News Content

Born-again Panama heralds cargo drain to USEC from USWC: Drewry

BIGGER ships in Panama Canal will carry more Asian cargo to and from the US east coast ports even if the number of services remains the same or falls.

That's because ship sizes are expected to increase 25 per cent to 5,900 TEU, according to London's Drewry Maritime Research.

"The direction is unstoppably moving towards bigger ships and fewer services, but the speed at which this process takes place will be restrained," said Drewry.

While 5,900-TEUers fall far short of the 13,000- to 14,000- TEU ships, the born-again canal can handle, it is a start in diverting cargo to the east coast from the west coast.

"There will be nine weekly services using the old panamax size ships from July, which provides plenty of scope for further upgrades," Drewry noted, "but with demand for US east and Gulf coast services slowing we maintain our expectation that carriers will only do so in stages."

There also is a shrinking freight rate differential for Asia-US east coast services compared with Asia-US west coast loops, according to Drewry's Container Freight Rate Insight.

At the peak of the west coast labour slowdown last year spot rates for an FEU from Asia to the east coast where as much as US$2,800 higher than to the west coast.

"Since then spot rates on both legs have come down steeply," said Drewry. Now the differential is now less than $1,000.

If ocean shipping alliances collapse into three consortia as expected, the move to fewer services with bigger ships is anticipated to accelerate given current merger activities, say Drewry analysts.