Don't Expect Huge Cargo Surge at U.S. East Coast Ports | Global Trade Magazine
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  August 1st, 2016 | Written by

Don’t Expect Huge Cargo Surge at U.S. East Coast Ports

Expanded Panama Canal Opened as U.S. Imports Are Slowing

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  • During the the third quarter of 2016, carriers will add 30 neopanamax vessels to the Asia-USEC trade.
  • The ability of the Panama Canal to handle much larger ships will present U.S. importers with wider choices.
  • Impact of Panama Canal on routing goods: Things “will not all change overnight,” says Drewry report.

The new set of locks at the Panama Canal opened for business on June 26 with the 9,476-TEU Cosco Shipping Panama owning the honor of first transiting the canal with a westward passage.

Five days later, in the opposite direction, the10,000-TEU MOL Benefactor was the first neopanamax vessel to perform a commercial transit through the canal en route to New York on July 8, where she would become the largest containership that port handled in all its history.

During the the third quarter of 2016, the G6 and CKYHE alliances will have added 30 neopanamax vessels to the Asia-USEC trade routing via Panama.

The ability of the canal to handle much larger ships is a groundbreaking event and heralds a new era in which U.S. importers will have much wider choices routing goods from the Far East. But, says a recent report from the maritime consultancy Drewry, things “will not all change overnight.”

“The migration of seaborne cargo from the west coast to the east coast will continue to be a steady evolution,” the report concluded. “As it is, the MOL Benefactor is restricted to docking at the GCT Bayonne facility as the raising of the Bayonne Bridge—allowing the larger ships to pass under to reach the inner berths of Elizabeth and Newark—will not be completed until next year.”

East Coast ports enjoyed increased traffic last year, thanks to congestion and labor action at west coast ports. Realistically, however, they should not have expected to keep much of that traffic and the statistics bear that out.

According to Drewry, the 12-month rolling growth average of eastbound Asia-to-east coast traffic sand by May to seven percent from a high of 18.5 percent last August. At the same time demand generally in the U.S. market slowed in April and May.

“U.S. consumer confidence indices have detected a slightly edgy mood among American consumers at present,” the report noted.

In May, the Conference Board index was at 92.6, down 10 points from September of last year. “The economy is not gaining any significant momentum in the short term,” the report said, “and may not do so until the presidential elections are out of the way in November.”

Drewry declined to predict what this year’s peak season would look like at east coast ports, noting that carriers are adding larger ships while cutting back on services in an environment of continued historically low freight rates.

“Poor freight levels and the countdown to the reformation of alliances in March of 2017 have pre-empted any mass invasion of new capacity in the Asia-ECNA trade,” the report concluded. “Thus further drift of cargo from a west coast routing to an east coast carriage will be gradual.”

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