America.

Scaling up

From next April, container vessels of up to 13,000TEU will be able to navigate the Canal, more than doubling the current 5,000TEU limit. The potential impact on the U.S. East Coast has been well documented. A recent analysis by Boston Consulting Group and C.H. Robinson suggests that up to 10 percent of container traffic to the U.S. from East Asia could shift from West Coast to East Coast ports by 2020, following the Panama Canal expansion.

In 2014, about 35 percent of container traffic from East Asia to the U.S. arrived at East Coast ports. But according to the report, current growth trends would push that share to 40% by 2020 even without the Canal’s expansion. With that expansion coming, the East Coast’s share could reach 50% — a 10% increase in market share.

West Coast ports will remain the destination of choice for shippers who need faster expedition to markets in the U.S. heartland. But for less time-sensitive products, the savings of shipping through the Panama Canal will likely outweigh the extra time in transit. This raises the possibility of a significantly changed logistics dynamic as shippers take a more segmented, nuanced approach to supply chain execution.

Yet it also raises questions about the ability of East Coast ports to absorb these vastly greater container volumes. Rerouting that amount of trade is equivalent to building a port roughly double the size of the current ports in Savannah and Charleston. While those and other East Coast ports have invested heavily in recent years to secure much of this projected growth, it is by no means certain that all will be well positioned to cope with a container "tsunami".

Shipping network patterns in the wake of Canal expansion, alongside vessel size growth, alliances and other maritime trade fundamentals, will be one of the key topics for the first session of the TOC Americas Container Supply Chain conference this year. Delegates will hear from major carriers including Matthias Dietrich, SVP – Region Caribbean and Latin America West Coast for Hamburg Sud, Andres Osorio, Director of Key Clients, Latin America at Maersk and Hernán Salazar, Regional Planning Manager, MSC Mediterranean Shipping Company Chile. A shipper perspective will also be offered by Alessandro Menezes, Afton Chemical’s Senior Logistics Manager and Head of Logistics and Customer Service Operations Latin America.

Drilling down further, a session later on Day 1 will discuss how cargo owners, 3PLs and carriers might approach North American Gateway Selection.

Moderated by Bill Ralph, Senior Consultant/Economist, RK Johns & Associates, the panel features John Carver, Executive VP Business Development, Ports America, Howard Finkel, Executive VP Trade Division, COSCO Container Lines Americas, Paul McClintock, Senior VP & Chief Commercial Officer, South Carolina Ports Authority, Chris Logan, Senior Director, Trade Development, Georgia Ports Authority, and Daniel Negron, Vice President, TT Club.

They will debate the North American port network post-Panama Canal expansion, including whether US ports - and legislators – have yet fully taken on board the implications for infrastructure funding, port performance and labor.

Caribbean cruise?

Ports in the Caribbean and South America also stand to gain from this major impetus in traffic.
 
Latin America has already seen some of the fastest growth in ship size in recent times and features heavily in the global list of ports on secondary deep sea routes that are now routinely handling 8-10,000 TEU vessels. Average ship size on the Asia-East Coast South America container trade, for instance, has grown 37% in the last two years alone, with 21% increase on Europe-ECSA.

However, the ability to absorb even greater container flows arising from the Panama Canal expansion poses a number of questions. While the standards of infrastructure in many parts of this region can be considered acceptable, an historical challenge has been sufficient maintenance of equipment and infrastructure. On top of this, principles of corporate governance, notably the impact of government interference, asks whether many are institutionally equipped to harness the benefits of a more dynamic and competitive maritime economy.
 
Critical to forecasting the way forward for these regional ports is how future canal traffic might impact the morphology of regional shipping networks, transhipment hubs and feeder operations.
 
Also on Day 1 of the TOC Americas Container Supply Conference, two sessions are set to explore these impacts on Caribbean and Latin America trades.

First up, Grantley Stephenson, President of the Caribbean Shipping Association, will examine this new era for the Caribbean, including an assessment of trade spin-offs from the thawing of US-Cuban relations.

This is followed by a debate on Transhipment Trends & Hubs, looking at how new maritime logistics networks could take shape. Moderated by Michael Kaasner Kristiansen, President at CK Americas, the debating panel features: Giovanni Benedetti, Commercial Director, Sociedad Portuaria Regional Cartagena (SPRC); Tom Heidt, Chief Operating Officer, Port of Houston; Enno Koll, Head of Latin America, PSA; Charles Baker, Director General, TC Mariel S.A, TC Mariel S.A; and Asaf Ashar, National Ports & Waterways Initiative (NPWI).

Panama potential

As previously announced, Jorge Quijano, CEO, Panama Canal Authority, has been confirmed as a keynote speaker at the 15th edition of TOC Americas. The conference will also feature a special Day 2 Panama Market Briefing, assessing national port and maritime logistics investment to capitalise on Canal expansion and boost Panama’s role as a regional logistics hub. Speakers will include Juan Carlos Croston, VP – Marketing for Manzanillo International Terminal – Panama, Edgar Pineda, Commercial Director at Panama Ports Company, Rafael Rocha, Managing Director, Galores Group Panamá and Ricardo Ungo, Manager, Business Development Section, for Panama Canal Authority.

Hosted by Panama Canal Authority, this year’s event includes Container Supply Chain and TECH TOC conferences, site visits to the Panama Canal expansion site, networking receptions and exhibition of port services, equipment and technology.

TOC Americas 2015
13-15 October
El Panama Hotel, Panama 
www.tocevents-americas.com