The Panama Canal is being upgraded right now. Already, some traffic ( according to the latest issue of Trains Magazine ) is already going that way instead of through Los Angelas. Can someone ( ie RWM, Paul North or Greyhound) speculate on who might be the big winners and losers. Could CN get a lot of traffic along the old IC going to Chicago and north to Canada?
George
The port development of Manzanillo in Mexico ( KCS) and Vancouver and Prince Rupert in Canada by CP and CN to avoid all the California regulations and lawsuits. Its not for nothing that CN put all those railroads together so that they have a straight shot from Prince Rupert to Chicago. The UP and BNSF should hold off on any further expenditures in California until they see what happens. As far as container traffic from the orient to the east coast is concerned< the party is probably over.
All the below is based on what I have read and may not in fact have anything to do with reality.
I guess it will depend on how deep the port of New Orleans is and how big the newer container ships are. On the east coast Norfolk/Hampton Roads is the only port that can take the newest designs, Both NS and CSX are there as well as in Baltimore, Savannah,Jacksonville and NY/New Jersey. Not to sure about NS in Charleston, SC. With the money NS is putting into the Heartland Corridor I think they think they will win comming out of Norfolk. Also which railroads have direct access to the container yards may have a bearing. Another thing to think about is how much is Panama going to charge to get the ships through, remember they have to go both ways assuming they are comming from Asia.
Another thing is the capacity of the canal. If a ship has to wait 3 days, at approx $100,000 per day for the passage that money could possibly be better spent using any of the West Coast ports. Its going to Europe that the Canal will save money for the shipping companies.
John
Savannah, Charleston and Norfolk have all done well with Pacific Rim container traffic over the past several years. I think would be the big winners.
No doubt the east coast ports are getting ready for this traffic. The ships will be specifically designed around the limitations of each harbor such as the Bayonne Bridge’s air-draft will knock off a layer of containers for Port Elizabeth and Port Newark. Unlike California these ports want the business.
Many people are hoping that the capacity and ship-size expansion of the Panama Canal will be a comeuppance to the ILWU, the PMA, the Ports of Los Angeles, Long Beach, and Oakland, BNSF, UP, and California in general. I think those people will be sorely disappointed. Here’s why:
The landbridge traffic from the West Coast to the Northeast and Southeast for U.S. consumption is already gone (there never was any that got back on a ship and continued to Europe, despite popular legend). For several years now this traffic has moved via liner strings via the Suez Canal to ports such as New York/New Jersey, Norfolk/Newport News, Charleston, and Jacksonville, or already moves via the Panama Canal. Some of this Suez traffic might switch from the Suez Canal to the Panama Canal, particularly the North Asia ports, but that will be zero effect on North American railways. No one will want to make the first port of call at Houston, a small market, vs. New York/New Jersey, a large market. It’s very unattractive to load a liner to hit a small market first. That’s why the West Coast strings typically have LA/Long Beach as their first port of call (because that is an enormous local market) and Oakland as their second port of call (where they pick up the empties and drop off the NorCal loads).
The traffic that some people think might flip to the PC is Chicago-Upper Midwest, but I doubt that also. If someone wants an alternative to the PMA-ILWU West Coast ports and BNSF-UP, they already have one, the COSCO-CN service through Prince Rup
And me without an acronym dictionary.[:P]
ILWU?
PMA?
COSCO?
ILWU = International Longshore and Warehouse Union – the union on most of the West Coast ports
ILA: International Longshoreman’s Association – the union for most of the East Coast ports
PMA: Pacific Maritime Association – the bargaining authority for the port operators for most of the West Coast ports
COSCO – China Ocean Shipping Company
RWM
It was port capacity constraints in LA/Long Beach that pushed the volumes up at the East Coast ports in recent years. Columbus OH is a large dist center for garments, I believe, which is part of the push by NS and CSX to get better/cheaper rail service and terminals there from the east coast ports. I suppose the current economic downturn has shifted things a bit, a least in the near turn.
