Just read this in the news:
http://www.msnbc.msn.com/id/10627208/
Looks like the people of Panama are going to expand the canal by 2015.
A couple of comments: When the original canal was completed in 1914 it proved to be a major competitor for transcon railroads in the US. All transcons lost some business to it, and it put some rrs on a precarious footing right after their new rr line was built (Milwaukee Road). The Milwakee Road eventually lost their transcon due to a lack of business, some would argue because of the completion of the Panama Canal.
Translated in to today's markets: if the canal were upgraded to accommodate the big container ships on the seas today, would this cut into BNSF and UP's transcon intermodal franchise? Would this have a chilling effect on capitol expenditures on infrastructure that the rr's are planning for in the next couple of years?
Investors earn profit in return for accepting risk. The railroads face risk from this and other changes. As as example port congestion in Long Beach and LA is causing freight from East Asia to the Midwestern US to move westbound via Suez to Savanah or Hampton Roads and then on by NS or CSXT into the East North Central States. Another risk to all involved, especially the Panamians, is whether they can complete the project on time and on budget.
That was precisely the concern expressed in the article. Big projects like this have a history of massive cost overruns, and the success of any major construction project depends on the superintedants ability to manage these overruns.
If they expand the canal to handle 'modern' cargo ships - by 2015 won't the modern cargo ships be even bigger than what they would design the canal for today?
At least Panama doesn't have all those environmental regs and NIMBY brigades to drag the project out for a few more decades, you know, like we do here in the US of A.
As for what containerships might look like in a decade, it might be that the catamaran principle is applied to current designs to effectively double their capacity while maintaining most of the current hull specs and a single crew. Of course, this "wider is better" concept would make all the world's ship canals obsolete.
The way I see it, by 2015 all the NA railroads will have been "Conrailed" in some form or another, and if OA is still the principal in Europe and Australia, it will have made it's way here by then. Which means the current focus on ISO double stacks will have become obsolete to the new NA railroad marketplace.
solzrules wrote: Just read this in the news: http://www.msnbc.msn.com/id/10627208/ Looks like the people of Panama are going to expand the canal by 2015. A couple of comments: When the original canal was completed in 1914 it proved to be a major competitor for transcon railroads in the US. All transcons lost some business to it, and it put some rrs on a precarious footing right after their new rr line was built (Milwaukee Road). The Milwakee Road eventually lost their transcon due to a lack of business, some would argue because of the completion of the Panama Canal. Translated in to today's markets: if the canal were upgraded to accommodate the big container ships on the seas today, would this cut into BNSF and UP's transcon intermodal franchise? Would this have a chilling effect on capitol expenditures on infrastructure that the rr's are planning for in the next couple of years?
It hasn't yet!
By the way, how do you know that any of the transcons "lost" business to the Panama Canal? Are you referring to business they had that shifted to water? Or new business that began moving at the low, low, all-water rate after the Canal opened -- and how would that business ever have moved by rail in the first place? Surely the annual reports of all the transcons would reflect a big hiccup in their traffic and revenue before and after -- have you checked those yet?
S. Hadid
So they make the Canal bigger? That is good.
Intermodals on land between the west and east coast in boxes single and double stack has only been around a limited time.
There is enough domestic freight to sustain this in containers. I remember JB hunt had many yards dedicated to this work. That revenue outstrips traditional over the road revenue.
I support the expansion of the canal. If they can enlarge it and possibly create multiuple pathways to sustain natural disaster, war time destruction and ever expanding sizes of civilian and military vessals.
A simple shipping casulty in the canal today will close the Panama crossing and force shipping to round the Cape Horn which is not really a good option.
1435mm: Actually, the railroad I mentioned, the Milwaukee Road, completed their transcon in 1909. Just as the line was begining to come into element and establish itself the panama canal opened and took away much of the traffic that would have moved on the line. This is a case of the rr not having any business because the line just opened up. NP and UP were more established at that time and I think they were able to absorb the loss, although it was painful. The Milwaukee never fully recovered.
Don't take my word for it. Jim Scribbons mentions it in his book about the Milwaukee Road, and I think even the company annual reports for the period talk about the affects the canal was having on the ability to maximize the traffic potential of the pacific coast extension.
solzrules wrote: 1435mm: Actually, the railroad I mentioned, the Milwaukee Road, completed their transcon in 1909. Just as the line was begining to come into element and establish itself the panama canal opened and took away much of the traffic that would have moved on the line. This is a case of the rr not having any business because the line just opened up. NP and UP were more established at that time and I think they were able to absorb the loss, although it was painful. The Milwaukee never fully recovered. Don't take my word for it. Jim Scribbons mentions it in his book about the Milwaukee Road, and I think even the company annual reports for the period talk about the affects the canal was having on the ability to maximize the traffic potential of the pacific coast extension.
