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Thursday, September 19, 2019

Maritime Logistics Professional

2014 Gets More Attention

Posted to Martin Rushmere (by on October 14, 2010

More nail biting over the Panama Canal effect

Throat clearing, furrowed brows and long pauses between are becoming more common in discussion of the Panama Canal post-2014 and its effects on the West Coast. Those reactions were certainly noticeable at the panel discussion in Long Beach this month.
No one was brave enough to give a definite forecast. It was all "maybe". The economists and logistics professionals agreed that the West Coast must "guard against complacency", to coin a phrase, and improve efficiency. Otherwise, they covered all the possibilities from A to C – the East Coast will gain; no, it will lose; no, it will get more traffic but not more market share.
To many observers, it seems that Panama is not clear what it's aiming for and wants the $6 billion (officially it's $5.5 billion but we all know what happens) expansion program to be a done deal before looking at strategy. The most important feature of the strategy is, obviously, rates. Those will only be decided when the expansion bill is totted up, plus changes in interest costs – which are not all fixed. The current schedule of tariff increases is careful to make no promises of post-2014.
Some people reckon routes will be the criteria, but the lines have already figured out those logistics. Also, the future policy for slow steaming needs to be factored in. In four years' time, the industry's norm will be unrecognizable to the point that the choice of the Canal or the West Coast will be self-evident.
One advantage that the West Coast is clinging to is illusory. Having six times (a total of 98 million square feet available at LA/LB) of the warehouse space of a port like Jacksonville is seen as rock solid defiance against loss of traffic. (This drew loud cheers – an indication of the anxious nail biting at the ports.) "Build it if they come" is a principle to bear in mind, as other ports will very soon find space if traffic starts ramping up.
Todd Thomas of Expeditors International said: "Los Angeles and Long Beach are always going to be vibrant, relevant ports." Strike out the "vibrant" and he is dead right.
The question is, just how relevant.

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