Panama Canal expansion + mega-ships = more U.S. East Coast services

Panama Canal expansion + mega-ships = more U.S. East Coast services The U.S. East Coast will take over from the West Coast as the key entry point for Asian goods destined for the Midwest once the Panama Canal project is completed in 2014, according to research by London consultants Ocean Shipping Consultants on behalf of Lloyd’s Register.
   Andrew Penfold, director of OSC, said the widened transport corridor, combined with the ultra-large New Panamax (NPX) containerships of more than 12,500 TEUs being ordered for arrival in three or four years, will fundamentally change the trade patterns on the major east/west routes.
   “The main driver will be Asia/North America trades, with the Panama Canal displacing some of the landbridge services from congested U.S. West Coast ports to make East Coast ports the most effective gateway to the American Midwest,” Penfold said. “That’s the primary reason for ordering these ships.”
   Another consequence will be a re-examination of round-the-World services, he said. “They were quite competitive in the '80s but that was before the introduction of most post-Panamax tonnage and the growth of intermodalism in North America. Then RTW looked a bit sick and it was cheaper to run end-to-end services.”
   The RTW option is most closely associated with Taiwanese carrier Evergreen, which in 1984 started its hallmark contra-rotating Eastabout and Westabout services using a total of 20 ships. Evergreen ended the services in early 2002 when it replaced them with two tri-continent “pendulum” services. China Shipping Container Lines has just ended its own short-lived RTW loop called AMAX.
   “If you eliminate the Panama Canal size restrictions with new locks, the arguments for RTW are re-asserted,” Penfold said. “It’s cheaper than operating into a congested port and you diminish the effects of the weak legs that exist on all the main end-to-end trades.”
   Pending enlargement of the Panama locks, Penfold suggests that NPX ships could be ordered now for highly competitive use on Asia/Europe trades.
   David Tozer, container ships business manager at Lloyd’s Register, warned that the inability of NPX ships to enter New York and New Jersey could be a significant limiting factor in operators placing early orders.
   “New York-New Jersey is the key point because it has such big hinterland linkage. The problem is that NPX ships will not be able to access the container terminals until the Bayonne Bridge is heightened,' Tozer said.
   “The estimated cost of raising the bridge is at least $600 million and it’s not in the harbor authority’s current 10-year plan. The timescale is uncertain but potentially we’re looking at 10 to 15 years.”
   Lloyd’s Register is working with shipyards and operators to develop an interim NPX design with scope for a relatively simple increase in ship capacity once the Bayonne air draught has been enhanced.
   Both Penfold and Tozer will be participants at the annual design and operations conference Boxship 2007, organized by Lloyd’s List Events, Oct. 15-17, in Hamburg.