The Panama Canal is getting even larger, and its growth could change how the world moves goods. And that could end up costing Seattle and Tacoma a lot of money and jobs.
A Washington delegation who traveled to Central America to see the new Panama Canal expansion and assess the possible impact on our state’s ports.
The trip was organized by State Senator Pam Roach (R-Sumner), who chairs the state Senate’s Government Operations Committee. Others included:
- St. Sen. Maralyn Chase, D-Seattle
- Stephanie Bowman, Port of Seattle Commissioner
- Dan Roach, Pierce County Councilmember
- John Parrott, Foss Maritime COO
- Gordon Baxter, Puget Sound Maritime Trades Council
- Kurt Beckett, Northwest Seaport Alliance Deputy CEO
- Briahna Murray, Gordon Thomas Honeywell
Ports’ potential impact
The $5.25 billion Panama Canal expansion is expected to open this June. The construction project has taken nine years and has faced several delays.
“This is the disruptor in the shipping industry that folks have been talking about for many years and now it’s finally coming into fruition,” said Port of Seattle Commissioner Stephanie Bowman, who was on the trip.
Originally opened in 1914, the locks raise and lower ships so they can travel between the Atlantic and the Pacific Ocean.
“(It’s) really a marvel of engineering 100 years after the first locks opened,” said John Parrott, who is COO of Foss Maritime, a Seattle-based shipping company.
“There’s no doubt that this will have impact,” Parrott said while overlooking one of the two new sets of Panama Canal locks. “The size and the scope of the impact, I think it’ll take time for that to develop. The trade lanes industry has to adjust.”
Consulting company C.H Robinson Worldwide estimates as much as a 10 percent impact of container traffic from East Asia could shift from the West Coast to East Coast ports.
East Coast ports adding infrastructure
The concern is some ships from Asia will bypass West Coast ports like Seattle and Tacoma… instead opting for an all-water route through the Panama Canal, before ending up at the United States’ East Coast ports.
The Port of Charleston is embarking on a $1.6 billion expansion to lure larger ships through the Panama Canal’s all-water route, including $509 million designated specifically for dredging deeper waters.
“Our states on the East Coast are delighted that there’s a widened Panama Canal,” St. Sen. Roach said.
Savannah, Georgia’s port, is embarking on a $706 million project. The Port of Jacksonville, Florida, is still split on whether it will follow through on a $700-plus million project.
Other Southeast ports like Miami, Baltimore, and Fort Lauderdale are also vying for some of the West Coast ports’ market share, according to CBRE, a commercial real estate consultant.
“That’s really our competition is our southeast ports in the U.S.,” said Bowman, who added the Northwest ports have the advantage of naturally deep waters.
“The southeast ports in the United States all have to dredge constantly,” said Bowman.
Northwest ports betting on bigger boats
Even though the Panama Canal is set to triple the size of ships it can handle, it looks as though it was not built large enough. The size of the industry’s ships has grown since the canal’s expansion was drawn up.
The 18,000-container ship, the Benjamin Franklin, was the largest ship to call on the Port of Seattle earlier this year. Ships that size would not be able to fit through the Panama Canal, even after the expansion.
“They’d have to actually build new locks,” said Bowman.
The expanded canal can is designed to handle ships with 14,000 containers.
Both the ports of Tacoma and Seattle want to handle two Benjamin Franklin ships at the same time.
The Port of Tacoma is reworking two piers. That work will include strengthening piers and adding larger cranes at the cost of $168 million.
The Port of Seattle is drawing up plans to add another terminal to handle larger ships.
State Senator Pam Roach, who organized the trip, said no state funds were used. She chairs the Government Operations Committee and says that committee will hold hearings on competition from Panama and Canada this summer.