What effect will the enlarging of Panama canal have on the Panama Canal RR?
This RR was rebuilt and container terminals built at either end to tranship containers from vessels too large to transit the canal. Presently this RR is used by tourists and workers travelling from Panama to Colon, but this psgr traffic could hardly sustain the upkeep of the Panama Canal RR.
Railwayman: are you sure of those voyage times. I get about 10 knots average speed. The container ships that pass Kingston hereon Puget Sound on the way to Tacoma are zipping along at at least 20 knots and the biggest ships have a sea speed of 25 knots. It might be faster to NY through the Panama Canal from Shanghai than the trans-ship it at Los Angeles. I know that NY container port is full of Panamax container ships back in 1991.
I was stationed at Ft. Clayton, CZ 1977-'79, across the street from Miraflores Locks, while I was in the army. The Panama Canal (PC) is an amazing bit of work! The only good thing “JC” did as president was “give it back”! The entire Canal Zone was a feudal state. The “Gold” and “Silver” pay scales never were eliminated. The entire operation cost the U. S. Government (taxpayers) a LOT of money. The PC Company employes, of “American” heritage, considered themselves above the other US citizens. I had cousins that worked for the PC Co… They never invited me for Thanksgiving dinner, 'cause I was a lowly (enlisted) GI and not a Baptist. Anyhoo, I don’t think the increased capacity (the new locks) will hurt our country. Transit time is just too long for valuable goods. I don’t think Prince Rupert or Vancouver pose much of a threat, either. The Canadian’s penchant for going on strike will keep those ports suspect. KCS’s Mexican port shows promise. Yar! California needs to clean-up their act. NIMBYs and BANANAs can ruin anything, not to mention the “Tree-huggers”.
Interesting subject and timely. In another thread the discussion is getting around to the “Green Requirements” of doing transportation of goods into and out of California, and how there seems to be an almost “anti” business environment agenda being promoted there.
And in this thread the noted movements to ports other than those located in California, and the alternative ports available ( not to also mention the reasons, sailing times and capacity issues) in those alternative ports; Wast Coast Ports vs. Gulf and some of the N.W. Pacific Coast ports, both in the U.S. and in Canada.
My question concerns the efforts of the Kansas City Southern and its other corporate cousins to validate its added container corridor from Lorenzo Cardenas to the Kansas City area. This link in the distribution net seems to have been left out of the forgoing conversations referencing trave times for goods from the ports to the various distribution centers of the U.S. KCS has spent a lot of capital and time as well to promote this corridor as a viable alternative to the Asia/ California Lane ( Port of LA/ Long Beach, etc.)
I’m curious to hear others thoughts on this alternative Corridor.
Sam, the EPA is tightening the pollution standards for ships at all ports, not just what California is doing.
Good question. I used a long-term look at what I think speeds will have to be in order for the liner companies to stay in business, and generate volume: slow.
Schedule times have varied quite a bit in recent years. In 2006, many liner schedules were around 18 knots. Then when oil shot up, schedules were slowed down to as little as 9 knots and the shippers could just lump it if they didn’t like it because demand for slots was still high. With the fall-back in oil prices, and the collapse in demand starting in late 2008, the liner companies became desperate, the shippers regained the upper hand, and now schedules are back into the 18 knot regime.
The liner companies are also on schedule to lose a cumulative $20 billion or so this year, every major container line is running at a substantial operating loss, and the more volume they haul the more money they lose. Speed is a major contributor to cost because it requires much more fuel, and fuel is the major component of operating cost.
No one knows how this will shake out. China, Taiwan, Japan, Germany, South Korea, Netherlands, and Singapore and other major ship-operating nations may choose to cling grimly to their ocean shipping market share even though it will inevitably drain their national treasuries to cover the operating losses of carriers they either own (in the case of China) or are domiciled in those countries, and in effect subsidize the consuming countries such as the U.S. (the current operating profits of companies such as Wa
How much money did KCS spend on creating capacity in this corridor? I thought the money spent on the port was all someone else’s, and I never heard any specifics about rail line capacity being created specifically for this port.
