The $5.4 billion spent to expand the Panama Canal is paying off for East Coast and Gulf of Mexico seaports; however, it is putting more pressure on the Northwest to remain competitive.
The enlarged waterway opened in June 2016 allowing much larger container ships and tankers to transit between the Atlantic and Pacific oceans.
Ships carrying up to 14,800 containers can now bypass Washington ports. Shippers have a cost-effective alternative to reach midwestern markets from southern and eastern states.
Our traditional advantage of shorter Pacific crossing times to Asia is being challenged by Canadians as well. Even though Prince Rupert, the deepest natural seaport in the Northwest, is 1,000 miles by road north of Seattle, it is 68 hours closer to Shanghai by boat than Los Angeles.
The older canal could accommodate ships with 5,000 containers but it was a bottleneck causing up to 30-hour delays. On any given day, there were as many as 150 ships waiting in line to make the 48-mile journey. No more!
Recently, the Wall Street Journal reported an increase of 23 percent in tonnage over the last 16 months. By late September, the 2,000th ship too large for the old locks passed through the Canal.
“It’s an unprecedented increase and demand is driven by the expanded East Coast and U.S. Gulf ports that have been preparing for the new locks,” Manuel Benitez, the Panama Canal Authority’s deputy administrator, told WSJ.
The added canal capacity opened new markets for petroleum shipments, particularly Liquified Natural Gas processed in Texas and Louisiana. LNG exports were miniscule before the new locks opened, but today it accounts for 10 percent of the entire canal cargo. It is mostly exported to South Korea, China and Japan.
Container and shipments of oil, gasoline and LNG accounted for 90 percent of the total Panama Canal cargo between October 2016 and April 2017.
The Washington Public Ports Association (WPPA) concluded that much of the cargo received in our state’s ports is discretionary and can move through alternative gateways. Transportation time and shipment costs matter more in today’s highly competitive global market.
The trend has not been good for Washington.
In 2014, ocean-going cargo containers grew by 11 percent at Prince Rupert, B.C., as shipping companies continue to seek the fastest route to move goods to and from Asia. By contrast, cargo volume at the Port of Seattle dropped 26 percent from 2010 to 2013 while the Port of Tacoma’s volume remained unchanged. The Marine Cargo Forecast for this year is substantially lower in our state.
The Federal Maritime Commission reports that roughly 87 percent of the containers received in Prince Rupert were hauled by rail to the U.S., mostly to Midwest states.
As more and more bulk cargo, such as wheat, coal, potash and refined petroleum, is shipped overseas, those products are leaving the docks in British Columbia, not Washington.
Canada has no Harbor Maintenance Tax which is assessed on ocean-going imports that land in U.S. ports. It pays for maintenance dredging of harbors and waterways, but needs to be changed to make American ports more competitive.
The stakes are growing each day. Washington can’t afford to lose market share internationally. We have more than 25,000 maritime related jobs with a $4.6 billion a year in economic impacts.
Finally, while other states are taking advantage of the surge in LNG production exports, Washington is not. We must recognize that investments in safe petroleum facilities are not automatically bad and put off limits.
Washington’s elected officials must find ways to upgrade our state’s harbors, docks and roadways, streamline project permitting, and look at other ways to encourage trade.
Don C. Brunell is a business analyst, writer and columnist. He retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.