Drewry has an insightful article on the problems the Panama Canal is facing due to the extended drought that has compromised its water supply.
The article discusses the water levels and also the prospects for a variety of shipment types, such as LNG and agricultural. The effect on trade patterns could be marked in a number of cases.
Drewry produces high-quality research and it’s must reading if you have an interest in bulk transport
Drewry, 12 Sep 2023
Tagged Bulk carrier challenges, Bulk shipping impact, Climate change effects on shipping, Impact on Bulk Shipping Routes, Logistics, panama canal, Panama Canal Authority, Panama Canal water levels, Panama drought, Shipping route disruptions, supply chains, sustainability, Understanding the Panama Drought, Water conservation measures
We all know now that the Panama Canal is suffering from a lack of water, due to a prolonged drought. The result is limits on draft of ships traversing it. The Canal has also raised rates recently. So shippers are looking for alternatives.
Just remember that the canal was getting increased use as shippers migrated from US West Coast ports, and started using East Coast ports. The trip is a lot longer in time, but if there is a disruption danger at West Coast ports, it makes some sense. Over the COVID period, East Coast ports such as Savannah and the Port of Virginia have made major investments in inland infrastructure to support better distribution of goods inland. Of course Houston is also a very good port to reach from the Panama Canal and has significant container capacity.
Now we see some results from the merger of the Kansas City Southern railroad, formerly a US Class I line, and the Canadian Pacific (CP) railroad. The new line has significant capacity in Mexico which the KC developed on its own for some years. This new route will allow shippers to send cargo to Lazaro Cardenas in Mexico, a West Coast Mexico port, to Houston or north to Chicago. The route from Asia is longer in time than the US West Coast ports, but days shorter than the East Coast ports, and with excellent penetration to the Central US areas around Chicago and Kansas City.
I think this is a good marketing strategy for the CPKC railroad. Another West Coast port could well get a steady stream of container cargoes. The route would be less sensitive to West Coast US disturbances such as strikes, and less dependence on the BNSF and UP rail systems, both of which are under fire for scheduling issues, and are known to be a bit light on staff, according to recent reports from their various craft unions.
However, when there are no disturbances, the West Coast ports of Los Angeles and Long Beach are still the fast and dependable way to get cargoes into the central US. They are also good fast ways via the land bridge to get cargoes to Europe by transshipping again from the East Coast ports such as New York.
If the West Coast ports can keep on an even keel, I think their efficiency will attract back a good chunk of the trade they lost due to the strike. Trade of all kinds is down, but it’s still considerable.
Marcus Hand | Aug 09, 2023
CPKC offering Panama Canal rail alternative via Lazaro Cardenas into the US
Posted in Logistics, Rail, Shipping, Supply Chains
Tagged Canadian Pacific railroad expansion, Central US cargo transportation, container shipping, Kansas City Southern railroad merger, Lazaro Cardenas Mexico port route, Logistics, Maritime trade trends, panama canal, Panama Canal draft limits, Panama Canal rail alternative, Panama Canal shipping challenges, Panama Canal shipping disruptions, supply chains, Trade impact of West Coast strikes
This extremely interesting article details what’s happening at the Panama Canal in terms of ocean shipping trade. I learned a lot from it.
For instance, containers are a small part of the trade through the Canals, both the Panamax and NeoPanamax (deepwater, for the larger ships) routes. The largest part is bulk, grains, coal and oil and LNG.
And the majority of the trade in 2020 is Pacific to Atlantic, not Atlantic to Pacific.
Since there’s a lot of export of these commodities, particularly agricultural and oil-based, from the Gulf Coast of the US to Asia, Canal traffic is a good measure of US international trade of these.
Altogether a good read.
Greg Miller, Senior Editor Thursday, October 15, 2020
How Panama Canal navigated COVID, drought and trade war – FreightWaves
Posted in Logistics, Shipping, Supply Chains
Tagged bulk, container shipping, Logistics, ocean shipping, panama canal, trade
Supply Chain Digest Port Technology International Marine Link
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