April 23, 2024

International Trade - Ports

Panama Canal Expansion: A Game Changer?

Here's what you need to know when you cut through the hype about the expanding of the Panama Canal.

Mike Vogel | 12/4/2012

» Takeaway No. 4
Other U.S. ports are making improvements, too.

Florida ports will spend big on improvements, but it’s a drop in the bucket globally. After a costly labor strike at Long Beach, Calif., in 2002, shippers have been diversifying the ports they use. But how much of a shift will actually play out? “I’m not sure everybody’s going to get what they expect,” says Port of Tampa senior marketing director Wade Elliott, whose port is joining with Houston and Mobile, Ala., to market themselves as a route for container ships interested in reaching 32% of the U.S. population. “I don’t think there’s a real kind of simple answer that says, ‘OK, these are going to be the winners and these are going to be the losers.’ The (U.S.) west coast is not going to stand still. They are not going to let the east coast eat their lunch.”


» Takeaway No. 5
Florida isn’t certain to gain, but it has to build to stay in the game.

“I don’t think anybody’s throwing out it’s a panacea or a guarantee,” Florida Ports Council President Doug Wheeler says of the port construction boom. “I think the guarantee is: If you don’t do it, they’re not coming.”


» Takeaway No. 6
Florida loses traffic to other ports that it shouldn’t.

Florida will gain employment and revenue just by recapturing cargo that now moves through Savannah and other ports outside the state. Some 90% of what Florida’s 19 million residents and 86 million tourists consume comes by ocean. Of that, 45% comes through ports outside the state. “If we just recapture Florida, you’re talking about billions coming to the state. In Miami, we want to go beyond that,” PortMiami Director Bill Johnson says.


» Takeaway No. 7
North-South vs. East-West.

In the long run, growth in Brazil, the Caribbean and Latin America will mean more than Asian trade through the canal. Miami, which handles more traffic from Asia than any other Florida port, still gets 54% of its trade from Latin America and the Caribbean compared to 18% from China. Florida’s location is unique in the U.S. because of its position for east-west and north-south trade. “One of the things people are overlooking is the position of Florida ports in the north-south trade,” says Port Canaveral CEO Stan Payne. As the cost structure in China increases and manufacturing shifts to near-shore Central American countries, the north-south routes only grow more important.

“It’s really going to be a market-driven decision by the carriers. In today’s world, it’s all about time to market. It’s a lot of moving pieces. All the moving pieces are trying to optimize what they do. Everybody’s looking to save money.”

— Steve Cernak, CEO, Port Everglades

» Takeaway No. 8
Every port can find a niche.

Ports Council President Wheeler reports that a Colombian group is studying an opportunity to ship through Panhandle ports. JaxPort exports cars to Africa and the Middle East. Palm Beach makes a nice living serving the Caribbean. At Canaveral, where cruise business keeps growing, CEO Stan Payne sees potential gain from smaller cargo shipping lines and goods moved from larger canal-transiting ships to smaller ships at a transshipment hub such as Freeport. “We’ve always been a niche player, but the niche is a good one,” Payne says.

» Takeaway No. 9

A rising tide lifts all ports.

Increasing global trade has to go somewhere, and it’s tough to build a new port in the United States. “Somebody leaving for one port, it creates an opportunity for someone else to move in. There are only so many linear feet of deep water available,” says Port Everglades CEO Steve Cernak.

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