Green light for Panama
Voters back referendum on Canal expansion project
Mitsui O.S.K. Lines is developing a new container terminal in Jacksonville. Zim and new space charter partner Emirates Lines are calling Tampa with their Asia/Gulf service. Evergreen and COSCO this year started calling Port Everglades from Asia. China is now the leading trade partner for the Port of Miami.
Gone are the days when Jacksonville is simply the gateway to Puerto Rico, Tampa is well-placed for serving the Yucatan region of Mexico, Port Everglades is mostly for Central America, and Miami is mostly a Caribbean island hub.
The Asia trade is becoming increasingly important for all the Florida ports offering scheduled container services, and industry-wide projections indicate all-water services to the U.S. East Coast from Asia will continue to grow.
The one potential drawback has been the capacity of the Panama Canal, which is already close to its limits, even though the Panama Canal Authority (ACP) continues to tweak operational efficiencies to improve throughput.
That is why the October 22 referendum election in Panama on the canal expansion project was critical for the future of shipping services not only in Florida, but in all the Americas on the Caribbean/Atlantic side of the canal.
The referendum, which was backed by 78 percent of the voters, was the final formal step before construction in a process that has taken several years.
The ACP first had to complete extensive studies on the potential options for the canal expansion, first winnowing the choices down to three options and finally selecting a specific engineering plan.
Panamanian legislators had to concur and schedule a vote by the general public. Now, the $5.25 billion project can proceed. It will take an estimated seven to eight years to complete, with vessels expected to begin passing through the new, third set of locks by 2014 or 2015.
“We spent years studying, researching and preparing and we are ready. This project will be done efficiently and transparently. With this vote, the Canal will be able to grow with demand, improve service, spur economic growth in Panama and maintain the Canal’s competitive advantage,' said Dr. Ricaurte V'squez Morales, chairman of the Panama Canal Authority's (ACP’s) board of directors and concurrent minister for Canal affairs.
For most of the transit of the canal, vessels move in conventional ship channels in bays, lakes, and on long open area known as the Galliard Cut. But at three points, commercial vessels have to pass through a series of locks that raise or lower ships. Each lock has two lanes, with vessels moving toward the Atlantic in the mornings and toward the Pacific in the afternoon. The maximum vessel width is 106 feet.
The expansion project will provide a 'third lane' that will be wider and deeper, allowing the new generations of larger containerships to transit the canal.
With the canal currently operating at almost 95 percent of capacity, there are extensive industry concerns about its ability to accommodate projected increases in trade volumes. U.S. West Coast ports and their intermodal rail yards are already operating at close to capacity, meaning the container trains carrying Asian cargo to the eastern states are must be supplemented by more East Coast all-water services.
The Panama Canal is expected to reach full capacity around 2012, according to ACP estimates, and that could happen sooner if trade volumes exceed current projections. The ACP says that the earliest the canal would reach capacity would be 2009 or 2010.
Under any scenario, there will be a squeeze for at least two years between 2012 and 2014, meaning the overland intermodal capacity in the U.S. will have to increase. There will also be more all-water services between south Asia ports and the U.S. East Coast via the Panama Canal.
When the canal expansion is completed, however, the annual capacity will double in terms of total container handling capabilities.
That will bode well for Florida shipping services with Asia.
Florida is attracting more Asia traffic first because of its large and growing population, combined with the increased amount of consumer products originating in China and other Pacific Rim nations.
Former Port of Miami director Charles Towsley, who now has his own maritime consulting business, Maritime Directions, said that although trade with China was minimal when he came to the port in 1999, it was apparent that the Asia trades would inevitably become an important factor in Florida.
He explained that national industry projections were showing that the West Coast was going to be experiencing capacity problems, creating the demand for the East Coast all-water services.
'We could foresee issues on the West Coast, and sure enough, those things came to fruition,' Towsley said.
The Florida East Coast Railway also has high hopes for funneling more Asia traffic through Florida.
John Lucas, the vice president/general manager of intermodal marketing and sales, says that improved intermodal connections from the ports, the FEC could offer interline services to the Midwest that would have faster transit times than the existing intermodal services from other East Coast ports.
In effect, he believes, Florida will be competing for the Asian cargo that has used Savannah'with its strong rail connections'as a first inbound port on the U.S. East Coast.
MOL, and most likely other Asia trade carriers in the future, sees Jacksonville and its intermodal rail options as a new all-water gateway on the East Coast.
Perhaps no other industry executive in Florida understands the importance of the canal expansion better than Port of Tampa director Richard Wainio. He is a former director of executive planning for the Panama Canal Commission, the U.S. agency that managed the canal until it was turned over to the Panamanian government at the end of 1999.
In an op-ed column he wrote for the Tampa Tribune on the day of the referendum election, he said: 'The Panama Canal is a key link in the transportation chain connecting Florida with the global marketplace 'Expansion of the canal'one of the world’s critical trade arteries'is urgently needed, along with simultaneous expansion of U.S. port capacity. Florida and in particular the Tampa Bay area have much at stake.'
He said expansion of the canal will accelerate global trade opportunities in Florida'but only if there are sufficient improvements in intermodal connections.
But for all the planning and projections, most of the gains were ultimately dependent on the prior approval of the voters in Panama.