Perhaps, but does the annual report just trot that out as an excuse to investors for management's sorry performance, or do the revenue and GTM charts in the report show any actual change? More importantly, do the annual reports of ALL the transcons show a "Pamana Canal Effect" at that time? If such a thing exists it wouldn't affect just the Milwaukee Road. All the roads were charging the same rates by this time under regulation. All due respect to Mr. Scribbins, who I know well, but I don't think he enjoyed reviewing the traffic and tonnage figures. I haven't seen any evidence in his books and articles, at least.
This is unsupported by the data.
"In the early 1900's, the Milwaukee had indeed begun slipping into the position of a second class railroad. From being the largest of its peers, it began slipping until both the Northern Pacific and Great Northern surpassed it in overall revenues; the Burlington and the Northwestern had surpassed the Milwaukee in total revenues in 1902 and the gap grew larger and larger. By 1912, the Milwaukee had gone from the largest railroad in terms of revenue in 1895 to the smallest among its peers. Even the lowly NP, which earned only half of the Milwaukee's revenues as recently as 1900, had surpassed the Milwaukee in 1912. Miller's concerns appeared to be entirely justified: the Milwaukee Road as a Midwestern road was fast becoming a second-class railroad.
"After the Pacific Extension was completed, however, this began to change, and the change was dramatic. After 1913, the Milwaukee gained revenue more rapidly than any of its competitors, and by 1925 had outstripped them all. The dynamic growth of the NP and GN prior to 1912 appears to have been diverted after that date to the Milwaukee, and both of the transcontinental carriers grew much more slowly compared with the Granger railroads, and especially the Milwaukee. GN and NP lost traffic; by comparison Milwaukee had become, in the words of one U.S. Senator, the fastest growing railroad in America after the Santa Fe."
This is not opinion. I graphed the gross revenues of the relevant roads, 1895-1925, to "show" the effects of the Panama Canal, and the alleged weakness of the Milwaukee out West. I was surprised by the result. Rather than the exhibit demonstrating what I had written -- written with all due conviction based on numerous published sources thoroughly researched and conforming entirely with the conventional wisdom -- it demonstrated the exact opposite, that the Milwaukee was spurred to unprecedented growth. I had to go back and re-examine what I had written.
Nobody had actually looked at the numbers. They did not support the purported "weakness" of the Milwaukee, and particularly after the Panama Canal which is when the Milwaukee, as it rapidly grew, significantly diverged from the NP and GN as they declined.
In addition to the distinct probability that modernizing the Panama Canal will run well behind schedule and over budget, there's the minor detail that even rainy Panama may not have enough runoff to operate the new locks! That was mentioned (and quickly glossed over) in the TV documentary I watched on the subject.
It is now 2006. Even the rosiest of optomistic schedules won't see post-Panamax ships passing through the Panama Canal for nine years. I wouldn't sell my UP and BNSF stock just yet.
Chuck
Michael:
It is obivous that you have a fuller understanding of what happened with the Milwuakee, certainly I am not going to take issue with that. I am only repeating what I read in books. When the PCE was abandoned I was still in diapers! I also understand that it is a controversial topic, and that from time to time certain people tend to let their view on the matter cloud the facts.
Otherwise:
I don't think the canal's opening and operation can be overlooked with respect to transcon traffic in the 1910's - perhaps the profitability of certain railroads improved, but overall traffic was affected by it. Certainly if railroads were able to haul what traffic there was more efficiently then of course profitability would increase regardless.
I feel that a revitalized canal in 2015 would certainly give the major intermodal carriers a run for their money - BNSF probably has the most to lose along with UP. NS and CSX would be hauling the containers either way - ships docking on the east port with destinations inland would have to use them and ships docking at Texas would wind up using those two carriers for points east no matter how you slice it.
Of course this is pending the successful completion of the canal - something that could never come to fruition. It is a government project, and that already places it at a disadvantage because it will be subject to political pressures not noramlly seen in the private sector. Throw in some corruption and you may have all the fixins for a mess.
tomikawaTT wrote:In addition to the distinct probability that modernizing the Panama Canal will run well behind schedule and over budget, there's the minor detail that even rainy Panama may not have enough runoff to operate the new locks! That was mentioned (and quickly glossed over) in the TV documentary I watched on the subject.
tomikawaTT wrote: In addition to the distinct probability that modernizing the Panama Canal will run well behind schedule and over budget, there's the minor detail that even rainy Panama may not have enough runoff to operate the new locks! That was mentioned (and quickly glossed over) in the TV documentary I watched on the subject. It is now 2006. Even the rosiest of optomistic schedules won't see post-Panamax ships passing through the Panama Canal for nine years. I wouldn't sell my UP and BNSF stock just yet. Chuck
I think Chuch has it right!
