So far I have not read of any or seen any impacts of the widened Panama Canal on Intermodal shipping cross country or other rail shipping patterns in the United States. Has anyone else? Just curious. Opened in 2016.
NS is restricting number of intermodal containers at its JAX facility .
My understanding is that is due to inbound loads of building materials from continental North America for recovery from the devastation of Hurricane Irma.
At least so far, I have not heard of anything. I know some of the east coast ports are upgrading, but that's all.
You all may recall Fred Frailey's post "Sampson in the Temple" about EHH pulling the plug on the PPP to enlarge the Howard Street Tunnel so CSX could run double stacks through it. The acqusation by Anthony Hatch was that this was a really bad idea and Fred ran with that ball.
I posted five times, all early in the blog, post #8 and #16 on first page then three more on the second page. The theme of the first two posts was that EHH was correct since CSX would handle the same containers landed at another East Coast Port, making it folly to spend CSX funds largely to benefit the Port of Baltimore rather than CSX.
In the fourth post I did as extensive an analysis of the issue of trafic diversion from West Coast to East Coast ports as it is possible to do without more real rate info than I have. My conclusion was that due to the substantial increase in steamship miles, time, and cost the BNSF, UP, and West Coast Ports will loose little to no China, Korea, Japan origin or destination container traffic due to the enlarged canal.
The last post is a reply to Oltmand who took exception to my not breaking out terminal and line haul costs for the steamship component. He was correct that doing so would be more accurate, but when I did so it increased per mile cost which reinforced my original point.
I asked anyone to offer more accurate numbers than mine, which are educated guesses. No one has done so.
If you care, go to that blog since there is no point in retyping those posts here.
Mac McCulloch
PNWRMNMIf you care, go to that blog since there is no point in retyping those posts here.
Actually, I wish you would synopsize them here, in a few sentences, because it is time someone put the 'Panamax effect on stack-train railroading' issue definitively to bed, and you are one of the few people with the skills and experience to establish what that is. You have almost done that with the post you made.
The one issue I wondered was whether at least some of the Gulf ports with intermodal optimization would see at least some advantage from Panamax-sized container operations given the lack of real advantage to traditional East Coast points over great-circle operation to Pacific ports followed by effective intermodal handling. Specifically wouldn't there be some advantage, at least in 'precision scheduled' rather than least-time delivery, in running intermodal trains up from Panamax-enabled ports to locations like Memphis that are centrally-located distribution centers?
My previous post did summarise my fourth post in Fred's blog, except to fail to mention that to really answer the question of traffic diversion we would need at the very least a count of East Asia-US and Canada West Coast Ports and US East Coast Ports traffic for about the last 10 years. It may or may not be possible to get that out of various Port websites.
As to the new question about Gulf Ports picking up some traffic that previously went West Coast, without real data my first question is whether Houston, New Orleans, and Mobile have sufficient draft and suitable land side facilities. Again that is a trip thru Port websites. Even if all have physical capability, if I were running a steamship line, I would shy away from New Orleans due to the long trip up the river which likely adds a day or two each way compared to the others. Portland Oregon is in this same position vs. Seattle and Tacoma in the PNW, and it does next to no international container traffic.
The Gulf Ports have less additional steamship miles, time and cost than do the East Coast Ports, but my sense is not enough to make them attractive.
Remember a container ship is like a stack train only more so. They want to load and go, unload and go. To the West Coast they run almost like streetcars. The land side carriers sort the traffic by destination.
To the Gulf Coast, origin ports have to accumulate a boatload, literally, incurring delay and congestion on the dock, an additional cost. The steamship companies are not going to offer much overcapacity in that lane and are not likely to use their best boats. Think railroad drag freight "We will run it when we get enough cars". How many sailings per month from how many ports? Gulf Ports do not look like much of a threat to me, especially to inland points like Memphis.
Again if we had real rates, the answers would be obvious at a glance.
Mac
PNWRMNM If you care, go to that blog since there is no point in retyping those posts here.
