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East Coast Ports Not Prepared for Panama Canal Expansion

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Panama Canal_image from Panama Canal website

The much awaited, though contractor-contested, Panama Canal expansion is expected to be open this June, but one container lessor has said U.S. East Coast ports aren’t even close to being ready to handle more business.

Work on expanding the canal—a $5.2 billion project—started in September 2007 and, once completed, the canal’s capacity will be doubled. The project creates a new lane of traffic along the canal through the construction of a third set of locks.

The new canal will allow vessels with room for 13,000-14,000 twenty-foot equivalent units (TEUs), nearly three times what the existing locks allow.

Naturally, the expansion is expected to alter international trade routes, letting Asia-bound ships departing the U.S. reach their destination more than two weeks faster than the route east through the Suez Canal.

But the sobering truth, according to Seaspan Corp. CEO Gerry Wang, is that the infrastructure to accommodate the added traffic just isn’t there.

“At the end of the day…you want the volume to come, you want big ships to come, but you just don’t have the infrastructure to handle them,” the leader of the world’s largest lessor of container ships told Reuters.

The U.S. has been working to ready itself for more business, whether in preparation of the Canal expansion or because shippers want an alternative to West Coast ports after the debacle that was last year’s labor dispute, but progress has been slow going.

Conversations are currently underway about who will deepen the Charleston Harbor from its current 45 feet to 52 feet—a project that would make it the East Coast’s deepest harbor—but the dredging isn’t expected to be completed until 2020.

A contract was awarded in May 2013 to raise the Bayonne Bridge, which connects New York to New Jersey, so that bigger ships can pass under it, but that project isn’t expected to be complete until mid-2019.

And as with most projects of this scale, delays are expected.

Either way, the East Coast may not be ready. Wang said rail, highway and warehousing infrastructure isn’t up to snuff either.

“The first two, three years (after the expanded canal opens) the U.S. East Coast has to learn to adapt to the new traffic coming,” Wang told Reuters. “Then it will take years more to settle down the distribution system.”

“Right now,” he added, “the efficiency’s just not there.”

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