More than 95% of the imports of U.S arrive by ship. According to the information provided by the U.S department of transportation, global foreign trade has increased by 35%. To accommodate the increased volume of goods, shipbuilders are making larger ship. To accommodate such large ship, Panama City decided to expand the Panama Canal port. The Panama Canal connects the Caribbean Sea to the Pacific Ocean. This canal is the main source of income for the Republic of Panama. The port faces competition from U.S ports and Suez Canal Port. The ports along the eastern cost of U.S are not wide and deep enough to receive large containers. Presently, large containers arriving from Asia, are handled through the western ports. Unlike the Panama Canal route, transporting goods from Asia to U.S ports have been intermodal, employing ocean, road and rail routes. (Salin 1-11)
The expansion of the Panama Canal will increase trade in the east coast ports. It can also accommodate larger ships. This means, fewer trips will be required to transport large load to the East coast. It will also reduce the congestion in the west ports. Currently, most imports and exports from and to Asia, are handled through the western routes. The opening of the Panama Canal, will reduce the congestion seen in the western ports by 10%. The average travel time for goods to reach Long Beach, California from Asia, through the western port is 2 weeks, 3 days. This is because, the ships have to travel all the way across Europe and Africa, before reaching America. With the expansion of the Panama Canal, large containers can direct transit their cargo from Asia to America. It is difficult to calculate shipping cost of goods, as it involves both direct and indirect coast. It takes approximately $563 to transport 1FEU container from Asia to Long Beach, CA. The cost is calculated based on the hours of transit. The hours of transit of Ships from East Asia to the east cost of U.S is ~126 hours. The transit time will reduce considerably with the expansion of the Panama Canal. Presently, shipping cost for transit from Asia to U.S, accounts for 60% of the transit cost. This can reduce considerable with the expansion of Panama Canal. Importing to eastern ports from Asia can be done through all water transport. U.S has been importing most of the food grains from Asia, and the transitional cost of this, can be reduced by 12%. (Press Releases)
Expansion of the canal will increase the volume of goods reaching the east coast of North and South America. While using the East coast port, one can transfer good through all water routes. There would not be required for land transit. The loading and dis-loading cost can be reduced, unlike the intermodal route of transfer. The Panama Canal route would be an ideal way to transit large loads of grain from Asia. It would also be an ideal route for transfer of petrol and petroleum products from U.S to Asian markets. Expansion of the Panama Canal, will lead to a redistribution of trade volume between the ports. Further research is required to obtain information on the redistribution of trade across the three ports: U.S, Panama Canal and Suez Canal. (Salin 1-11)
Work Cited
Press Releases, "Panama Canal Expansion to Lower Cost of Shipping US Grain to Asia By 12%". Rabobank.com. N.p., 2013. Web. 27 May 2016.
Salin, Delmy L. Impact of Panama Canal Expansion on the U.S. Intermodal System. Washington: USDA, 2010. Print.
