One year after the widening of the Panama Canal more Asia-ECNA container services are transiting the Central American waterway at the expense of other routes, according to Drewry Maritime Research.
Panama Canal Authority (ACP) last week celebrated the first anniversary of the expansion of the Panama Canal, taking the opportunity to showcase some statistics from year-one operations.
Most interesting of all was the average 5.9 daily vessel transits (of which containerships accounted for about 51%) – far above the original forecast of two to three daily transits expected in the first year.
Rapid adoption of the widened canal by container lines was expected, given that the US$5 billion project enabled them to upsize vessels from a maximum of around 5,000 TEU to nearer 14,000 TEU.
This allowed carriers to make use of more ships from other over-tonnaged lanes.
Drewry predicted vessel upgrading would be gradual as there was insufficient demand, as well as physical restraints at US East Coast ports, to enable all services to immediately deploy the maximum ship size available.
Nonetheless, the upgrade in the size of ships used on the Asia to East Coast North America via Panama trade (the most common trade using the canal) has been spectacular, rising by nearly 60% since May 2016, from 4,900 TEU to around 7,800 TEU as of June 2017.
Now that the raising of the Bayonne Bridge in New York has been completed carriers have the opportunity to add even more of the larger ships.
Weekly Asia-ECNA services via Panama have not increased in number before the expansion with shippers being able to utilise 14 different loops. To mitigate the upgrading of ships on those services carriers instead had to reduce the number of services routed via the Suez Canal, from nine loops in May last year to five in June this year.
Panama Canal expansion reignited the shift away from the West Coast for Asian export cargoes, which had reversed in the first-half 2016.
That momentum has carried into 2017 with volumes from Asia to USEC up by 6% after five months to 1.8 million teu, according to Piers statistics.
Shipments from Asia to the US Gulf Coast soared 34% to just under 200,000 teu.
As reported last week, Asia to USWC volumes rose less sharply (2.5%) but it still remains the dominant gateway at nearly 4 million TEU.
The pace of growth seen thus far in 2017 indicates that it will be another bumper year for Asia to ECNA container traffic and will very likely surpass the annual 4.8% spurt.
When including volumes to Canada and Mexico – for which we only have data for the first four months – the average monthly Asia-ECNA shipments over the past 12 months stood at 443,000 teu in April, some 7.3% higher than in the same month last year.
The problem for Asia-ECNA carriers is that monthly shipments very rarely fall into the average category. The lumpiness of volumes month-to-month in this trade requires skilful capacity management through void sailings to prevent load factors from dropping to levels that will reduce their pricing power.
It demonstrates quite a bit of capacity was shaved via this method from August through to April, but since then the trade has been operating at virtually full capacity (ignoring slow-steaming).
It would appear that carriers wanted to showcase their new networks in all their glory for the start of the new alliance roll-outs, which has had a detrimental impact on load factors.
Carriers have had a mixed year so far in this regard with our estimated headhaul ship utilisation ranging from over 100% in January (when we counted 11 void sailings) to a low of 80% in March (four void sailings).
Despite an improvement to our estimated Asia-ECNA ship utilisation index in April, when it gained nine points to 89%, carriers continue to suffer from lower spot market freight rates.