Expanded Panama Canal could see 10% of container business move from US west to east coast

San Francisco: When the Panama Canal expansion is inaugurated in 2016 (projected for April that year), it could signal a huge switch of container traffic away from the US West Coast to its East Coast.

Such an eastward shift could see as much as 10 per cent of cargo from East Asia move away from the left shore to the right, according to new research.

A paper, released by Boston Consulting Group and logistics firm C.H. Robinson, said the change could happen as soon as 2020. The quantity of rerouted goods involved would equate to building a port roughly double the size of those in Savannah, Georgia and Charleston, South Carolina, the report said.

All major US ports will have greater container traffic in 2020 than they do today. But the largest of the West Coast ports, the Los Angeles–Long Beach complex, will handle less traffic than if the expansion were not to occur. That complex will likely experience growth at an average rate of 5 to 10 percent per year through 2020, compared with double-digit growth rates at some East Coast ports.

Current growth trends would push the East Coast’s share of East Asia traffic from 35 to 40 percent by 2020 without the canal’s expansion. But with the canal expansion in place, the report says, the East Coast’s share could reach 50 percent – a 10 percent increase in market share.

The main effect of the canal’s expansion will be to accommodate the enormous “post-Panamax” container ships which have two to three times the capacity of current vessels.

If those carriers have the short-cut option to reach the East Coast it will lessen the appeal of ports in California, Oregon and Washington State. Presently a lot of goods destined for parts of the US east of the Mississippi go the western ports and are then transported by train and/or truck.

The New York-New Jersey port complex, Norfolk, Virginia, and the two mentioned previously – Savannah and Charleston – are best poised to cash in on any extra traffic.

The report comes from research which involved extensive scenario analyses based on differing levels of demand, capacity, and costs.

Boston Consulting Group is headquartered in Boston, Massachusetts while C.H. Robinson is based in Eden Prairie, Minnesota.