“I Know a Short-Cut” -The Panama Canal
Part 1 of “I Know a Short-Cut” explored the benefits of using the Canal and tolls and traffic statistics for the Canal. Part 2 looks at the impact of the Canal on trade via the greater port of Houston.
Panama Canal and Houston
The exports of two commodities, crude oil and propane, as well as the import and export of containers offer examples of how the foreign waterborne trade emanating to and from Houston utilizes the Panama Canal.
Increased U.S. oil and natural gas production resulted in a surplus of light low sulfur crude oil, condensates, and propane. To balance demand with supply, export markets have been developed and the greater port of Houston (including public and private terminals) is a key cog in the international crude oil and propane trade with quantities growing significantly over the last five years.
Foreign waterborne exports of crude oil from Houston for 2017 are estimated to be about 3.7 million metric tons with about 20% to 25% sailing through the Panama Canal. Similarly, Houston’s foreign waterborne exports of propane are estimated to exceed 16 million metric tons for 2017 with an estimated 10 million metric tons, or 62%, passing through the Canal. See Figures 1 and 2.
With Asia as a growing market for U.S. petroleum exports, export traffic could utilize the Panama Canal to expedite delivery of either crude oil
or propane. However, the decision for crude oil would be based on shipping economics around the time of loading. An alternative would be to charter a VLCC, reverse lighter, and sail east-ward through the Suez Canal (another “short-cut”) as opposed to contracting for a smaller Neo-Panamax ship and sail westward via the Panama Canal.
Container ships in liner service calling at the port of Houston can also utilize the Panama Canal for foreign waterborne cargo moving to or from ports
in Asia or the west coasts of Central or South America. For the year 2017, estimated total foreign waterborne container trade with Asia is expected to be about 8 million metric tons split evenly between imports and exports, all of which would pass through the Canal. Similarly, since 2011 a growing foreign waterborne container trade to and from Central and South America is expected to reach more that 6 million metric tons during 2017; composed of foreign waterborne imports averaging 2 million metric tons and foreign waterborne exports at 4 million metric tons. A reasonable allocation could be 1/3 or 3 million metric tons available for transit through the Panama Canal. See Figures 3 and 4.
The Panama Canal can be a viable link in the trade patterns involving not only the port of Houston, but also worldwide maritime commerce. The recent addition of the Neo-Panamax locks offer additional economic and efficiency savings for owners, shippers, and receivers to utilize this new aspect of the Canal waterway. Press reports indicate that in just over a year of operation, more than 2,000 ships have traversed these new locks with cargo aboard each ship that approaches doubling the capability of a smaller ship traversing the original Panamax locks. Success appears evident. It’s nice to know a “short-cut”!
- Date December 15, 2017
- Tags Dec 2017-Jan 2018