The Panama Canal handles around 5 percent of the world’s total trade – in comparison about 7.5 percent moves through Suez. The cost of moving a ship through the Panama Canal has tripled over the past five years to around $450,000 per passage for a vessel carrying 4,500 containers. Many companies are finding cheaper and faster routes to the U.S. East Coast by shipping to ports in California and then transiting goods overland by train.
The world’s biggest container shipping company, Maersk Line, has already abandoned Panama in favor of Egypt’s Suez Canal, which has no locks, and other companies are finding cheaper and faster routes to the U.S. East Coast by shipping to ports in California and then transiting goods overland by train.
The reason for the global shipping shift is not so much the construction at the Panama Canal but the exorbitant costs of crossing it, the time spent waiting to enter the canal and the already limited number of eastern U.S. ports that can service Post-Panamax ships.
Shipping goods from Shanghai to New York via Panama takes 25 to 26 days compared to 27 to 28 days through Suez, but only about 20 percent of China’s exports to the U.S. head through the Panama Canal. Typically, Chinese goods are shipped to West Coast ports and then moved overland by truck or train to the East Coast, a method that generally takes between 19 and 22 days.
Besides speed, there are other reasons businesses choose the ship-to-rail routes. One is that it’s often cheaper. Recently a number of major Pacific ports in the U.S. – Los Angeles, Long Beach, Oakland, Portland, Seattle, and Tacoma – have paired with western railroads likely Burlington Northern Santa Fe and Union Pacific to form the U.S. West Coast Collaboration (USWCC) in an attempt to offer competitive cost and service options.
And unlike many West Coast ports that sit in deep-water harbors, the only port on the East Coast that can currently handle Post-Panamax ships is in Norfolk, Virginia.