Expansion AND Related IMPACT Of The PanAMA Canal

With Recorded Audio Slides

Steve GreeneJuly 10, 2016Greenville Technical CollegeManagement 101-140Ron Hofffman, Instructor

June 26, 2016Coscos passage inaugurated the expanded Panama Canal and began a new era in global trade.

Presentation OutlineNeed for Canal ExpansionExpansions Size and ScopeShort-term Market ConditionsInternational Shipping of Hydrocarbons Impact on U. S. Shipping RoutesImpact on the Ports of the US Eastern SeaboardQuestion 1: Impact on the Ports of South Carolina?Question 2: Impact on Upstate South Carolina?

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Need For The Canal Expansion

Panamas Economic Survival 2006 ReferendumNeo-Panamax ShipsCompetition from Suez CanalReservations now at 170 large cargo ships. Annual Revenues should double to $ 2 B per year in 2021

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Expansion Size and ScopeLocks expansion and waterway dredging cost was $5.4-billion. 10 year project started in 2006.Should double the capacity of the 50-mile Canal.Canal now carries about 6 percent of world commerce. Neo-Panamax ships now carry 45 percent of the worlds cargo.

Size and Scope

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Short-term Market Conditions 10.2% net cargo decline in 2015 - USA to Asia.Suez Canal reduced its rates up to 65%. Past reductions in shipping prices led to. . .Shipping industry consolidation. Wait for other ports to expand for neo-Panamax ships.

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A big boatload of the future of shipping.

Which ship can sail through the new Canal locks?

Shipping Hydrocarbons through the Canal. The new locks would still be too small to accommodate oil supertankers. The locks would allow for oil tankers that carry 400,000 to 600,000 barrels. But the economics of shipping oil call for freighters that can carry 1 million barrels or more.

LNG tankers carrying gas from Americas Eastern shale beds to Asia will now be able to pass through the Panama shaving off 9000 miles. These LNG tankers are expected to account for 20% of US cargo by volume by 2020.

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Canals Expansion Will Reshape U.S. Trade Routes.

Large vessel shipping will be diverted from the Suez Canal - Persian Gulf route.

Now more practical for Neo-Panamax ships to sail directly to and from the East Coast rather than using busy West Coast ports.

Shipping costs will decrease not only through shorter routes, but also that East Coast cities are enlarging their ports, intermodal facilities, and increasing transportation automation.

Better East Coast ports will improve shipping with European ports.

Canals Expansion Impact on the US Eastern Seaboard.

Asian imports will be more prevalent. The East Coast is Chinas most important and lucrative commercial destination.

Many East Coast ports, including Charleston and Savannah have announced projects to enlarge ports and deepen channels.

Increase and improvements of East Coast supply chain infrastructure, intermodal facilities, and freight automation.

Along with natural gas exports, the biggest winner in the short term should be U.S. agribusiness.

Larger and more efficient ports and intermodal networks will increase shipping efficiencies with European ports as well.

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How does the Canals Expansion Impact the Port of Charleston, SC?

Much of the Charleston Harbor will be dredged from 45 to 50 feet.

A new intermodal port terminal is under construction in North Charleston.

Rail lines and new inland ports increase the volume and speed of cargo containers out of the Charleston port.

Georgia and South Carolina are co-developing the $500 million Jasper Ocean Terminal.

Charlestons port expansion will increase the building of distribution centers in the Southeast.

What Are The Impacts on South Carolina PortS?

How Does the Canals Expansion Impact Upstate South Carolina?

South Carolina Inland Port in Greer, SC

What Are the Expansions Impact on Upstate South Carolina?

Upstate business will increase with much more cargo shipped to and from Charleston given the expanded Panama Canal.

Nearly 95,000 jobs and $26.8 billion in economic output in the Upstate in 2015 was related to the Port of Charleston.

Incoming cargo at the South Carolina Inland Port in Greer mostly comes by rail from the Port of Charleston.

The 2017 budget of the Ports Authority forecasts a 23 % increase container volume at the Inland Port.

The Authority plans to spend $2.2 million in 2017 for upgrades and expansion of the Inland Port.

Over six million square feet of private-sector warehouse space is under construction near Greer.

Credits of Sources:

Panama Canal opens $5B locks, bullish despite shipping woes. Juan Zamorano and Kathia MartinezThe Post and Courier of Charleston, SC - The Associated Press, June 26, 2016 http://hosted.ap.org/dynamic/stories/L/LT_PANAMA_CANAL_EXPANSION?SITE=SCCHA&SECTION=HOME&TEMPLATE=DEFAULT

Wider impact - What the expansion of Panamas waterway means for world trade.Author not listedThe Economist, June 18, 2016http://www.economist.com/news/business/21700657-what-expansion-panamas-waterway-means-world-trade-wider-impact

Winners And Losers In Panama Canal Expansion.Lorne Matalon-FronterasKPBS Public Broadcasting of San Diego State University, June 27, 2016 http://www.kpbs.org/news/2016/jun/27/winners-and-losers-panama-canal-expansion/

A new era in global trade begins, as $5.4-billion Panama Canal expansion opens. Chris Kaul Los Angeles Times, June 26, 2016http://www.latimes.com/world/mexico-americas/la-fg-panama-canal-expansion-20160626-snap-story.html

South Carolina Will Get Boost From Expanded Panama Canal.Reno DeatonGreer Development Corporation, June 25, 2016http://greerdevelopment.com/sc-will-get-boost-expanded-panama-canal/

Exceeding projections: Authority plans Inland Port upgrades.Robert MontgomeryGoUpstate.com, June 27, 2016http://preps.goupstate.com/article/20160627/ARTICLES/160629718/1051/news?Title=Authority-plans-expansion-for-bustling-Inland-Port

Study reveals ties between port, Upstate manufacturers.Rudolph BellThe Greenville News, October 21, 2015http://www.greenvilleonline.com/story/money/business/2015/10/21/study-reveals-ties-between-port-upstate-manufacturers/74263296/

2016 BIENNIAL OVERSIGHT REVIEW The South Carolina Ports Authority, Review and Oversight Commission, January 2016http://scstatehouse.gov/citizensinterestpage/ReviewCommissionOnSCStatePortsAuthority/ROCSPA%202016%20Oversight%20Report.pdf