Continuing the trend toward larger, more efficient ships, MSC announced that they were changing their Far East-US Golden Gate service to nine ships of 6,700 TEU’s each. These nine vessels will replace the ten 5,000 TEU ships that had previously operated in the service. This also converts the service from a round the world service to one that transits the Suez Canal each way because the new ships are too large for the Panama Canal.

Despite a 2% decline in the number of container ships using the canal in 2008, the Panama Canal Authority has announced that they will implement an increase in the transit toll on May 1, 2009.  The 14% increase in the per TUE charge has been expected since the Authority laid out a schedule of increases in 2006.  However with world trade declining, it was thought that the Canal Authority might suspend the increase in an effort to retain business.  For a typical 4,000 TEU vessel, it will cost approximately 36,000 more per transit.

In response to the increase in fees at the Panama Canal and the piracy concerns around the Suez Canal (and overall high fee structure), shippers have been analysing their shipping routes to find the most cost efficient transits.  Several carriers have opted to go around the Cape of Good Hope and Cape Horn in an effort to reduce tolls.  Typically, this has been for the return trip when transit time is not as critical.  The increased time on the return leg requires the addition of extra vessels into the rotation.  However, with previously idled ships available finding ships to add to the rotation is not a problem.  Some shippers are also considering an all water Eastward transit from Asia to US East Coast ports.  Efficiency will be the keyword in 2009/2010 and if increasing tolls make one route less viable, then shippers will take their vessels elsewhere.

It should come as no surprise, but I am a HUGE proponent of the East Coast ports.  I have long held that they are closer to the population, and with the widening of the Panama Canal are extremely well positioned for future growth.

Well, in a recent white paper, Drewry Supply Chain Advisors lays out some fundamental reasons why East Coast (EC) and Gulf Coast (GC) ports will continue to steal business away from the West Coast ports.  Even if volumes remain the same, the EC and GC ports will continue to grow.  And this is not a short term phenomena.  Drewry sees these changes as “structural and long term”.

“Even if growth continues as strongly as it has in recent years, any new trade will probably pass the West Coast by.”

The East Coast ports continue to be extremely well positioned to handle the future growth the the new Panama Canal will enable.  Come to think of it, maybe the Panama Canal authority should be on my Christmas list as well…