It’s hard to say exactly when the newest section of the expanded Panama Canal will open. Construction delays and labor disputes have laid waste to the original timeline.
Once it opens, many people (particularly representatives of ports east of the Canal) have suggested that a significant percent of import freight would shift to Gulf Coast or East Coast ports, closer to populated markets in the Eastern U.S. These ports are investing to dredge harbors in order to receive the newest Post-Panamax cargo ships, which will have the capacity to carry up to 18,000 TEUs.
We believe that the demand for Southern California ports will remain strong long after the Panama Canal expansion is completed. Download our Insight paper: Panama Canal Expansion: Impact on West Coast Ports.
The reason is that it takes far more than a deep-water port to successfully process millions of containers and transport them to and from the port.
Over the past 50 years, the Ports of LA and Long Beach have developed a complex supporting infrastructure to accommodate huge import and export volumes. This infrastructure includes roads, warehouses, trucking terminals, rail terminals that run directly to the vessels at the ports, and the logistics companies and experienced workers to service high and fluctuating volumes.
Eastern ports like Savannah, Tampa, Norfolk, Baltimore and New York are just developing an ability to receive larger cargo vessels, and they do not yet have the complex supporting infrastructure to move goods efficiently from the port to the retail shelf quickly and efficiently.
These infrastructure changes take years to complete. They involve dredging harbors, building larger bridges to accommodate the taller heights of the “super vessels,” building roads to accommodate increased heavy vehicle traffic flows, adding rail lines, and building warehouse facilities.
Such projects are also very expensive and the costs, no doubt, will translate into additional fees and taxes to the ship lines and, ultimately, higher costs for U.S. importers and exporters.
Southern California is the gateway to North America for Asian shippers today. Why? Because importing through Southern California is less expensive and two weeks faster than using Gulf Coast and East Coast port cities.
The expansion of the Panama Canal will not change this. The Ports of LA and Long Beach will continue to be North America’s freight gateway long after the Canal expansion is completed.