PANAMAX - Effect Upon US Roads

[Gilbert B Norman]

At another posting made at this site, I located this most interesting blog, albeit sponsored by maritime interests, that foresees the effect of PANAMAX upon the railroad industry:

https://www.flexport.com/blog/panama-canal-expansion/" onclick="window.open(this.href);return false;

All told, they hold that traffic consigned to North and South Central regions is most vulnerable to a diversion from the West Coast, and the lucrative line-hauls that BNSF and UP presently enjoy - and that there will not necessarily be an equal container-load gain in traffic to CSX and NS - and no way the revenue. UP and BNSF could be looking at a 15% decline in loadings.

Otherwise, "we report, you decide".

[rr503]

Yeah. I read a report that said that the PANYNJ's expressrail system could see a doubling in loadings post Panama's expansion. However, most of this cargo would be going no further than Ohio, Indiana and Illinois. I think that what we will see is a short haul intermodal showdown on the east coast. I have my popcorn ready.

[YamaOfParadise]

Interesting to see how it's particularly going to switch where non-time sensitive customers will receive their freight from; for the time-sensitive, the UP/BNSF still can get it by sending out hotshots in the area where the change is happening.

I'm interested to see how much this'll affect intermodal in New England, both in seeing how much intermodal goes up from the Port of NY and over the Selkirk Hurdle, and how much increased container activity at the Port of Boston (which is setup for Panamax and Post-Panamax ships) will flow more to trucks than rail, considering there's no more rail container ops in Boston anymore.

[Gilbert B Norman]

Messrs. 503 and Yama, as I noted opening the topic, and you both tacitly concur, post-PANAMAX CSX and NS has best not think that for every TCU BNSF and UP loses, that's a gain for us.

For shipments Ayer (that's Port of Boston's intermodal facility) or Port of NY (well, actually all freight is over in.NJ), figure anywhere short of Cleveland, Pittsburgh, or Washington, are most economically handled by highway, "horsey and puddie-tat" will not be all that much benefactors.

But I don't think the West Coast ports, as well as BNSF and UP are going to watch their lucrative business and line hauls go Adios without a fight. I still think there is the chance the East Coast ports are going to throw a party - and just might end up "nobody came". While I have often used in these maritime discussions the phrase "last time I checked, God does not have user charges for His waterways", but that's an "all bets off" when it comes to the Canal.

Finally, let us not forget the Port of Lazaro Cardenas, Michaun MX. True the maritime companies are wary of using this port account Mexico's political instability, but if the situation should stabilize and considering the "peasant" wages for which an up here $150K Longshoreman works for down there, that could be a real competitive drag to post-PANAMAX - but a bonanza to KCS-M.

[rr503]

I wouldn't write off short hauls like that yet. For a while (I'm not sure if they still do) CSX ran dedicated trains from Port Newark to Worcester. I think that if CSX and NS partner with/create inland ports to funnel traffic to themselves and make their service reliable, they could take some of that short haul traffic. If pan am can haul water from Portland to Ayer, why can't CSX or do the same?

[Gilbert B Norman]

Ready or not, post-PANAMAX is upon us as this Wall.Street Journal article notes:

http://www.wsj.com/articles/rail-expans ... 1464946201" onclick="window.open(this.href);return false;

Fair Use:

..The Panama Canal expansion, expected to bring bigger ships and more business for U.S. East Coast ports that are ready for them, is scheduled for completion this month...

Now what is most ominous is the main focus of the article - that both BNSF and UP desire to expand their facilities to serve the ports of LA and LB, yet are being blocked by NIMBYS - and this in a commercial area!

All told, it is not just the two roads that will take a hit post-PANAMAX; it's economic activity in the entire area. If two railroads using private capital cannot expand their facilities, how can they expect to compete with the publicly funded expansions of East Coast facilities?

[GulfRail]

I think the effect on U.S. roads will be minimal. Even with the improvements to the Panama Canal, it is still faster to transport containers over land than it is to transport them over sea.

[Gilbert B Norman]

The day is upon us:

http://www.wsj.com/articles/the-panama- ... 1466378348" onclick="window.open(this.href);return false;

Fair Use:

But the expansion isn't a panacea for the shipping industry. And it doesn’t guarantee a payoff for all the East Coast ports and other businesses that have poured billions of dollars into expansion and infrastructure along the East Coast in hopes of profiting from the larger vessels and extra cargo. The American Association of Port Authorities says close to $155 billion will be invested by 2020 to expand U.S. ports to handle bigger ships. South American terminals are also in an expansion race.

