H OW I MPORTANT IS THE E XPANSION OF THE P ANAMA C ANAL TO THE P ORT - PowerPoint PPT Presentation

“H OW I MPORTANT IS THE E XPANSION OF THE P ANAMA C ANAL TO THE P ORT OF N EW O RLEANS ” Bruce Lambert Executive Director, ITTS

W ARNING …

P ANAMA C ANAL E XPANSION  Is it needed?  Does Louisiana Benefit from the Canal now?  Does it fundamentally change North American flows?  Thoughts going forward…

I S IT N EEDED ?

W HY E XPAND THE C ANAL ?  Enjoyed strong growth before “great recession”  Critical, but obsolete, bottleneck  West coast uncertainties  Vessel economics

H ISTORY OF P ANAMA C ANAL E XPANSION  1914 - Opened  1930’s - First consideration for expanding third locks considered  1977 - Signing of the Panama Canal Treaty (Torrijos- Carter Treaty)  1988-APL Commissions Post Panamax Vessels  1999 -All canal properties transferred to the Republic of Panama.  2006 - Panamanian Voters approved Referendum authorizing expansion of Canal  2014 - Target Date for 3 rd Locks

D OES L OUISIANA B ENEFIT F ROM THE C ANAL

T OP E XPORT C OMMODITIES , 2011 Iron And Miscellaneous Steel Chemical Products 1% 1% Inorganic Chemicals Other 2% 8% Plastics Etc. 2% Mineral Fuel, Oil Animal Or Vegetable Etc.; Bitumin Subst; Fats, Oils Mineral Wax 3% 35% Prep Animal Feed 4% Oil Seeds Etc. 19% Organic Chemicals 5% Cereals 20%

T OP T RADING P ARTNERS – E XPORTS ( VESSEL VALUE ) 60,000 Africa 50,000 Asia Western Europe 40,000 Canada Mexico 30,000 Middle East South 20,000 America Central America 10,000 Caribbean Oceania - 2003 2004 2005 2006 2007 2008 2009 2010 2011

T OP I MPORT C OMMODITIES , 2011 Salt; Sulfur; Earth & Stone; Lime & Animal Or Vegetable Cement Plaster Fats 1% Other 3% 9% Coffee, Tea, Mate & Spices 3% Copper 3% Inorg Chem; 3% Rubber And Articles Thereof 3% Mineral Fuel, Oil 57% Organic Chemicals Fertilizers 3% 6% Iron And Steel 9%

T OP T RADING P ARTNERS – I MPORTS ( VESSEL VALUE ) 60,000 Africa 50,000 Asia Western Europe 40,000 Canada Mexico 30,000 Middle East South 20,000 America Central America Caribbean 10,000 Oceania - 2003 2004 2005 2006 2007 2008 2009 2010 2011

M ISSISSIPPI R IVER AND I TS R ELATIONSHIP TO S TATE E XPORTS (2011) % represents share of Total State exports through the Miss River Corridor (maritime tonnage) Shading Indicates Ranking of MS River Traffic based on Share of Export Tonnage

L OUISIANA E XPORTS AS S HARE OF T OTAL S TATE GDP 1997 -2011 25% 20% 15% 10% 5% 0% 1997 1999 2001 2003 2005 2007 2009 2011

T HE P ANAMA C ANAL AND T HE M ISSISSIPPI R IVER (PRELIMINARY) Share of Miss. River Share of the Canal that Traffic that transits the moves to/from Miss Canal River  Imports 15%  Share of East Coast Trade 44%  Exports 41%  Share of Total Panama Canal tonnage 25% 15

T RANSPORTATION MEANS WHAT TO L OUISIANA …  Physical Infrastructure  Energy  Job Creation  Taxes  Domestic Transportation  International Trade

D OES IT FUNDAMENTALLY CHANGE N ORTH A MERICAN FLOWS ?

