October 2, 2023

Kingston lags in Caribbean transshipment race

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panama-canalBy Greg Miller, From JOC

When the expanded Panama Canal debuts, assumedly by mid-2016, not all Caribbean transshipment hubs will be in the same position to accommodate larger vessels, and none may be as disadvantaged as Kingston Container Terminal.

Which Caribbean transshipment hubs will benefit depends on how prepared they are for larger ships. In this regard, concerns continue to overshadow KCT as the concession with a CMA CGM-led consortium for dredging and terminal upgrades is very flexible on the timetable and many of its rivals are prepping or prepared for larger ships.

The expanded Panama Canal, which would be able to handle 13,000 twenty-foot-equivalent unit vessels compared to the current 5,000, is scheduled to open in April 2016, but there is skepticism on the official timeline, as the discovery of cracks in the locks on the Pacific side could delay the scheduled opening.

According to recent filings with the Inter-American Development Bank, deepening of the port’s channel to 47 feet, which would take 18 months, is not required to be completed until 2020. The first phase of terminal expansion,to bring capacity from 2.8 to 3.2 million TEUs per year, is not required to be completed until 2021. Dredging to 51 feet in the second phase – comparable to depths already in place at competing hubs – is not required under the concession until 2025.

Neither CMA CGM nor Port Authority of Jamaica responded requests for comment by press time. One high-ranking source in the Jamaican shipping community, who spoke on condition of anonymity, said, “we are going to be way behind on dredging and I am beyond frustrated.”

Shortly after the port concession was announced in April, the PAJ addressed concerns on its dredging plan, by saying: “This is an economic decision, which sought to balance the cost of dredging with the projected deployment of vessels” on the belief that carriers “are unlikely to deploy 12,000–13,000 TEU vessels in this region immediately after the expanded canal opens.”

KCT’s pace of development to prepare for the expanded canal stands in stark contrast to regional rivals.

SPRC’s terminals in Cartagena, Colombia will be ready. Cartagena’s channel was dredged to 67.3 feet this year. SPRC’s Contecar terminal was recently expanded to a capacity of 2.2 million TEUs per year, with dredging to soon increase its depth from 50.9 to 54.1 feet. Capacity at SPRC’s Magna is being expanded from 1.5 to 2 million TEUs per year by year-end, with depth to be increased from 45.9 to 52.5 feet.

Freeport Container Port in the Bahamas has long been capable of handling larger ships. It is already dredged to 52.5 feet, with a capacity of 1.5 million TEUs per year and future plans to expand to 3.5 million TEUs per year.

Manzanillo International Terminal in Panama will be prepared for canal expansion assuming the bay’s channel is dredged in time. Capacity has been increased from 2.2 to 2.5 million TEUs per year through yard reconfiguration and new stacking cranes. A new, 1,312-foot berth and four new super-post-Panamax cranes will bring capacity to 3 million TEUs per year by the end of this month. Future plans to expand to 4 million TEUs per year are contingent on demand. The berths and the turning basin have been dredged to 54.1 feet. Dredging of the bay access channel has yet to be finalized, pending political issues on who will fund it.

Caucedo in the Dominican Republic has begun dredging existing berths to 49.2 feet, as well as preparatory dredging to 55.8 feet adjacent to existing berths. Dredging will be completed by year-end.

Container volume at Caribbean hubs has generally been flat this year, although there are exceptions due to service shifts. “The main driver right now is the economic situation in the area,” said MIT Marketing Vice President Juan Carlos Croston. “Transshipment is down 1 percent through July and local containers are down about 9 percent,” he said. MIT’s overall throughput was down by about 2 percent. MIT handled 2.07 million 20-foot-equivalent units last year, according to the Panama Maritime Authority.

Caucedo handled just under 1 million TEUs in 2014 and will end up roughly the same this year, with lower transshipment counterbalanced by stronger domestic flows, according to DP World Caucedo Executive Director Morten Johansen.

In Jamaica, throughput is slipping after modest gains in 2014, when the facility handled 1.44 million TEUs. KCT volumes in January through July were down 2.6 percent versus the same period last year, according to PAJ statistics.

The trend is very different in Cartagena, where throughput at SPRC’s two terminals is up 14.5 percent year-over-year, after finishing 2014 with 2.2 million TEUs. According to SPRC Vice President Giovanni Benedetti, Cartagena is benefiting from the integration of Hapag-Lloyd and CSAV, which has concentrated more of the combined volume in Cartagena, and the acquisition of CCNI by Hamburg Sud, which is having the same effect.

Benedetti also cited incremental volumes from new all-water services via the Panama Canal that were prompted by labor unrest that exacerbated congestion on the U.S. West Coast earlier in the year.

“I think that’s a typical ‘flavor of the month,’” said Carrix Senior Vice President Carlos Urriola of the new all-water services in 2015. “In the end, the West Coast is still the major entry port for cargo to the United States, so I think the surge in (all-water) services is temporary. People got all excited about these services but I don’t think it’s going to be a trend.”

As a result of aforementioned uncertainty in the canal’s official opening due to cracks in the locks, major overhauls to regional networks are generally not expected until 2017 or later.

Croston said carriers could make some changes in the months after the expanded canal opens, but these would be limited to upgrades of existing services.

“The real ‘juice’ from the canal would involve a total reconfiguration of services. That will take time because lines will have to feel comfortable with the new product at the canal and get approval of consortium partners,” Croston said.

He said lines will also need a year or two to figure out what they can do in terms of both the larger canal and transshipment hubs and their productivity, which could then lead to network restructuring.

“I’m sure all the lines have their concept (for canal expansion) ready and waiting in the drawers for assurance of when it’s going to happen,” Hamburg Sud Senior Vice President Poul Hestbaek said.

He stressed that lines can only make major service reconfigurations when carriers are certain the canal is working properly, which will take time, and this will cause a lag between the canal’s completion and major shifts in capacity.

Hestbaek says the initial changes will be composed vessel size upgrades on existing all-water services and shifts of existing Suez services to the Panama Canal.

For more on this story go to: http://www.joc.com/port-news/international-ports/kingston-lags-caribbean-transshipment-race_20151003.html

IMAGE: Panama Canal www.safety4sea.com

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