Lazaro Cardenas handled 524,791 TEUs in 2008. If all of that was inbound 40’ containers, and every one of them went to the U.S., it would be the equivalent of two trainloads per day, which is not much more than a blip in what comes out of LA/LB every day. In reality, this trade was entirely Mexican trade, and virtually zero went to the U.S. because this route is in direct competition with all-water routes that are cheaper and water-rail routes that are faster.
This recent article pours a lot of cold water on ideas that Mexican ports will seize market share from U.S. or Canadian ports for the U.S. market any time soon.
http://www.joc.com/node/413483
RWM
RWM;
Thanks for sharing the linked article. You are right of course, but my perspective was as an outsider with perceptions based on what I have read on the Internet, and in TRAINS, as well as some other sources.
The KCS capacity improvement was mainly,the rehabilitation of their Rosenberg/Victoria section of the old Tex-Mex RR . They have made much of the NAFTA RR, but I think, little has come of that at this time. The effect of the Meridian Speedway seems to be promising, but I think, nowhere near its full effectiveness. The Panama Railway is probably getting its best utilization as the Panama Canal widening project goes ahead. What happens when the Canal is fully operational remains to be seen. You are right, foreign investment in both the Container Port of Lorenzo Cardenas; and in the Canal Oerations, in the person of the Chinese ( Hutchinson Companies) investments has played a major roll in the accomplishment of their improvements. One has to wonder what the end game for the Chinese is at this time.
At any rate, it will be interesting in the coming years to see how this will all play out.
The Chinese must take the Boy Scout motto- “Be Prepared” seriously. The “Cosco Busan” incident is a good example of some of the problems of doing business in California. The ship in question was under a pilot’s care when it struck the Bay Bridge in heavy fog. In the resultant damage a lot of bunker C fuel oil was released. Lawyers started to come out of the woodwork as the fog lifted. Eventually the court found the pilot responsible. All the time this was going on the ship was held hostage. Now the state of California is suing Cosco for damages and criminal intent. Civil law and Marine law are completely different I guess. Cosco should be suing the state for wrecking their ship. Why pay for a pilot if you can wreck yourself for free. The existence of the pilots association should be at stake. In Mexico the owner just has to pay a few under the table bribes and they get all kinds of assistance.
RWM wrote;
“The landbridge traffic from the West Coast to the Northeast and Southeast for U.S. consumption is already gone (there never was any that got back on a ship and continued to Europe, despite popular legend). For several years now this traffic has moved via liner strings via the Suez Canal to ports such as New York/New Jersey, Norfolk/Newport News, Charleston, and Jacksonville, or already moves via the Panama Canal.”
I still see trains loaded with containers coming into Nashville from Memphis, presumably going to Atlanta. I thought that this traffic came in from the west coast. Am I misunderstanding what I’m looking at? COSCO and Hopaq and Lloyd are a couple of the names on them. If they don’t come from the west coast, where are they coming from?
George
It’s hard to say what you’re looking at because you’re in the middle of the country where numerous commodity lanes are intermixed. (It’s much easier when you’re standing at the front gate of a port.) Commodity flows are complex and not tracked nearly as well as people tend to think – most people are shocked and in disbelief when I tell them that data to track where stuff comes from and where stuff goes mostly does not exist. Anyone who spends their life in transportation (like me) spends an inordinate (and frustrating) amount of time simply trying to find data that is accurate and useful and meaningful.
What is known is that the West Coast share of international intermodal business that is destined to consumption points east of the Mississippi has fallen rather drastically, displaced by containers moving the other direction through the Suez Canal. We know that because we can track total number of containers entering the U.S. at each port, and the share of the total that moves into the U.S. via East Coast ports has risen dramatically in the last decade. We can divide that share by population and we kn