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Geography can really be enlightening. The Panamma canal Pacific ocean entrance is at about w 78 degrees and the Atlantaic is about west 79 degrees. Miami, Fl is about west 80 degrees. So for the ports of Houston New Orleans, and Mobile the ships actually have to go back west to reach them from the canal. Miami is not a straight shot as ships have to pass between Cuba and Hatti to reach east coast ports.
It becomes a very delicate balancing act of available ships, time, rail availability, and rates as to where you ship your goods. West coast ports definitely have advantage for time sensitive freights. Then for others drawing a line from JAX - ATL - Cincinnati ? - Detroit east of there east coast ports.
Traffic maagers have a very three dimensional chess game going.
Port of Baltimore had it's channels dredged to handle post-Panamax vessels as well has having installed new cranes at Dundalk Marine Terminal to efficiently handle loading and unloading of the post-Panamax vessels.
Until EHH axed the Howard Street Tunnel improvements that was going to be PoB's doublestack route to the West.
I don't have any knowledge of what if any improvements have been done to the Chesapeak & Delaware Canal that is the short cut that links the Port of Baltimore and the Port of Philadelphia together.
Never too old to have a happy childhood!
This is a post I made on a related thread more than two years ago. I would add to this that the canal tolls and the increased transit time for shipments moving via the canal would be additional disincentives for a shipping company that tried to serve U.S. markets via the canal.
Since I'm retired from the rail industry, I haven't been following this nearly as closely as I would if I were still gainfully employed. But I'm curious as to how closely (if at all) actual events have matched my suggestions.
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I agree western railroads won't "benefit" from the Panama Canal expansion. But I want to make the same point I've made before. It isn't nearly as evident as you may think that the project will hurt western railroads to any significant extent.
Now, why would I say such a thing? Isn't it obvious that the canal will allow large containerships to go through the canal and avoid the rail move from west coast? Well, yes, but consider this. The ship transit time to use the canal rather than just go to a west coast port will be two to three times as much as the transit time required to serve a west coast port. That means a shipping company will need two to three times the number of vessels for the same volume of traffic to operate through the canal than they would need if they just did a west coast shuttle. Ships are expensive build and operate. It is this consideration that has led many containership operators to avoid calls on multiple west coast ports - it's better to turn the ship quickly and go back for another load than to have the ship tied up serving multiple ports. The same consideration would seem to apply to canal service.
So, the question becomes whether the additional revenue a steamship company might be able to earn by going through the canal and cutting out the rail move from the west coast will be sufficient to justify the costs of the additional ships required to provide this service. I doubt that it would in most cases. The cap on the additional revenue the steamship company would get is the inland shipping cost that's avoided. Now, with shipments destined to customer at or near east or gulf coast ports served by the ship, there may be a lot a inland shipping costs that are avoided. But that's not true of the many shipments that go inland - you just end up substituting a rail move from the east coast for a rail move from the west coast It's also not true for shipments to east and gulf coast ports not called on by the company's ships (the company could try to minimize the inland costs by having its ships call on multiple ports, but that would cause its transit times - and its need for ships - to balloon). That doesn't leave the steamship company much room for a higher rate to justify the additional ships needed to bypass west coast ports and go through the canal.
Bottom line. I don't think the canal is going to be the bonanza its promoters are hoping for or the threat to western railroads that's feared. We shall see.
Falcon48The ship transit time to use the canal rather than just go to a west coast port will be two to three times as much as the transit time required to serve a west coast port.
Some facts:- Shanghai - West Coast port about 14 days, to New York by train total 22 days- Shanghai - New York via Panama Canal about 26 days- Shanghai - New York via Suez Canal about 28 days
Via Suez Canal is less expensive than via Panama Canal as larger ships can be used (economy of scale).
Falcon48(the company could try to minimize the inland costs by having its ships call on multiple ports, but that would cause its transit times - and its need for ships - to balloon)
That is already done. Most of the routes to the West or East Coast are loops calling at different Asian and East Coast ports. And a lot of loops call at two West Coast ports.
The share of container landbridge traffic has dropped from about 85% in 1999 to about 55% in 2007. But rising volume might have stabilized or increased the rail traffic.
