some observers believe the expansion’s
net beneficial impact on carriers’ costs
may be marginal. For example, Panamax
containerships pay transit tolls of as much
as half a million dollars. Tolls are based
on a ship’s type, tonnage, and payload,
so bigger ships pay more. In July 2016,
the 10,000-TEU MOL Benefactor paid
a one-way toll of nearly $830,000. To
retain business, ACP has instituted discount programs for regular users, but
with still-bigger ships on the way, one-way tolls of $1 million or more remain
a possibility. Even if they operate fewer
ships, carriers could still pay as much in
tolls as they did before.
Faster all-water transit times from Asia
compared with the Suez route are often
cited as a cost advantage for carriers
using the Panama Canal, but that’s not
necessarily the case, say some analysts.
Theodore Prince, chief operating officer
of the intermodal service company Tiger
Cool Express, for one, expects bunker
fuel costs will be one of several factors
determining whether big ships transit the
Panama Canal. Fuel is the only significant
variable cost for ship operators today, he
says, and the biggest containerships “only
save money when they’re moving.” Slow
steaming to reduce fuel consumption,
coupled with the long transit times on the
Suez routes, generally is more economical
for ship operators than the shorter transits via Panama, he contends. An international mandate requiring more-expensive
low-sulfur fuel that takes effect in 2020
could make “even slower steaming” and
longer transit times more cost-effective
for carriers, he suggests.
Still, “cargo routing ultimately is a function of shippers’ supply chain optimization, not of ocean carriers’ linehaul economics,” Prince wrote in a 2012 analysis
titled “Panama Canal expansion: Game
changer, or more of the same?” in DC
VELOCITY’s sister publication, CSCMP’s
Supply Chain Quarterly.
Some shippers do seem to be taking
the canal expansion into account when
formulating their long-term strategies.
When a major U.S. retailer, which did not
wish to be identified, was seeking a loca-
tion for a new import distribution center
a few years ago, the potential impact
of the expansion was one of many
factors it considered. The retailer
concluded that the expansion could
lead to more direct vessel calls at
U.S. Atlantic and Gulf ports, poten-
tially reducing its transportation
costs compared with intermodal
shipments over the West Coast and,
in certain cases, shortening total
transit times from Asia. In addi-
tion, the bigger ships transiting the
canal would have more space for the
retailer’s growing import volumes.
A seaport that could accommodate
those ships was chosen as a home for
the new DC.
