Photo: Photocapy via creative commons.

Photo: Photocapy via creative commons.

Following an expansion of the Panama Canal in 2016, up to 10% of container traffic to the U.S. from East Asia could shift from West Coast ports to East Coast ports by 2020, according to research by the Boston Consulting Group and C.H. Robinson.

Currently, East Coast ports receive about 35% of U.S.-bound container traffic from East Asia. The Panama canal expansion could increase this share to near 50% by 2020. This amount of rerouted volume is equivalent to building a port roughly double the size of the ports in Savannah, Ga., and Charleston, S.C.

These findings were made in a report titled "Wide Open: How the Panama Canal is Redrawing the Logistics Map." The report looked at different scenarios based on differing levels of demand capacity and cost-analyzing how the expansion of the Panama Canal would likely change how cargo moves into and within the U.S.

“With the Panama Canal’s expansion, shippers will have more options and carriers will compete to provide those options,” said Peter Ulrich, a BCG partner and the leader of the firm’s transportation and logistics topic area in North America. “Rail, truck, and ocean carriers will all have to reconsider their routing and investment decisions. And shippers will need to make fundamental choices, such as where to locate distribution centers and how to segregate their cargo heading for the heartland.”

According to the report, the $5 billion expansion to the canal will permanently alter the competitive balance between ports on the East and West Coasts. Global container flows are rising and while West Coast ports will still handle more traffic than they currently do, their growth rates will drop and market share will likely fall.

“Companies accustomed to shipping to the West Coast and relying on relatively fast rail service to cover most of the country will need to take a much more segmented and dynamic approach,” said Sri Laxmana, director of ocean services at C.H. Robinson. “When time is of the essence, that routing may continue to make sense. But for other products, the savings of shipping through the Panama Canal will likely outweigh the extra time in transit.”

To download a full copy of the report, click here.

0 Comments