Falcon48That doesn't leave the steamship company much room for a higher rate to justify the additional ships needed to bypass west coast ports and go through the canal.
The new Panamax ships (12,000 TEU) might mean less ships to the East Coast with less frequent port calls. And economy of scale (larger ships) might even reduce the rates. This has happened in Europe with the advent of the 20,000+ TEU ships replacing the smaller ships.
With all those 20,000+ TEU ships in service or on order a lot of new Panamax ships get bumped from the Asia to Europe route and now available for other routes.
So there can be an effect especielly if the the service problems at the West Coast ports are not solved permamently.Regards, Volker
Volker,
I estimated water miles from Shanghi to LA/LB as 5623, to Portsmonth VA as 9203, and via Suez to Portsmouth at 19,000 for a previous post in Fred's blog about Sampson in the Temple.
Your ratio of water travel times of 14 days to LB and 26 to East Coast matches closely enough with the ratio of mileage.
Where things diverge is Suez route which you say is only a couple of days longer sail to Portsmouth despite being twice the mileage. One of us has messed up badly. Care to comment?
The other point that I think you may have misstated is that rates via Suez are (absolutely) lower than via Panama, due to larger ships. I would expect costs and rates per mile to be lower using bigger ships, but the double mileage would overwhelm the relatively modest drop in per mile cost.
You also talked about share of container landbridge traffic. What exactly does that mean? What compared to what?
The little research I have done on the Panama Canal's tolls for passage suggest ships unloading/reloading at western ports in the US are more economical than transiting the canal. The tolls for the canal are very high.
Norm
PNWRMNMWhere things diverge is Suez route which you say is only a couple of days longer sail to Portsmouth despite being twice the mileage. One of us has messed up badly. Care to comment?
The mileage from Shanghai to New York via Suez Canal is 13861 nautical miles according to this website: http://ports.com/sea-route/port-of-shanghai,china/port-of-new-york,united-states/
I checked Norfolk, Virgina or Port of Virginia. They are 13843 nm and 13820 nm respectively.
With a speed of about 20.5 kts you get 28 days. I had it from a different website which I forgot to bookmark.
PNWRMNMYou also talked about share of container landbridge traffic. What exactly does that mean? What compared to what?
The total (100%) was devided between "Asia-West Coast-landbridge-New York", "Asia-Panama Canal-New York", and "Asia-Suez Canal-New York"
PNWRMNMThe other point that I think you may have misstated is that rates via Suez are (absolutely) lower than via Panama, due to larger ships. I would expect costs and rates per mile to be lower using bigger ships, but the double mileage would overwhelm the relatively modest drop in per mile cost.
Here is the new tarrif structure for the Panama Canal: http://www.pancanal.com/peajes/ApprovedTollsTables.pdf
A fully loaded container costs $85 on a fully loaded 12,000 TEU ship, $5 less than for a smaller ship at total costs Shanghai to New York of about $1,900 per TEU.
Suez Canal rates are lower but more difficult to calculate. You need the ships particulars, especially the Suez Canal Net Tonnage. With estimated dimension the cost per TEU are about 50% of the Panama Canal rate:Regards, VolkerEdit: I re-calculated the Suez Canal toll for the 13,000 TEU container ship Hamburg Express. With 142,300 GRT, 15.5 m draft and an estimated 50% dwt as SCNT = 65,000 t the cost per TEU is approx. $28.
VOLKER LANDWEHR PNWRMNM The other point that I think you may have misstated is that rates via Suez are (absolutely) lower than via Panama, due to larger ships. I would expect costs and rates per mile to be lower using bigger ships, but the double mileage would overwhelm the relatively modest drop in per mile cost. Here is the new tarrif structure for the Panama Canal: http://www.pancanal.com/peajes/ApprovedTollsTables.pdf A fully loaded container costs $85 on a fully loaded 12,000 TEU ship, $5 less than for a smaller ship at total costs Shanghai to New York of about $1,900 per TEU. Suez Canal rates are lower but more difficult to calculate. You need the ships particulars, especially the Suez Canal Net Tonnage. With estimated dimension the cost per TEU are about 50% of the Panama Canal rate:Regards, VolkerEdit: I re-calculated the Suez Canal toll for the 13,000 TEU container ship Hamburg Express. With 142,300 GRT, 15.5 m draft and an estimated 50% dwt as SCNT = 65,000 t the cost per TEU is approx. $28.
