5% of the world trade affected for six months!

Can the world wait six months, or should we start placing our orders now to be sure they arrive on time?

The Panama Canal Authority just announced that the planned expansion of the canal will not be finished until June 2015, a full six months delay on the original plan. The over $5 billion dollar expansion, will impact not only the canal operation by doubling it’s cargo capacity, but even the business strategies of countries and ports in the U.S., the Caribbean and northern South America. According to the Press of Atlantic City “ports in the U.S. are scrambling to ready their facilities for the bigger ships, and welcome the reprieve”.

Courtesy of Google Maps.

Courtesy of Google Maps.

While the news is surely welcome for ports and business in the Caribbean and eastern U.S./South America, it may create new challenges to the business in the west coast of the Americas that rely on their position to benefit from the Asia trade. In addition to ports and facilities on the west coast, the U.S. supply chain and logistics industry may need to reconsider their current shipping lanes, if cargo is received directly in southern or eastern ports. If that happens, the railroad and trucking industries may see themselves needing to adjust from long haul trips from the west coast, to shorter routes starting in Texas, Louisiana, and Florida.

Courtesy of skylineequitiesrealty.com

Courtesy of skylineequitiesrealty.com

One of the biggest questions of the expansion will be the role that the ports of Miami, Fort Lauderdale, and Jacksonville may have to play in the future. If the new larger ships can drop their merchandise in Texas or Louisiana for the central U.S. trade, and Tampa for the southeastern U.S., what could be left for Miami, Ft. Lauderdale, or even Jacksonville? Any location that can be reached from those ports, could potentially be reached from the port of Tampa, and then transferred to multimodal logistics chains for the whole east coast. That is something that business in those cities need to start considering in their strategic development plans before the canal opens in 2015.

Panama Canal, Handling 5% of World Trade, Sees Delayed Expansion – Bloomberg.

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