W HAT A RE THE V IEWS OF THE P ANAMA C ANAL E XPANSION IN N ORTH A MERICA ? “Eastern” “Western”  “Christmas Tree”  Yet another gateway competitor, especially Syndrome with Canadian/Mexican  West Coast is “dead” gateways coming online  See land and lower  Asia is our “market” capacity costs as plus  Rail Intermodal faster  Geography favors us  Still important despite recent events  Geography favors us

C HINA AND U.S. G ATEWAYS , 2011  California – Southern Tier  PNW (US and Canada) West – Northern Tier Airports Airports Coast 31%  Gulf Coast Ports 28% 33% through Panama Canal Imports West  South Atlantic Ports Coast Gulf 51% Coast through Suez 1% Canal/Panama Canal East Coast Gulf Other  Airport Gateways 16% Other Coast 6% 4% 11% East Coast 19% Exports

M AP OF C OAL P RODUCTION , 2009 (EIA)

C HANGING H INTERLANDS FROM THE P ANAMA C ANAL ?  Faster Transit  Economies of Scale  Landbridge competition

D RY C ARGO C APACITY - C AN I PUT IT IN A T RUCK ? Source: Texas Transportation Institute Center for Ports and Waterways

C OMPETING C ORRIDORS (FAF, 2010) 0% 15% 0% 5% 1% Air (include truck-air) 1% 0% 1% Multiple modes & mail 24% 3% No domestic mode Other and unknown 8% Northbound Pipeline 34% Rail Truck 6% Water 67% 28% 7% Southbound

FREEPORT SAN JUAN RIO HAINA KINGSTON CAUCEDO P. of SPAIN P. CABELLO CARTAGENA COLON/MIT Caribbean Transshipment Triangle

L ATIN A MERICA AND THE C ARIBBEAN : SHARE OF SELECTED PARTNERS IN TOTAL TRADE , 2000-2020 A . (P ERCENTAGES ) EXPORTS IMPORTS Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the United Nations COMTRADE Database and national sources. A/ Projections from 2011 to 2020 are based on GDP growth rates for the years 2000-2010 in Asia-Pacific, China, the European Union, Latin America and the Caribbean, the United States and the rest of the world. The growth rate of trade is expected to converge with the economies’ long-term growth rate.

A M UDDLED F UTURE North American Logistics Shippers Tolls versus Rail Rates Near-Sourcing   Other Gateways (Canada, California, Suez Canal) Changing Shipment Strategies   Eastern Railroad developments Intermodal Connectivity   FDI and Market Shifts  Pace of US Recovery  Expectations Bulk Shipments and investment  Everyone is focusing on their part  What if nothing happens?  Policy Dredging  Trade Agreements  Carriers Security and Regulatory Oversight Ship Rotations   Economy  Order Books  Transshipment hubs in region 

Y OU T OO C OULD B E A WINNER…

T HE S UM OF K NOWLEDGE The Known The Unknown  Will S. Cal ports push trade  The Canal is away? expanding  Will Eastern U.S. ports  Trade has shifted receive dredging? from West Coast  How much more cargo is  Total Trade will divertible? ( Drewery’s 25%?) recover in the next  How (when) will vessels be deployed? few years  Who wins in battle between  Globalization tolls and railroad costs? continues at a slower  External Shocks? pace

W HO A RE THE P LAYERS ? Private Public  Shippers  State  Carriers  Local  Economic Developers  Federal

W HAT M UST I D O TO B E S UCCESSFUL (P UBLIC S ECTOR ): Develop Facilities Secure Keep Locals Revenue Happy Stream Growth Promote Create Jobs Partnerships

T WO D IRECTIONS OF D EVELOPMENT  What is your Terminal Terminal market?  What facility/services are needed?  Develop densities and services  Equipment balances  Workforce training Port Port  Public-Private partners 1. Inside-Out 2. Outside-In

W HAT ARE N ATURAL M ARKETS ?

Y OU T OO C OULD B E A WINNER B UT …  Find the right public- private sector partners  Improve connectivity with system and to hinterlands  Work on funding agreements (incentives)  Manage Expectations  Patience

P ANAMA C ANAL E XPANSION – A NSWERED ?  Is it needed? YES  Does it fundamentally change North American flows?  Bulks – Yes - more volume  Containers – Yes, Some growth  Ports – Opportunities for Ports  Transshipment Opportunities – Yes and No  The real question is when will this occur

Bruce Lambert Executive Director Institute for Trade and Transportation Studies 540-455-9882 bruce@ittsresearch.org