Panama project to redirect flood of Asian goods

(mydigitalfc.com) Warehouses holding everything from beer kegs to frozen chickens crowd the side of Highway
146 south of Houston, and a building boom is adding acres more, thanks to an even bigger project 1,800 miles away in Panama.

A $5.25 billion plan to triple the capacity of the Panama Canal is to be completed in 2014, opening the way to Houston, 2,900 kilometers to the northwest, for huge cargo vessels that cannot squeeze through the canal’s current locks and do not want to go around South America.

The prospect of bigger ships, and more of them, could be a boon for the Port of Houston, which already handles more foreign tonnage than any other U.S. port.

With an eye toward feeding American consumers’ demand for Asian-made goods, U.S. retailers like Wal-Mart Stores and Home Depot have built millions of square feet of warehouse space around the Port of Houston.

‘‘They’re popping up everyplace,’’ said Jimmy Jamison, director of operations at the Port of Houston Authority, referring to the warehouses. ‘‘If they wait until the Panama Canal expansion, that property won’t be there.’’ Many of the warehouses were built without dedicated tenants, and many remain vacant.

Port officials expect spare capacity to disappear, once the Panama Canal opens two new sets of locks — the first major expansion since the canal opened in 1914. The locks will give huge container cargo ships from Asian exporters like China an all-water route to U.S. Gulf Coast ports like Houston.

At present, the biggest cargo ships from Asia must unload their goods onto trucks or rail cars on the U.S.West Coast or travel via the Suez Canal to the East Coast.

After the expansion, shipping containers unloaded onto Houston’s docks, which nowgomainly to other Texas cities like Dallas and San Antonio, could end up in U.S. Midwestern cities like Chicago. Houston is the closest U.S. port to the Panama Canal.

The canal widening could lead to a shift in global shipping patterns and could reduce reliance on West Coast ports like Los Angeles and Long Beach, California, which have long dominated the U.S. market for unloading cargo containers.

Other ports on the Gulf Coast and East Coast — including those in New Orleans, New York, New Jersey, Georgia and South Carolina — are considering expansion to lure the big ships.

‘‘It’s really a game-changer,’’ said Chris Bonura, spokesman for the Port of New Orleans, referring to the canal expansion.

U.S. imports from East Asian nations like China and Japan are valued at about $410 billion a year, and about half of the total is handled by ports in California, Oregon and Washington, according to the Greater Houston Partnership business group.

But about 70 percent of cargo unloaded on the West Coast is sent by truck and railroad to markets east of the Rocky Mountains. That creates an opening for ports like Houston to extend their reach into the Midwest.

‘‘The expansion that is going on in Panama has got the Port of Houston written all over it,’’ said Jeff Moseley, president of the business group.

To the east of Houston, in Baytown, is the Cedar Crossing Business Park, the largest industrial park in Texas, which houses warehouses owned by Wal- Mart, Home Depot and others.

Wal-Mart’s distribution center at Cedar Crossing, covering 4 million square feet, or 370,000 square meters, opened in 2005 and is one of the largest such facilities in the world.

‘‘Wecan all agree that they are kind of the king of logistics,’’ Mr. Moseley said of Wal-Mart, calling its decision to locate in Houston ‘‘a loud resounding validation of this strategic location.’’ A Wal-Mart spokesman declined to comment.

Home Depot operates a 750,000- square-foot distribution center in Cedar Crossing, but most of the cargo housed there arrives by railroad from the West Coast, said Jeff Siewert, Home Depot’s director of international logistics.

Home Depot, which imports goods from about 30 Asian countries including China, Vietnam and Thailand, would consider a water route to Houston if its shippers offered one, Mr. Siewert said.

‘‘As we think about our opportunities to ship all-water into Houston, that has always been on our radar screen,’’ Mr.

Siewert said.

Some U.S. analysts have predicted that about 20 percent of cargo ships serving West Coast ports could divert to Houston, once the canal is widened to handle a new breed of container vessel known as post-Panamax ships. ‘‘There is going to be some market share gain,’’ said Paul Bingham, managing director at IHS Global Insight, an economic forecaster, who pegged the diversion rate at 5 to 10 percent.

About 14 percent of container traffic handled by the Port of Houston comes through the Panama Canal, a percentage that port officials say could grow to about 25 percent by 2020.

The port will spend about $1.2 billion to expand its Bayport Container Terminal to allow it to handle about 1.4million containers per year.

The port is buying giant cranes capable of unloading post-Panamax cargo ships, which can carry asmany as 12,600 containers, almost three times the number carried by Panamax ships, or ships capable of fitting through the existing Panama Canal.

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Original Source: http://www.mydigitalfc.com/news/panama-project-redirect-flood-asian-goods-935
Date Retrieved: December 16, 2009.