Moody’s: Panama-US Cargo Shift ‘Unlikely’


A report released by Moody’s Investor Service has stated that large shifts in cargo from the US West Coast (USWC) to the US East Coast (USEC) as a result of the completion of the Panama Canal expansion in 2016 are unlikely.

Neil Davidson, Senior Port and Terminal Analyst at Drewry recently said that more container lines have been using the USEC route via the Suez Canal as a result of more capacity along this trade lane.

There is also the issue of the recent return of strike-action at the ports of Los Angeles and Long Beach, which could potentially rekindle huge congestion resulting in container movements being diverted to ports along the USEC that can handle the new era of mega-ships.

Myra Shankin, Analyst and Report Author at Moody’s, said: “In most cases, shipments from Asia to USWC ports will arrive at inland destinations faster than via an all-water route to the East Coast through the Panama Canal.

“Additionally, ports' long-term contracts contain minimum annual guarantees, which will protect the USWC ports from swings in cargo volume and revenues. However, on-going labour and operational difficulties at USWC ports could shift cargo traffic if not resolved.”

Economic benefits can be obtained by local governments that are situated closely to USEC. Those gaining will be ports with water depths deep enough to accommodate the larger ships and with the best intermodal transportation connections.

Coby Kutcher, Report Author and Analyst at Moody's, said: “Even a muted uptick in cargo volume from Panama Canal activity will provide at least some increased revenue for local governments. Notable municipal 'winners' will be in the Norfolk, Virginia and Savannah, Georgia regions.”

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