Thursday, March 24, 2016

U.S. EAST COAST PORTS ARE NOT READY FOR PANAMA CANAL EXPANSION

U.S. East Coast ports not ready for Panama Canal expansion: Seaspan CEO

CHICAGO U.S. East Coast ports looking to use the Panama Canal expansion to lure traffic from congested West Coast ports have failed to invest in infrastructure and are years away from being ready for extra business, the head of the world's largest lessor of container ships said on Tuesday. "The infrastructure’s just not there," Seaspan Corp Chief Executive Gerry Wang told Reuters in a telephone interview. "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." Seaspan owns large container ships it leases on long-term contracts to the world's biggest shipping companies.
The Panama Canal expansion project, due for completion in the second half of this year, will open the waterway to the largest ships, which carry thousands of containers full of everything from televisions to clothing for the consumer-driven U.S. economy.
Since a labor dispute at the Los Angeles-Long Beach port complex in the winter of 2014-2015 slowed container traffic from Asia, especially China, to a dribble, U.S. East Coast ports have been touted as an alternative.
In February, volume through those West Coast ports jumped 42 percent over the 2015 period in to a record high, and Wang said congestion there should allow ports like Boston, Charleston, Norfolk and Miami to benefit.
But necessary infrastructure projects have moved slowly. Deepening of the harbor at Charleston, for instance, is not expected to be completed until 2020.
Wang singled out the raising of the Bayonne Bridge linking New York and New Jersey to allow larger, new ships to pass under it as a choke point for carriers, as it is years behind schedule. The Bayonne Bridge project is "just delays, delays, delays," he said.
"It creates a lot of uncertainty for the carriers as to when the project will be finished," he added. "That’s something the industry’s not happy about, to be honest, because it causes a lot of headaches for planning."
Wang said rail, highway and warehousing infrastructure is also inadequate. If containers cannot move inland, a port shuts down, he said. "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 said. "Then it will take years more to settle down the distribution system.
"Right now," he added, "the efficiency’s just not there."

(Reporting by Nick Carey; Editing by Dan Grebler)