Panama Canal Expansion will have a large impact on US cargo

Many of us don’t think about the Panama Canal very much, but if your business relies on imports or exports to Asia, The Panama Canal expansion may have a larger impact on your business than you might think.

The Panama Canal is actually a series of water ways that includes lakes, static passageways and locks.   The entire system is about 81 miles long.   A ship may take 8-10 hours to cross the canal.  The average fee per ship charged is $45,000, but the canal saves about 20 days of voyage if a ship had to go around the tip of South America.  About 30 ships per day go through the Panama Canal.

There are three lock systems that a ship must pass through when traversing the Panama Canal.  In the course of travel a ship will go up 85 feet then go down 85 feet.  There are 36 tug boats assigned to the Panama Canal, each ship has 2 tug boats that tug the ships in open water.  When going through the locks there are trains (mules) on each site that propel the ship through the channel.

The Panama Canal is undergoing a major expansion that started in 2007 and should be completed during 2015.  The revamped canal allow for more and larger ships.  Currently the canal allows an approximately sized cargo ship of 950 ft by 107 ft; with the expansion, ships with dimensions up to 1200 ft by 160 ft can pass through the Canal.  Even with this expansion, some of the new super cargo ships won’t be able to go through the waterway.

The completion of the expansion will have a number of affects on US and global cargo transportation.  With the capacity to carry larger ships, some the Asian cargo ships that normally port on the US west coast will go through the canal and port on the south east coast or sail up the US east coast.  Many eastern seaboard ports are dredging their harbors to allow for the larger ships.

Producers in the Midwest, who normally would send cargo by freight or plane to the West Coast, now may find it cheaper to ship cargo to ports in Texas or Louisiana.

Ports on the East Coast are some of the highest cost ports in the US, largely because of wages and work rules negotiated with the Longshoreman Unions.  The lower cost ports on the US coast will win more business at the expense of the more expensive ports.

Packnet is not in the business of exporting or importing, but we are experts in packing and crating export cargo containers.  We even offer “on-site” packing services.   For more information about our Packing and Crating services go to www.packnetltd.com or call us at 952-944-9124.