In Port News 07/03/2016
The obvious solution for the government of Panama was to build a better, bigger set of locks to accommodate the ships.
With the expansion on the Panama Canal, Caribbean ports will be challenged with more competition. Why? In this global market it is important for suppliers around the world, mainly in Asia, to get their goods to the United States in a timely manner. The recent lifting of the U.S. embargo in Cuba adds the port in Havana to the list.
Hutchinson Port Holdings, a China company, with a Freeport, Bahamas-based container port is ready to accommodate the ships. Brazil and Cuba, partnering with Grupo Odebrecht and a state-owned Cuban company, developed a port west of Havana in 2009, and they are throwing their hat into the ring. Kingston, Jamaica, is an established hub that is a contender but the island must update its port to be in the running. China Harbour Engineering Co. also located in Jamaica has been building a port on the Goat islands west of Kingston.
The strongest competitors to the Caribbean ports already have an advantage because they are ports located in the U.S. Miami, Norfolk, Va., Baltimore, and New York already have the capacity and the technology to host large ships. They are poised to consume a big slice of the pie.
The Panama Canal was scheduled to be finished in August 2014, but due to a series of delays, it is now targeted to be completed in May 2016. Panama President Juan Carlos Varela feels that there will be no more delays this time and the opening of the new, improved canal will bring back lost revenue to Panama and open up a new avenue for the Caribbean shipping industry to benefit greatly.
The expansion work of the Panama Canal came to my attention last week. While channel surfing, I ran across a documentary that gave a detailed timeline from the start of the project in 2007 to the current work still being done in 2016. Here again a man-made dam being created to divert water from its natural flow to accommodate what we (human beings) need to make things more convenient and comfortable for us. But I digress, because this writing is actually about what the building of this newly expanded canal will mean to the Caribbean.
The canal enables passage of ships from the Atlantic Ocean side to reach the Pacific Ocean, but first they must go through the Caribbean Sea. Otherwise, the ships would have to take the long way around the southern tip of South America instead of taking a short-cut through the Panama Canal. And that is what has been happening with the larger ships that are being built today. Over the last decade, ships are being built disproportionately larger and larger, and eventually it became a challenge to fit them through the original canal.
Surely this would be an opportunity for the small islands in the region to capitalize on the transcontinental shipping coming from the Far East traveling through the Caribbean Sea onward to the East Coast of the United States.
The economist.com website expects that “lots of cargo will be uploaded onto smaller ships at several transshipment hubs, before being shipped to their final destinations, and several Caribbean islands are vying for the business.”
Other long established ports that may be negatively affected over time are Nassau Bahamas, Bridgetown Barbados, Castries St. Lucia and Falmouth Jamaica.
Key factors in determining which company gets the business will be first and foremost: capacity to handle large ships, competitive tariff (fees or freight rates) as well as safety and security. The rates charged by the smaller islands are much higher than those charged by competiting U.S. ports. High port fees increase the costs of goods and services. Shipping companies are looking for modern, well-managed, cost-effective port systems.
In order to be successful, these small Caribbean countries must join together and pool their resources to have a more successful outcome. They should consolidate their resources in an effort to strengthen their capacity. They should work on enhancing security and safety of their ports. They definitely need to improve their tariff structure to remain competitive. They should work on their container port development. And finally, they need to update technology and IT applications to improve port operations.
Source: The Philadelphia Tribune
