Analysis

The recently-delayed Panama Canal expansion project will eventually enable significantly larger bulk and container ships to pass through the canal after it is completed. In essence, it will improve connectivity between Asia and the eastern coasts of North America and South America by making an all-water route accessible to a wider range of ships. The U.S. Gulf Coast and trade ports in the Caribbean stand to benefit the most from the increased shipping volumes of larger ships. East Coast ports that have the capacity to handle new, larger Panamax ships will be in direct competition with West Coast ports and interior transportation lines for trade traffic.

Ports will have to be modified to receive the larger post-Panamax ships, requiring hundreds of millions of dollars worth of upgrades. New Panamax ships — with significantly larger hulls and displacement — draw much more water than current Panamax ships. This means that ports will need to have channels and berths at least 15 meters deep. For many locations, this will require significant dredging. This is particularly true of Gulf Coast ports such as Houston, which tend to be relatively shallow, but even East Coast ports will have to deepen their channels and berths. For example, the Port of New York and New Jersey began dredging key channels to depths of 15 meters in 2005. The New York and New Jersey Port Authority is also raising the Bayonne Bridge by 19.5 meters to allow enough air clearance for larger tankers entering the port. Other ports in the Western Hemisphere have already invested or are preparing to invest in the improvements necessary to receive increasingly large ships. These include Norfolk, Va., and Savannah, Ga.; Kingston, Jamaica; Cartagena and Buenaventura in Colombia; and Suape and Santos in Brazil. These are long-term investments designed to keep the ports relevant and competitive in a global climate in which ships are becoming larger each year, regardless of the status of the Panama Canal.