Someone with deep pockets will have to step up to finance this, and since the Chinese are already there in Panama [ Hutchinson Whampoa, as site managers, I think].
Maybe they will provide the deep pockets, but you can bet, it will not be without strings !
samfp1943 wrote:Someone with deep pockets will have to step up to finance this, and since the Chinese are already there in Panama [ Hutchinson Whampoa, as site managers, I think].Maybe they will provide the deep pockets, but you can bet, it will not be without strings !
Nothing is more fairly distributed than common sense: no one thinks he needs more of it than he already has.
Here is something.
The numbers I get for the dimensions on the new locks are 1400 x 180 feet. This is adequate for most Panamax container ships, but already too small for the Emma Maersk, the latest and the largest container ship, which is 1300 long with a 184 beam. Something called a Malaccamax container ship is now viewed as the largest practical size. At 1542 x 196 feet it would carry 18,000 TEU's. From what I read, anything larger would require rebuilding supporting infrastructure everywhere.
Given that completion of the expansion is about ten years out, I would say any assesment of the impact on BNSF and UP is highly speculative.
"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics
jeaton wrote:Something called a Malaccamax container ship is now viewed as the largest practical size.
JSGreen wrote: jeaton wrote:Something called a Malaccamax container ship is now viewed as the largest practical size. The Straits of Malacca is the passage past SE Asia into the Indian Ocean. I dont recall a specific narrow passage in the straights; the size limit could be related to ports along the route or maneuverability. THere is a lot of shipping in that channel...on Radar, it looks like a bridge sometimes!As to the US Navy and the Panama Canal, the last Aircraft carrier capable of passing though the current locks was the USS Midway, and it had a "hinged" section on the angle deck, so it could be "Folded" up to enter the canal. Dont know if they ever actually did that, though. The politicians probably would like to use the canal to reposition Carriers, but they have to keep in mind it wouldnt take an overly sophisticated terrorist action to put both sets of locks out of commission for a while, stranding any ship that happens to be in the upper lake...and it would be REAL TOUGH to fly many power projection sorties from a lake that small! As it is, the number of carriers we have are already fully scheduled without trying to swap from coast to coast!
The channel is only 1.5 miles wide at its narrowest point, but even worse is its depth, as little as 25 meters. That's your limiting factor on a ship!
Have fun with your trains
vsmith wrote: The Malacca channel can be dredged to increase its depth, thats old technology, someone should remind the Panamainians that the original canal was a major pain the A$$ to build due the absolutley lousy soil conditions in the hills the canal was dug thru, landslides are still a problem to this day. Also as mentioned, I have to wonder just how vunerable to canals are to over use if they are wider and allow more fresh water to escape than the rain forest can resupply, there no mention of the possibility of adding a major pumping system to pump the water back up into the upper canal are instead of letting it just flow into the ocean like it does today. As I remember currently only about 10% of todays ships are too big for the canal, only the largest oil tankers and the largest US warships are too big, and even with all the intermodel transfers, it still faster to ship a Europe bound container to Long Beach and have it sent acroos the country and reloaded onto another ship in Jersey than to stay on a ship thru the canal and onto a shlep across 2 more oceans to Europe. Plus, isn't most of the crap in these containers STAYING in America? There has been rumblings of building a new major port on the Mexican coast and upgrading road and rail routes to allow for direct shipping from the central Mexican coast straight up Mexico, into Texas and into the Mississippi valley into the center of the country, all this via dedicated rail and truck routes. Bypassing again the need for a wider canal to ship goods to the east coast. Also There was a story this past week about renewed interest in building a direct rail route from China to Europe by filling in missing portions of an almost complete rail route, not using the Russian Trans-Siberian as its too far north but thru a further south route. How would this effect shipping worldwide if instead of a slow boat from China, goods could be put on a fast train to Europe?
Actually you can't dredge the Malacca Strait, the bottom is solid rock. Anything can be done for a price but no one is seriously considering that one, yet. And even if you could there's hardly a port in the world that could handle 25 meter drafts without appalling expense.
There are virtually no containers moving from Asia to Europe via North America. They go through the Suez Canal.
I'm not holding my breath on a rail route across Asia replacing ocean shipping to Europe to any degree of significance. There are immense political, cultural, financial, and organizational problems to overcome.
Mr Green and Mr. Hadid
Thanks for defining Malaccamax.
I agree that we are not likely to be running any cariers through the new locks and not just for security. From somewhere I recall that when a carrier deploys from Norfolk, all other vessle traffic between Hampton Roads and some point off of Cape Henry is stopped. The folks running ship through the Canal might not be to happy about a several hour delay.