PNWRMNM The other point that I think you may have misstated is that rates via Suez are (absolutely) lower than via Panama, due to larger ships. I would expect costs and rates per mile to be lower using bigger ships, but the double mileage would overwhelm the relatively modest drop in per mile cost.
I think we are like ships passing on parallel courses. My question has to do with the absolute rates via all three routes, but lets limit it to via Panama Canal, 9203 nm and via Suez at 13,860 or so. Suez is 50% more miles, so I would expect the steamship only rate to be just under 150% via Suez vs. Panama.
I understand that canal charges are different, you figured about $50 spread which I have no basis to question, but canal charges are a small part of total SS costs/rates.
I will conceede that larger ships via Suez will reduce cost per box mile a bit.
Do you know real rates via all three routes at some specific time?
I have talked today with Hapag-Lloyd the manager of the Hamburg Express for which I tried to calculate the Suez Canal Toll. They gave me the following freight rates:
Shanghai - Long Beach, CA: $1,400 including port chargesShanghai - New York, NY: $2,200 via Panama Canal including port charges
They don't offer a westbound route from Asia to East Coast.
MSC offers the "America Westbound" loop. While Hapag-Lloyd has the headquarters in Germany, MSC only has a small office. They forward inquiries somewhere. I sent an e-mail and hope for an answer sometime.Regards, Volker
VOLKER LANDWEHR I sent an e-mail and hope for an answer sometime.
In the meantime a got an answer from MSC, Maersk and Evergreen. They all give information only to logistic companies not private persons.
If interested perhaps someone in the USA could ask a local logistic provider for the rate of a loaded 40' container from Shanghai to New York westbound via the Suez Canal or the difference of that journey to the eastbound travel through the Panama Canal.
I found a website explaining that e.g. Maersk re-routed traffic from Asia to the East Coast to the Suez Canal Route. But that was in 2013 before the extensions on both canals: http://www.shiplilly.com/blog/asia-us-east-coast-ocean-freight-reroute-suez-versus-panama/
There is another interesting development. A number of ships are going around the Horn of Africa on the return trip to Asia avoiding both canals. How large the savings are depends on fuel cost an canal tolls. As far as I read yesterday the Suez Canal offers discounts to get the ships back. https://www.lloydsloadinglist.com/freight-directory/news/Carriers-tap-alternative-route-for-Asia-US-east-coast-backhaul-leg/65617.htm#.WjwGCDciGM8
And here is an article on the impact of the Panama Canal extention: Panama Canal expansion: game changer, or more of the same?http://www.supplychainquarterly.com/topics/Logistics/201201panama/
An equation with a lot of variables.Regards, Volker
Speaking of railroads...
I wonder what the impact of the new canal has been on the Panama Canal Railway. As I recall, a few years ago in TRAINS they did not expect to see a big dent in their container transfer business since besides just transferring boxes between oversized ships, they provided a sorting service, distributing containers from each incoming ship to ships headed for different destinations. I wonder how they're doing.
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"A stranger's just a friend you ain't met yet." --- Dave Gardner
The last article in Volker's previous post presents an excelent analysis of why the answer to the headline question is "Not much". If you have any interest in this subject, I strongly recommend it.
Thank you Volker!
The last article is from 2012. The Panama Canal Extension opened in 2016. So it seems a bit early for an update or the first experiences.
To show the influence of the canal tolls and the economy of scale (large vessels of 20,000+ TEU) again some rates.
Shanghai - Long Beach: $1,400Shanghai - New York:....$2,200 eastbound through Panama CanalShanghai - Rotterdam:..$1,600 about the same distance as Shanghai - New York
According to the AAR the average shipping cost by rail were 4 ct per ton-mile. Intermodal are higher, perhaps somebody can provide them.Regards, Volker
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