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The Gulf Courts Mega Shipping

Posted on November 10, 2016

By Matt Guasco, AJOT

The expansion of the Panama Canal has opened the Caribbean Basin and the Gulf of Mexico to the age of Mega Shipping. Increased commerce with Cuba, or a remix of cargo from regional load centers could spell a reshuffling of trade lanes to accommodate larger ships. Is the U.S. Gulf prepared for this potential traffic?

Houston’s Future is Here

Banking on an anticipated 15% increase in container volume through 2020, Houston authorized $68.9 million for dredging and maintenance. This revitalization will allow the port to handle vessels drawing up to 45 feet of water. The work, scheduled for completion at the end of this year, includes dredging the Bayport and Barbours Cut channels, widening and realigning them as needed to accommodate Neo Panamax traffic. Nine Super Post Panamax (SPP) cranes manufactured by Konecranes of Korea and valued at $50 million began arriving last year. Each has a lift height of 289 feet and can discharge vessels 22 containers across.

The city of Houston is encouraging growth within the petrochemical industry, which could drive expansion of exports to Cuba and Latin America. Offering lucrative back haul, Houston hopes to court carriers into first-in last-out port calls depending on how new markets and trade lanes develop. This September Houston’s Mayor Turner headed a trade mission to Cuba in an effort to cement new business relationships. Houston handled over 2 million TEUs in 2015.

Mega Shipping Big Easy Style

In an ongoing project the port of New Orleans will spend $67 million on improvements to its Napoleon Avenue container terminal. New SPP cranes and facility upgrades will bring the terminal’s capacity to over 1.6 million TEUs. A new reefer stacking system will accommodate 600 containers for imports of bananas and exports of poultry through the port. The new Mississippi River Intermodal Terminal located at Napoleon Avenue was dedicated this April. The yard features 1,550 feet of track with a 2,200 foot turnaround. TEU capacity at the intermodal terminal is 160,000 TEUs per year. An additional four acres of paved storage yard will accommodate 64,000 containers per year.

Currently the Mississippi can handle vessels with a 42 foot draft, both at mid-channel and alongside the wharf. The port and the Army Corps of Engineers are studying the impact of dredging the river to 50 feet to accommodate even larger vessels. If undertaken, this project would make the Port of New Orleans’ ship channel the deepest in the Gulf of Mexico.

Mobile vies for Panama traffic

Mobile has seen 8,500 TEU ships from Europe in the past, but now the Alabama State Port Authority (ASPA) is courting the influx of larger vessels coming through the expanded panama locks. The Port Authority spent $40 million in 2011 to build a new turning basin, which would accommodate ships up to 1,200 feet L.O.A. in preparation of the canal’s opening.

Acquiring land from the ASPA in 2005, APM Terminals built the Choctaw Point facility that opened in 2008. Last year APMT invested $40 million to add additional lifts and acreage with two new SPP cranes and 20 acres of back land. The expanded operation will bring the annual thru-put capacity up to 1.3 million TEUs. In order to entice additional rail traffic the ASPA spent over $50 million to build a new Intermodal Container Transfer Facility on land adjacent to the container terminal. The new facility scheduled to handle both international and domestic containers will be served directly by the Canadian National and CSX Railways with interline connections to the Norfolk Southern, BNSF and KCS via Mobile’s short-line railroad. The ICTF is capable of handling 150,000 lifts annually.

Gulf Ports Bet On A Future Of Uncertainty

In June COSCO and Hanjin announced a new direct service between Asia and Mobile. The GME connects U.S. Gulf shippers directly to the Ports of Shanghai, Ningbo, Xiamen and Yantian. Two months later, a critical partner is out of business. COSCO goes it alone, now bearing the entire burden of a fixed weekly service. CMA also has the standalone PEX 3 calling Houston and Mobile. Is it possible that as carrier alliances change, new partners will rationalize the number of vessels entering the Asia Gulf trade?

If Neo-Panamax ships are used, it could be a win for Gulf ports vying for that tonnage. It’s doubtful however that the local markets in say Houston or New Orleans could absorbed the steady stream of containers discharging off 12,000 TEU ships. Ports along the Gulf are looking to the interior as their secondary avenues of distribution. South Atlantic ports however are looking at the same extended markets. Intermodal is intermodal, whether goods move to Louisville via New Orleans or Norfolk. As a matter of fact Norfolk is closer. It is uncertain who will be the biggest winner in the race for Post Panamax tonnage.

Cuba the Cay?

It all depends on how larger ships affect triangular trade between the Caribbean and the mainland. Trans-loading in ports further east could tip the balance of cargo to the South Atlantic. Cuba might be the game changer. If Gulf ports can entice carriers into dedicated trade lanes, this would create unique gateways to the U.S. interior.

Everybody’s been there!

Gov. John Bel Edwards and the Port of New Orleans visited Cuba last month to promote trade through Louisiana. Houston’s Mayor Turner was there in September. In February the U.S. Government granted Alabama’s Horace Clemmons permission to build a $10 million tractor factory near the port of Mariel. While production is for local consumption a steady stream of U.S. parts moving through Mobile will no doubt keep the assembly line supplied. In fact officials from the Alabama Department of Agriculture maintain a solid relationship with their counterparts in Havana.

Size Matters

If the carriers ultimately decide to transload their Neo Panamax ships in the Caribbean will they then route them into the U.S. Gulf? The point of trans-loading is to put your biggest ships into a hub then spoke midsized ships to final destination. Granted we may see 8,500s do the work that 4,500 TEU vessels once did in Gulf ports. Actually carriers have conjectured that the workhorse of Neo Canal traffic might be 8,500 TEU vessels. So, if Gulf Ports were capable of handling this size ship before their build out, was all of this necessary?

Source: AJOT

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