The newly inaugurated Panama Canal may not be as beneficial as it seems for container ship carriers. So says Patrik Berglund, CEO of Xeneta, provider of a global benchmarking and market intelligence platform for containerized ocean freight.

Although the new sets of locks and deeper, wider shipping channels will potentially double the waterway’s capacity, giving neopanamax vessels access for the first time, the increased efficiencies may actually undermine rates—deepening the crisis for a segment already suffering the strains of severe over capacity and cut-throat competition.

Xeneta, which boasts a database of over 12 million contracted ocean freight rates crowdsourced from more than 600 major international businesses, has charted a spectacular fall in container rates over the last two years. The short-term market average rate for transporting a 40-foot container from Shanghai to Rotterdam, for example, has fallen over 60 percent since summer 2014 and currently stands at $941.

The Panama Canal extension, opened on June 26 with the passage of the 9,472-TEU COSCO Shipping Panama, was meant to be a boon for carriers, giving vessels carrying around 13,000 TEU all-water access from Asia to U.S. east coast ports and inland markets.

But according to Patrik Berglund, this neopanamax shortcut could come at a crippling cost.

“On the face of it, improved transit times and two-way traffic deliver huge benefits for container carriers,” he noted, “facilitating more cargo to the U.S. east coast and Caribbean ports faster and cheaper. However, there could be real trouble brewing on the horizon. First, the neopanamax vessels have to attract trade to this fresh route, and this could initially force them to keep rates artificially low, the last thing the industry needs. Then we have the fact that more ships will be able to compete on the east coast, potentially pushing rates even lower.”

Even more vessel capacity may be headed to east coast routes with the arrival of 18,000 to 20,000 TEU megaships. “MSC has four in the pipeline now,” said Berglund, and this could cause “a cascading of existing tonnage onto attractive routes, like the east coast. It all spells, what could be, an impending financial disaster for a segment currently defined by consolidation, new alliance-building, and on-going uncertainty.”

Rosemont College Professor Andrew Lubin, a specialist in container freight and logistics, agrees with Berglund. At present, 68 percent of container movement from Asia to the U.S. east coast comes through west coast ports, he noted. Lubin predicted that between 10 percent and 14 percent of that traffic will be diverted to gulf and east coast ports within the year.

“Faster transit times and the fact that carriers switching tonnage to the east coast will now be able to avoid west coast labor unions will boost vessel numbers and therefore competition,” said Lubin. “Increased competition has an obvious impact in the market—lower rates.”

This is only the latest development for an industry that is currently in a constant state of flux. “Rates across the more than 60,000 port-to-port pairings we cover are changing all the time,” said Berglund. “Information is knowledge and, especially in a market like today’s, has to be the cornerstone of every key business decision.”