Panama Canal Expansion Expected to Provide Great Market Opportunities for Mid-Sized Companies
When the much-anticipated expansion of the Panama Canal is completed early in 2016, cargo ships the size of aircraft carriers will ferry goods from Latin America and Asia directly to East Coast ports and back. These ships – up to two-and-a-half times bigger than those currently allowed – will uproot trade patterns developed over the last century and will affect nearly every sector of the U.S. economy.
Obvious economic winners will be multinational corporations that will be able to quickly and more easily move vast amounts of raw materials and finished products across markets, as well as the companies and enterprises directly tied to transport, from state port authorities to warehouse operators and distribution centers.
In fact, some estimates say the new trade routes will put shipping companies in reach of nearly two-thirds of the nation’s population, opening significant opportunities for another important sector: Middle-market companies in the United States.
The shifting path for global trade opens up chances for expanded international trade and for greater market share in the United States, as ports along the East Coast and the Gulf of Mexico take on greater importance for commerce. But to capitalize on the changes, mid-sized companies should take steps now to evolve their businesses and set new strategies.
Shifting Global Trade
It is hard to understate the scale of the Panama Canal expansion. The $5.25 billion project will add a deeper and wider third lane and a new system of locks so as to accommodate massive “post-Panamax” vessels (the term refers to today’s regulation-sized Panamax vessels that can navigate the 100-year-old canal system).
Just as important, a growing number of ports along the Gulf of Mexico and East Coast are being upgraded to handle the post-Panamax vessels, which require at least 50 feet of draft in freshwater harbors and massive cranes to move containers from the ships.
Projects across the East Coast ports are now under way, including deepening projects for numerous harbors, such as those in Miami and Charleston, S.C.; improvements to container-handling equipment in Savannah, GA.; and a significant dredging project for New York. All of this will mean more efficient movement of the goods from the ships to trains, trucks or even airplanes.
Ultimately, the completion of the project will make the U.S. East Coast competitive with the West Coast in trading with Latin America and Asia – a shift that will have tremendous implications for nearly all industries.
Source: SupplyBrain.com – Doug Davidson, global commercial banking market executive for Bank of America Merrill Lynch.