Rational Expectations: The impacts of the Panama Canal ......Panama Canal Trade Handled by Gulf...
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Rational Expectations: The impacts of the Panama Canal Expansion on Gulf Coast ports Michael Bomba Center for Economic Development and Research University of North Texas
Transcript of Rational Expectations: The impacts of the Panama Canal ......Panama Canal Trade Handled by Gulf...
Rational Expectations: The impacts of the Panama Canal Expansion on Gulf Coast ports
Michael Bomba Center for Economic Development and Research University of North Texas
Justifications for the Panama Canal Expansion
∗ Growing global trade volumes
∗ Changing supply chains for retailers; decentralization of distribution centers
∗ Alternate routing of cargo away from Ports of Los Angeles/Long Beach
∗ Carriers are using larger ships to lower costs, which exceed the handling capability of the Panama Canal
Photo Credit: www.hollandamericablog.com
Direction of Trade Transiting the Panama Canal
0
50,000
100,000
150,000
200,000
250,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
FY 2
011
Long
Ton
s of
Car
go (i
n Th
ousa
nds)
Pacific to Atlantic Tonnage Atlantic to Pacific Tonnage
Source: Panama Canal Authority, 2013
Panama Canal Trade Handled by Ports in the Eastern United States
Eastern U.S. Exports
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
FY 2
011
FY 2
012
Long
Ton
s of C
argo
(in
Thou
sand
s)
Gulf Ports South Atlantic Ports North Atlantic Ports
Great Lakes Ports Other U.S. Ports
Eastern U.S. Imports
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
FY 2
011
FY 2
012
Long
Ton
s of C
argo
(in
Thou
sand
s)
Gulf Ports South Atlantic PortsNorth Atlantic Ports Great Lakes PortsOther U.S. Ports
Source: Panama Canal Authority, 2013
Destination of Cargo Transiting the Panama Canal from U.S. Gulf Ports
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
FY 2
011
FY 2
012
Long
Ton
s of
Car
go (i
n Th
ousa
nds)
Asia South America Central America West Coast Canada Oceania United States
Origin of Cargo Transiting the Panama Canal to U.S. Gulf Ports
0
5,000
10,000
15,000
20,000
25,000
30,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
FY 2
011
FY 2
012
Long
Ton
s of
Car
go (i
n Th
ousa
nds)
Asia South America Central America Oceania United States Canada
Panama Canal Trade Handled by Gulf Coast Ports
Exports to Asia
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
FY 2
011
FY 2
012
Long
Ton
s of
Car
go (i
n Th
ousa
nds)
Imports from Asia
0
5,000
10,000
15,000
20,000
25,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
FY 2
011
FY 2
012
Long
Ton
s of C
argo
(in
Thou
sand
s)
Source: Panama Canal Authority, 2013 Source: Panama Canal Authority, 2013
Panama Canal Trade Handled by Gulf Coast Ports
Exports to Western South America
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
FY 2
011
FY 2
012
Long
Ton
s of
Car
go (i
n Th
ousa
nds)
Imports from Western South America
0
1,000
2,000
3,000
4,000
5,000
6,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
FY 2
011
FY 2
012
Long
Ton
s of C
argo
(in
Thou
sand
s)
Source: Panama Canal Authority, 2013 Source: Panama Canal Authority, 2013
Panama Canal Trade Handled by Gulf Coast Ports
Exports to Mexico and Central America
0
2,000
4,000
6,000
8,000
10,000
12,000
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
FY 2
011
FY 2
012
Long
Ton
s of C
argo
(in
Thou
sand
s)
Imports from Mexico and Central America
0
200
400
600
800
1,000
1,200
1,400
1,600
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010
FY 2
011
FY 2
012
Long
Ton
s of
Car
go (i
n Th
ousa
nds)
Source: Panama Canal Authority, 2013
General Findings
∗ Future Texas trade with Asia, South America, and Central America will grow to coincide with population and economic growth
∗ Carrier trends towards larger ships will require improvements to port infrastructure to remain competitive
∗ The trend towards larger vessels includes all cargo types
Share of Total Intermodal Containers Handled at U.S. Ports
Source: U.S. Maritime Administration, 2013b.
7.0% 7.0% 7.5% 7.3% 7.4% 7.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012
Other
Gulf Coast Ports
Atlantic Coast Ports
Pacific Coast Ports
Intermodal Containers Handled at Gulf Ports
Source: U.S. Maritime Administration, 2013b.
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2007 2008 2009 2010 2011 2012
Number of TEUs Handled in the U.S. Gulf by U.S. Customs Port
Galveston, TX
Tampa, FL
Panama City, FL
Freeport, TX
Mobile, AL
Gulfport, MS
New Orleans, LA
Houston, TX
Intermodal Cargoes
∗ Unlikely that the largest containerships will immediately call on Gulf Coast ports
∗ Texas market dominates the Gulf but is too small to be among the most important ports of call
∗ One or more transshipment centers will likely develop in the Caribbean.
∗ The expanded Panama Canal’s transit tolls, will strongly influence future ship routing by carriers Photo Credit: www.caribjournal.com
Agricultural Products
∗ Expanded canal offers lower transportation costs for agricultural goods but production costs are increasing
∗ Texas agriculture producers more likely to remain competitive than to acquire new markets from the expansion
Photo Credit: www.lubbockonline.com
Liquefied Natural Gas (LNG)
∗ Currently 8.8% of world fleet can operate in the canal, will increase to 88% of fleet after expansion
∗ 1 approved LNG export terminal in the U.S. Gulf, 9 proposed, and 12 potential facilities
∗ Extraordinary profit potential for exporters Photo Credit: GE Reports, 2013.
Location Price ($US/MMBtu)
Lake Charles, LA - USA $3.15
Altamira, Mexico $16.40
Rio de Janeiro, Brazil $14.65
Bahia Blanca, Argentina $15.65
Korea $15.65
China $15.65
Japan $15.25
United Kingdom $10.66
Belgium $10.40
Landed LNG Prices November 2013
Source: FERC, 2014 and Waterborne Energy, Inc., 2014.
Transportation Industry Trends and Issues
∗ Overcapacity is an ongoing problem for carriers as ship size grows
∗ New pollution laws will affect carrier costs
∗ Railroads intend to compete aggressively against all-water services
∗ Trucking, especially long-distance drivers, will be impacted by “Hours of Service” rules
∗ Ports are finding it difficult to predict future outcomes from the canal expansion
Photo Credit: www.shipspotting.com
Key Findings from Port Interviews
∗ Latin America may offer opportunities for new niche markets, but they will require infrastructure investment
∗ Smaller Texas ports should expand their marketing activities into Latin America, including Pacific Coast ports
∗ “Last mile” landside infrastructure issues are still challenges at many ports
Photo Credit : Journal of Commerce
Panama Canal Wildcards
∗ Canal expansion takes much longer than planned
∗ Continued drought in the Central United States affects agricultural output
∗ Price of natural gas drops due to fall in demand or increased supply
∗ LNG routed to Europe for political reasons
∗ Asian and Latin American markets decline
Contact Info Michael S. Bomba, Ph.D.
Center for Economic Development and
Research University of North Texas 1155 Union Circle #310469
Denton, Texas 76203 (940) 565-4049 voice
Photo Credit: www.portstrategy.com
Panama Canal Expansion