It is indeed interesting to.note that The Journal has picked up on what I have long held and expressed at these forums; what if the East Coast ports are ready to throw the big party - and nobody came

[ExCon90]

With port expansion there is always a risk of sleepless nights--if you build it they may come, but then again they may not. The only sure thing is that if you don't build it they can't come. For many ports it's really a roll of the dice.

[SemperFidelis]

June 26th is the scheduled opening day for the expanded canal. As a fan not too far from the Southern Tier I'll be keeping my fingers crossed.

[Gilbert B Norman]

I realize not many here can make the claim of reading The New York Times for 65 years as can I, but nobody does investigative reporting to the depth as does TheTimes;

http://www.nytimes.com/interactive/2016 ... obile.html" onclick="window.open(this.href);return false;

Fair Use:

On July 8, 2009, the champagne finally flowed.

After an intense two-year competition, a consortium led by a Spanish company in severe financial distress learned that its rock-bottom bid of $3.1 billion had won the worldwide competition to build a new set of locks for the historic Panama Canal.

The unlikely victors toasted their win at La Vitrola, a sleek restaurant in an upscale neighborhood east of downtown Panama City. Within days, executives of the four-nation consortium, Grupo Unidos por el Canal, flew to Europe to begin planning the project.

This time, there would be no champagne. Disputes quickly erupted over how to divide responsibilities. Some executives appeared not to fully grasp how little money they had to complete a complex project with a tight deadline and a multicultural team whose members did not always see things the same way.

Internal arguments soon gave way to bigger problems. There would be work stoppages, porous concrete, a risk of earthquakes and at least $3.4 billion in disputed costs: more than the budget for the entire project.

Seven years later, and nearly two years late, the locks have finally been declared ready to accept the new generation of giant ships that carry much of the world’s cargo but cannot fit in the original canal. To mark the occasion, Panama has invited 70 heads of state to watch on Sunday as a Chinese container ship becomes the first commercial vessel to attempt the passage from the Atlantic Ocean to the Pacific through the larger locks.

For more than 100 years, the canal has been a vital artery nourishing the world economy, a testament to American engineering and one of the signature public works of the 20th century. The new locks, built by Panama without help from other governments, were sold to the nation and the world as a way to ensure that the canal remained as much of a lifeline in the hyperglobalized 21st century as it was in the last

Stand by for the screams of "hatchet journalism"; Gray Lady" has heard them before.

[FLRailFan1]

I wonder what will happen at some small ports, New Haven and New London...

[Gilbert B Norman]

The thought of a Neo-PANAMAX vessel aground on Stratford Shoals is, uh "disturbing"; nevermind a VLCC. .
Elsewhere at the site, we have had active discussion regarding the former New Haven RR Berkshire Line now "operated?" by the Housatonic RR. Possibly this road's salvation could be an intermodal interchange with Chessie at Pittsfield, then handling that traffic through Danbury and Hawleyville and on to Cedar Hill with highway delivery through Southern NE. The Amtrak Springfield Line will soon be inundated with passenger trains way beyond the "six a day" at present effectively minimize that line's freight access to New Haven.

[rr503]

Strangely enough, container traffic is down YoY at PNY/NJ, but that could be isolated.
Maybe someone in the know could shine a light on this?

[Jeff Smith]

<COUGH> Panamax </COUGH>

http://www.statesboroherald.com/section ... cle/79837/" onclick="window.open(this.href);return false;

SAVANNAH — The largest cargo ship ever to visit ports on the U.S. East Coast is so long the Statue of Liberty and Washington Monument could fit end-to-end along its deck and still leave room for Big Ben.


The COSCO Development arrived Thursday at the Port of Savannah after cruising past dozens of onlookers who cheered and took photos of the mammoth vessel from Savannah's downtown riverfront. Its first East Coast voyage marks a new era for U.S. ports that, despite years spent anticipating the supersized ships, will struggle to accommodate them without major infrastructure improvements.


"It takes up the whole river!" Andrew Evans, who served as a ship's officer in the 1960s, exclaimed to his wife as the ship slowly lumbered into view, the cargo containers stacked on its deck towering above trees on the shore.
...
The big ship, flagged out of Hong Kong and owned by China-based COSCO Shipping Lines, is also the largest to pass through the Panama Canal following a major expansion last year. Its arrival on the East Coast shows shippers aren't waiting for the seaports scrambling to deepen their harbors so the larger ships can pass fully loaded at low tide.


The Port of Virginia, where the ship docked earlier this week, is one of only four East Coast ports with the desired 50 feet of depth at low tide. A $973 million deepening of Savannah's shipping channel started in 2015 but won't be finished for about five more years. The Port of Charleston, South Carolina, where the big ship will head next before returning to Hong Kong, plans to start its own dredging this fall.
...