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With larger ships transiting the Panama Canal, the electronics and other markets are benefitting from faster transit times and more affordable shipping costs associated with the expanded waterway.
Last year, the Panama Canal Authority issued a notice to all shipping agents, owners, and operators, letting them know that after nearly two years of successful operations at the Neopanamax locks, it was increasing the maximum allowable beam for vessels transiting those locks.
As of June 1, 2018, the maximum beam for commercial and non-commercial vessels acceptable for regular transits in the Neopanamax locks (as measured at the outer surface of the shell plate and all protruding structures below the lock walls), was expanded to 51.25 meters (168 feet).
This opened the door for newer, larger ships to use the Panama Canal—including those that transport electronic products and components from Asia to the U.S. East Coast. According to gCaptain, more than 3,000 vessels had already transited through the new Neopanamax locks as of April 2018 (even prior to the expansion).
For Shippers: Cutting Sailing Times, Saving Money
According to the Authority, the enlarged waterway is cutting sailing times between Atlantic Ocean ports and Asia by up to 16 days for ships that previously could not fit through. When the initial expansion phase was completed in 2016, for example, SupplyChain247 noted that soybean farmers, natural gas producers, container shippers, and coal miners would all benefit by using the larger waterway.
The changes have also created opportunity for U.S. companies importing and exporting to Asia. For example, the canal can how handle double the shipping container size, thus enabling more affordable transport of Asian shipments to the U.S. East Coast and Gulf Coast. Importers and exporters can also bypass smaller ports and take more streamlined routes—all while taking advantage of the expanded docking capacity made possible by the canal’s larger lock system.
Overall transit time have also been reduced. Over the past 2-1/2 years, the transit time through the large new locks has been reduced to 2-1/2 hours from 3-1/2 hours, the American Journal of Transportation reports. Shippers also benefit from new container and roll-on-roll-off (RORO) cargo terminals situated at either end of the waterway; an LNG terminal currently being considered for the canal’s Pacific side; logistics park development; facilities for generation of electric power; and new bunkering and pipeline installations, according to AJOT.
Maersk Weighs In
Prior to the latest Panama Canal expansion, the largest ships that could transit the canal were first-generation panamax vessels with a maximum 32.3-meter beam and 12-meter draught, equating to no larger than 5,100 TEU capacity – “small by current industry standards and no longer considered viable to operate in many major deep-sea lanes,” Nelson writes.
Francisco Crespo, Maersk marine manager for the US east coast, told The Loadstar that Panama offered much more than just an old-fashioned shortcut for shippers and lines.
“The fact is that, having the ability to deploy larger ships through the Panama Canal has allowed Maersk Line to move bigger vessels from certain origins in Asia to the U.S. East Coast/Gulf,” he said. “For us, with the new locks, Panama is preferable for sailings from Shanghai and further north like Korea to ports south of New York.”
Increasing U.S. Exports to Asia-Pacific
Pointing out that higher demand for liquefied petroleum gas (LPG) exports from the U.S. due to rising production of shale gas has resulted in increasing demand for very large gas carriers (VLGC), Ajinkya Wagh of TMR Research says that the trade between the U.S and Asia Pacific region is anticipated to increase at a rapid pace thanks to decreased transportation costs.
“The U.S shale gas revolution is the primary game changer for the increasing demand for very large gas carriers,” he points out. “Freight rates of VLGCs are expected to increase at a rapid rate owing to the opening of the enlarged Panama Canal.” He says Japan, China, and India are the major centers for LPG imports, and that the widening of the Panama Canal in North America should further enhance the demand for these large carriers.
“Taking into account the route between North America and the Far East, the widening of the Panama Canal will reduce the cost of transportation to a huge extent,” Wagh writes. “This would increase the U.S. exports to the Asia-Pacific region.”