On the initial question, past is certainly not prologue. About the only thing comparable between then and now is the water in the canal and the standard rail gauge. No doubt the new locks will increase the capacity, but how much? Will the rest of the canal have the capacity to carry all the traffic when the locks are operating at full speed? How will the new capacity be used? Asia to US east coast and Europe to US west coast or Asia to Europe? How fast will port capacities change to handle shifts in traffic? How will the railroads respond with changes in service and rates? If mergers produce coast to coast railroads, will they even care? And on, ad naseum.
1435mm wrote: vsmith wrote: The Malacca channel can be dredged to increase its depth, thats old technology, someone should remind the Panamainians that the original canal was a major pain the A$$ to build due the absolutley lousy soil conditions in the hills the canal was dug thru, landslides are still a problem to this day. Also as mentioned, I have to wonder just how vunerable to canals are to over use if they are wider and allow more fresh water to escape than the rain forest can resupply, there no mention of the possibility of adding a major pumping system to pump the water back up into the upper canal are instead of letting it just flow into the ocean like it does today. As I remember currently only about 10% of todays ships are too big for the canal, only the largest oil tankers and the largest US warships are too big, and even with all the intermodel transfers, it still faster to ship a Europe bound container to Long Beach and have it sent acroos the country and reloaded onto another ship in Jersey than to stay on a ship thru the canal and onto a shlep across 2 more oceans to Europe. Plus, isn't most of the crap in these containers STAYING in America? There has been rumblings of building a new major port on the Mexican coast and upgrading road and rail routes to allow for direct shipping from the central Mexican coast straight up Mexico, into Texas and into the Mississippi valley into the center of the country, all this via dedicated rail and truck routes. Bypassing again the need for a wider canal to ship goods to the east coast. Also There was a story this past week about renewed interest in building a direct rail route from China to Europe by filling in missing portions of an almost complete rail route, not using the Russian Trans-Siberian as its too far north but thru a further south route. How would this effect shipping worldwide if instead of a slow boat from China, goods could be put on a fast train to Europe? Actually you can't dredge the Malacca Strait, the bottom is solid rock. Anything can be done for a price but no one is seriously considering that one, yet. And even if you could there's hardly a port in the world that could handle 25 meter drafts without appalling expense. There are virtually no containers moving from Asia to Europe via North America. They go through the Suez Canal. I'm not holding my breath on a rail route across Asia replacing ocean shipping to Europe to any degree of significance. There are immense political, cultural, financial, and organizational problems to overcome. S. Hadid
Well, the strait is 800 km long and owned by three different countries (Malaysia, Singapore, and Indonesia), plus China, Vietnam, the Philippines, and Brunei all think they have an interest in it, and 600 ships use it a day, plus a lot of pirates, and its width is also a serious problem, so good luck with that idea.
The market of interest in the Panama Canal is the Caribbean and South America. They do some business with Asia.
Dont worry about the carriers. We have LOTS of those. No one does em like we do and there is little oppertunity for Soviet era satuation strikes against them. I dont think our carriers are able to use the Canal but one thing they do have is stamina at very high speeds. I think they are capable of almost 1000 miles displacement every 24 hours. That is a huge amount of ocean.
Shipping needs to "Bulk up" as in add capacity. If we need many shipping fast as in right now there wont be enough to go around.
Shipping also needs to improve endurance, stamina and speed. That way they can probably take alternate routes and not lose too much time. Or be under stress when racing the tide to or from a port. 17 knots wont cut it. I would like to see 40 someday.
I dont see trains under the ocean any time soon. If we ever can establish and maintain neutral stability against gaining or losing depth like a submarine with all the sections of a underwater tunnel and keep it all dry, Im all for it.
One would not want to run crappy equiptment or have problems 200 feet below the water surface.
Until then we will have to settle for 50 mile bridges and chunnel type engineering.
Safety Valve wrote: Dont worry about the carriers. We have LOTS of those. No one does em like we do and there is little oppertunity for Soviet era satuation strikes against them. I dont think our carriers are able to use the Canal but one thing they do have is stamina at very high speeds. I think they are capable of almost 1000 miles displacement every 24 hours. That is a huge amount of ocean.
But they can't be used against an enemy like China that wages economic warfare.
The US trade deficit in August was $70 billion, $22 billion of that was with China.
vsmith wrote: Now if there's virtually no traffic from the Pacific to Europe via the rail route, Why are they widening the canal to accomodate ships that are already *not* using the canal in favor of Suez or are already the right size to pass thru the canal?
Hmmmm...Methinks the Pentagon may be a bigger pusher here than international commerce. Wonder what they have on the drawing board. I've heard rumors of aircraft carrier sized multi-ship mobile command bases in the study phase. Basicly a complete seaborne military air base that can be sent to trouble zones, anchored offshore, and interlinked via companionways and used to house air and land based forces without necessitating land-based military installations that can become focal points for anti-american attacks from insergents and terrorists and bypassing tricky negotiations for such land based installations. A wider canal would make moving such a system around the world much easier...
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