“You want the volume to come, you want big ships to come, but you just don’t have the infrastructure to handle them,” Seaspan Corp. Chief Executive Gerry Wang said of the larger vessels that will soon be able to transit the expanded Panama Canal.
Ports along the United States East Coast are looking to attract larger containerships following the opening of the expanded Panama Canal this summer, but are they ready to handle these mega-vessels?
The short answer is “no,” according to the head of the world’s largest containership lessor.
Seaspan Corp. Chief Executive Gerry Wang said in an interview with Reuters U.S. East Coast ports simply have not made the necessary infrastructure investments to be able to lure cargo away from ports like Los Angeles and Long Beach on the West Coast. Those major freight gateways suffered greatly from congestion issues in late 2014 and early 2015, which caused some shippers to divert a portion of their cargoes to East Coast ports.
“The infrastructure’s just not there” at U.S. East Coast ports, said Wang. “At the end of the day…you want the volume to come, you want big ships to come, but you just don’t have the infrastructure to handle them.”
Seaspan Corp. owns some of the largest containerships on earth, which it leases out to ocean carriers on a long-term charter basis.
The expansion of the Panama Canal, construction of which began in 2007, will allow ships with up to 13,000-TEUs of capacity to transit the important Central American waterway. The previous maximum vessel size for ships going through the canal was just 5,000 TEUs.
The Panama Canal Authority (ACP) announced on Wednesday the expansion will be officially opened to commercial vessel traffic on June 26, but as of yet no carriers have announced plans to send larger ships to U.S. East Coast ports on a regular basis. French ocean carrier CMA CGM, meanwhile, will deploy its flagship fleet of 18,000-TEU ultra-large containerships on a transpacific string between Asia and the U.S. West Coast beginning in May.
Some U.S. East Coast ports claim to be “big ship ready,” but it remains to be seen whether there is enough demand to drive sufficient volumes to fill those ships and whether inland infrastructure is sufficient to handle the increase. Currently, Miami, Norfolk and Baltimore are the only Atlantic U.S. ports that are capable of handling larger ships, while others like New York/New Jersey, Savannah, Charleston and Jacksonville still have work to do before mega-vessels are able to call there.
Even when all those ports are ready, challenges remain with landside infrastructure, drayage and intermodal connectivity, and if containers are unable to move inland, a port shuts down, said Wang.
“The first two, three years (after the expanded canal opens) the U.S. East Coast has to learn to adapt to the new traffic coming,” he said. “Then it will take years more to settle down the distribution system.
“Right now, the efficiency’s just not there.”
Wang specifically noted the Port Authority of New York and New Jersey’s project to increase the height of Bayonne Bridge to allow larger ships to pass under it and reach container terminal facilities in Staten Island, and Elizabeth and Newark, N.J.
That project, which had been seen as bottleneck for carriers, is “just delays, delays, delays,” said Wang.
“It creates a lot of uncertainty for the carriers as to when the project will be finished,” he added. “That’s something the industry’s not happy about, to be honest, because it causes a lot of headaches for planning.”
Seaspan CEO: U.S. East Coast ports unprepared for larger vessels
