Panama Canal Expansion Promotes Global Trade

About the Expansion

The expansion of the Panama Canal will offer new business opportunities to shipping ports located in the southeastern United States. Set to be completed in early 2016, the $5.25 billion expansion of the Panama Canal is aimed to the boost East and Gulf Coast container trade. The Panama Canal expansion consists of much larger locks, opening up trade for larger Pacific-Atlantic cargo ships. The larger locks are already boosting prospects for more exports to Asia from U.S. Gulf ports and vice versa, coal and grain amongst the commodities transported. Larger hauls are expected to increase efficiency with shipping cargo, ultimately maintaining the affordability of many critical goods for the public.

Doubling in Size

The connector between the Atlantic and Pacific oceans will be doubled in size, and once completed, will change the global routes for many of the world’s shipping lines. The canal will soon be able handle double the capacity in size of shipping containers, allowing for shippers to bring Asian goods to the East and Gulf Coasts of the United States for less money.

Bypassing Smaller Ports

While still passing through the Panama Canal, the shippers will now be able to bypass smaller port stops in lieu of a streamlined route with bigger hauls. In conjunction to the expansion of the canal, many key shipping ports have begun to expand their ship docking capacity to accommodate the larger ships now passing through the Panama Canal’s bigger lock system. The new locks will be able to handle larger vessels that can carry nearly three times as many containers.

Panama as a Global Shipping Leader

The project is expected to bolster Panama’s strategic position as a global shipping hub and business center for much of Central and South America. The capacity to process larger freighter ships through the canal, has sparked the interest of companies in the Southeast U.S., who have already begun seeking business opportunities in Panama or other parts of Latin America. Southern and Central America could benefit greatly from the expansion, as increased exports and imports expand job opportunities. Economists are hoping to see the quality of life increase for many Southern and Central Americans, as many citizens in the regions struggle to meet their basic needs.

West Coast vs East Coast

With the expansion of the Panama Canal, and the subsequent expansions of trade ports along the Southeastern United States and Caribbean, ships from the Far East can now ship directly to the Gulf regions without having to stop on the West coast of the United States. Ships from the Far East used to arrive on the U.S. West coast, then transport the cargo via railroad line to the East coast. Shippers can soon take advantage of the expansions on all ends as the ports in the Caribbean accommodate the larger ships.

The US East and West coasts are in constant  competition for business from the Far East. The $5 billion expansion will permanently alter the competitive balance between the ports of the US East and West coasts. According to industry analysts, despite the changes taking place in the Panama Canal, the market share of imports of East, West and Gulf Coast ports this year is set look a lot like it did during the second half of 2015.

Change Could Take Time

The completion of the Panama Canal expansion is a hefty project that will inevitably have a huge impact on the international shipping and trade sector.

Our team members at Jaguar Freight are always ready to answer your questions about the ever-changing shipping landscape. Clear supply chain leadership, expertly coordinated around the globe, backed by an exceptional degree of customer care, that’s what we deliver.