Panama Canal Widening - 2014

I saw an interesting article here that quotes a BNSF official who believes that west coast ports will not only keep all of their current traffic after the Panama Canal is widened, but will actually regain traffic they've lost over the years to the East Coast. I could argue many of the points and I think it's a case of VERY "wishful thinking" as the Canal widening would be a complete waste of money if this was true. Thoughts?

http://www.joc.com/portsterminals/bnsf- ... oast-ports

SecaucusJunction wrote:I saw an interesting article here that quotes a BNSF official who believes that west coast ports will not only keep all of their current traffic after the Panama Canal is widened, but will actually regain traffic they've lost over the years to the East Coast. I could argue many of the points and I think it's a case of VERY "wishful thinking" as the Canal widening would be a complete waste of money if this was true. Thoughts?

http://www.joc.com/portsterminals/bnsf- ... oast-ports

I think nobody knows what will happen until after the canal is actually widened and open for business. Sounds like all these Class I's are just trying to apeal to there stockholders that they will not lose any traffic to another Class I.

wolfboy8171981 wrote:

SecaucusJunction wrote:I saw an interesting article here that quotes a BNSF official who believes that west coast ports will not only keep all of their current traffic after the Panama Canal is widened, but will actually regain traffic they've lost over the years to the East Coast. I could argue many of the points and I think it's a case of VERY "wishful thinking" as the Canal widening would be a complete waste of money if this was true. Thoughts?

http://www.joc.com/portsterminals/bnsf- ... oast-ports

I think nobody knows what will happen until after the canal is actually widened and open for business. Sounds like all these Class I's are just trying to apeal to there stockholders that they will not lose any traffic to another Class I.

That likely is the case, some wishful thinking out west. In addition to the canal widening, east coast ports are expending substantial funds to expand infrastructure in anticipation of the larger ships. For example, PANYNJ is expending over a billion dollars to raise the clearance of the Bayonne Bridge to accommodate the larger ships. That could be good news for NS, CSX and Conrail.

I would argue that, here in NJ, we are currently in the worst case scenario for international intermodal containers on our rails right now... and it's been that way for the past decade. From Asia, anything destined west of the Harrisburg area is railed from the west coast inland but anything east of the Harrisburg area is brought into NJ and trucked because it is too local to put on rail. I'd venture to say that most land bridge traffic is gone as well in favor of the canal. Notice you don't see any unit Sealand (now Maersk) trains or APL trains anymore? Yes, this is not an exact science and there is still some, but not to the extent that there used to be. The widening of the canal can only help if the railroads can figure out decent ways to short haul containers to their destinations.

Good news for NJ ports... Port Authority announced last week that they are well ahead of schedule with their efforts to raise the Bayonne Bridge. If it keeps up, maybe they will be able to at least get ships through by the time the canal is widened. That could be an economic boom for NJ and good for railroads in the North Jersey region. If they delay much past the opening date, they could permanantly lose business to other ports.

i had to google how they are raising it. I honesly thought they were just jacking up the roadbed, not building a new one above it and tearing out the existing when done.

Most people in the container steamship industry don't expect to all of a sudden run ships across the Pacific, down the west coast of North America, pay $200k plus to pass through the Panama Canal and come all the way up to the U.S. Northeast. The trip is too long, requires too much fuel, and does not permit enough turns a year on the equipment. At most we'll see Northeast Asia to Houston, Mobile, and maybe Savannah or Charleston. Too, no one expects Europe to U.S. West Coast traffic to take the long and expensive toll route through the Panama Canal.

These days supply chain managers balance the cost of capital tied up in the inventory in the boxes as well as the need to speed goods to market sometimes more than any savings over hitting the Pacific ports and railing the boxes across the continent (which is faster). Proof of that is the success of Port Rupurt in British Columbia that allows two to three fewer days transit for the ships and railing the boxes to the U.S. midwest and east coast.

Everyone expects the price of oil to increase throughout the decade and longer. The reaction taken by shipping companies in 2008/9 was to slow steam their ships and no longer advertise eleven day express service from Shanghai to Long Beach. Slow steaming now takes about 15 days and saves a lot of fuel. The goods in those containers want to get off the ship and to customers faster by rail than many more total days via ship. I doubt we'll see ships going from East Asia to the U.S. Northeast or from Europe to the U.S. West Coast.

U.S. rail is the winner against the Panama Canal in this market. The Panama Canal is ideal for larger ships to haul ores from Brazil to China and many other markets like that they have recently emerged and brought new business to Eastern Latin America or from Chile and Peru to the U.S. East Coast.

Not so much...

http://www.sacbee.com/2011/12/29/415132 ... rries.html

Interesting article if it turns out to be true...

http://www.truckinginfo.com/news/news-d ... gory_id=23

Thoughts?

Why would any 10,000-plus teu ship go to Baltimore versus Norfolk? Baltimore has always been a minor player in container traffic and I don't see that changing.

riffian wrote:Why would any 10,000-plus teu ship go to Baltimore versus Norfolk? Baltimore has always been a minor player in container traffic and I don't see that changing.

if I'm following that's in reference to "dry bulk" I think I've read before that Baltimore does that well?

NY/NJ definitely has an advantage. I guess it depends on if they can get the Bayonne Bridge raised in time or not... though Jersey City and MOTBY are options for the beginning if they can't get to Port Newark/Elizabeth right away.

While the discussion here appears directed towards the impact of PANAMAX upon the PA NY/NJ, here is discussion elsewhere at the site directed towards other ports (and of course, the roads that serve them):

BNSF

Port of Miami - FEC

Port Authority has applied for expedited approval for the Bayonne Bridge project, less than one day after it was possible to do so. This could knock several months off the completion date. According to the article, cargo into NY/NJ could expand 20% after the canal is widened. But will NS and CSX be ready to handle any extra containers.....

http://www.globest.com/news/12_319/newj ... 20161.html

Otto Vondrak wrote:

SecaucusJunction wrote:Since the Panama Canal is supposed to open for larger ships as well as a greater number of ships in 2014, what effect does everyone think that will have on the railroads in NJ? Good, bad, no change? I've heard all different types of scenarios from more traffic, to less traffic, to not much change at all.... so I'm just wondering what the "experts" think on the situation.

Like there's not enough stuff to talk about in New Jersey, so we have to go to Panama?

This is a "reach" topic if I ever saw one.

Otto, since we know one another face to face, I think you know I'm an "old salt". As such, I find this mature and respectful discussion, as well as that moving forth at other maritime related topics about the site, to be quite interesting. Being "on the masthead' of a railroad industry publication nowadays, I am surprised to learn you do not hold same.

What is being addressed, namely shipping in a post-PANAMAX world, has the potential to turn the railroad industry literally around. with East Coast ports, and the two roads (CSX, NS) that serve them, benefiting at the expense of the West Coast ports and the lucrative line-hauls - far more lucrative than those the two Eastern roads can expect to gain - that both roads serving them enjoy.

East Coast ports are clearly placing their bets on substantial traffic increases in a post-PANAMAX world. This raising the Bayonne Bridge to have a clearance of 180ft MHW (Mean High Water) certainly means the Authorities are prepared to risk the wrath of motorists (and voters, BTW) so that the Port of New York can handle most anything afloat. The bets that the Port of Miami is placing, discussed over at the FEC Forum, in hopes of same clearly means that that Port expect a diversion of traffic to them and away from the West Coast ports.

Warren Buffet may have made a bad bet.

disclaimer; author holds long positions CSX KSU UNP