The ongoing expansion of the Panama Canal project, which is due to be completed in early 2016, is expected to provide carriers with opportunities to rectify supply-demand imbalances, by deploying newbuilds along the Asia-US East Coast (USEC) route and therefore fill this lane with its vessels.
Carriers are starting new Panama-transiting services to build up their customer base. Since the start of the year there have been six new services created for the Asia to US East Coast trade with all but one of them routed via Panama.
Drewry believe that the US West Coast (USWC) remains the most widely used gateway for Asian container imports but its share is declining fairly rapidly.
At the start of the century the split was around 84% USWC to 16% USEC but the latter coast has nearly doubled its share in 15 years.
The transfer of cargo seems to be intensifying too. Since January 2013 the USWC’s share has fallen from 73% to 69%, while the USEC has gained those four percentage points to reach 29%.
Much of the USEC’s recent ascent has come from greater use of Asia to US via the Suez Canal services that are able to accommodate larger ships.
However, this trend is now reversing and Panama Canal loops are all the rage once again as carriers prepare themselves for the expanded Panama Canal.
There are currently 25 weekly Asia-USEC services with 16 going via Panama and nine via Suez. When measured in effective capacity (after deductions are made for wayport calls and operational restrictions) that takes into account the smaller size of ships on the Panama route, services via Panama now account for just over half of all the available Asia-USEC slots.
Maersk and MSC recently announced container line MOL to one of its weekly calls from Asia to the East Coast of South America, suggesting that carriers are already making preparations for this new shift in trade dynamics.
A number of US West Coast ports are acting on plans to expand on their infrastructure. Some are spending billions in order to facilitate the new wave of 13,000 TEU ships that will sail through the Panama Canal.
The Drewry View: Carriers will continue to build up their Panama services ahead of next year’s expansion but unless carefully managed they risk losing more of the East Coast freight rate premium.