Rebooted Panama Canal causes hand-wringing at Port of LA

Brad Racino

Containerships are measured in TEUs — or Twenty foot Equivalent Units — with the average size being around 8,000 TEUs. The newer post-Panamax ships can reach upwards of 12,500 TEUs.

Brad Racino

The Port of Los Angeles is spending around a million dollars a day to upgrade its infrastructure to better prepare for the new wave of shipping..

Brad Racino

The MSC Fabiola, the largest containership vessel ever to call on a US port, makes its way in to the Port of Long Beach on March 16, 2012.

Brad Racino

The Port of Long Beach, together with the neighboring Port of Los Angeles, handles roughly 40 percent of imports into the United States.

Brad Racino

The cargo vessel MSC Fabiola is escorted in to the Port of Long Beach on March 16, 2012.

A hundred years ago, the Panama Canal connected the Atlantic and Pacific oceans and changed the shipping industry forever. It’s about to do it again. In 2015, the canal will unveil a multi-billion-dollar expansion that may dramatically shift trade routes in the U.S. from the West Coast to the East Coast — and the ports of L.A. and Long Beach are gearing up to defend their stake.

“The Panama Canal is really good for this country,” said Kraig Jondle. “We need the Panama Canal.”

Jondle is the director of business and trade at the Port of L.A.

“We’re not out to destroy the Panama Canal by any means,” he said. “But certainly we will do all we can to defend the cargo that comes today to the port. We don’t want that to go to the East Coast.”

That could happen once a new and improved Panama Canal opens for business in late 2014.

The Canal Authority is widening the canal’s locks and raising its water levels to allow some of the world’s largest vessels — called "post-Panamax ships" — to navigate the pass.

For decades, the canal’s size limitations have forced mega-ships traveling from Asia to offload their eastbound cargo at West Coast ports. That’s generated huge amounts of revenue not only for the ports, but for brokers, warehouses and road and rail shippers.

Dr. Khalid Bachkar, a professor at the California Maritime Academy, predicts the mega-ships will opt for the new canal route.

“Trade will shift,” he said. “Instead of coming to the West Coast, it will go directly to the East Coast and go to Europe.”

Ports from Houston to Boston are spending more than $10 billion in a scramble to upgrade their facilities, and Kraig Jondle says the ports of L.A. and Long Beach are spending like crazy to keep those ships coming to California.

“We’re doing things today — and have been for several years — that will sustain us going forward,” he said, “through our projects and our infrastructure investments, which total over $1 million a day.”

Defending cargo is a costly undertaking, and L.A. and Long Beach together are investing more than $5 billion over the next 10 years. Most of that money will be spent in Long Beach. Its improvements include a $1 billion terminal reconstruction project, which is now nearly halfway complete.

Jondle says the Port of L.A.’s strategy is to focus on what it does best.

“Let’s fortify our customer service,” he said, “let’s fortify efficiencies here in the port, let’s build, and that will keep people here, overall.”

The Port of L.A. is expanding several terminals and installing more on-dock rail. Jondle says that lets shippers offload cargo directly to a rail line, which gets it out of the port faster and more efficiently.

“Six out of eight container terminals have on-dock rail,” he said. “The other two are coming very soon.”

L.A. is also finishing a huge dredging project that will ensure 53-foot-deep access to the port’s containership berths.

“If you’re not at 53 feet, or at least 50 or more deep, then you’re going to be really challenged in staying competitive in the port industry,” he said.

This depth allows the post-Panamax ships access to the port — ships like the MSC Fabiola, the largest container ship ever to call on a U.S. port, which docked in Long Beach in March.

The port documented the Fabiola’s arrival in a video that said, “This voyage marks the beginning of a new trend in Pacific Rim trade, as a string of similar ships are expected in Long Beach in the months and years to come.”

The ports of Long Beach and L.A. are doing everything they can to turn that expectation into a reality.

More in Business


blog comments powered by Disqus