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The Panama Canal is undergoing a major widening. As a port owner/administrator what would you do to create a competitive advantage as a result of the widening and the post-Panamax hulls?
Panama Canal’s contribution to global transportation cannot be underestimated. It saved billions of carrier and consumer dollars connecting two oceans in the last one hundred plus years. According to Worldsensing (n.d.) prior expansion canal was able to allow “Panamax” vessels carrying up to 5000 Twenty-foot Equivalent Units (TEU). The ships were up to 106 feet wide, 965 feet long, and 39.5 feet of draft. With the completion of the expansion, post-Panamax vessels are now able to pass through the canal with up to 13,000 TEUs, and a total size of up to 160 feet wide, 1,200 feet long, and 50 feet deep (Worldsensing n.d.)
This expansion brings both advantages and challenges to the ports surrounding the Panama Canal. To stay competitive and take economic advantage from the larger cargo volume, ports must invest a great amount of money in their infrastructure.
While the length and the width of the ship is visible its draft is not. Draft change from 39.5 to 50 feet is quite significant. If a port is good with length and the width, the focus would be on how to deepen the draft. Dredging project might be one of the possibilities. With dredging the port’s throughput doubles or triples considering the above changes in Panama Canal.
Another factor is the height of the stacked containers on top of the larger vessel. It might dictate the port to invest in newer generation gantry cranes capable of reaching to the height of the new cargo vessels. Additionally, can the pool of the port Material Handling Equipment (MHE) handle increased cargo volume? Do we have to invest in newer or more container handlers and employees?
Also, with increased cargo volume, port management should analyze their staging capacity. If we have enough real estate, can the surface support the additional weight per square foot? In some instances it might require additional investment to reinforce the surface of the staging yard as well.
These are all extremely costly projects. But, if there is demand for the port, investments will pay off big dividends to all around it for a long time.
Worldsensing (n.d). Big engineering – the Panama Canal extension: success or failure? Retrieved from https://www.worldsensing.com/article/panama-canal-expansion/
he Panama Canal provides a great example of the roles hubs play within the global transportation system. It has additionally shown us how the hubs can evolve to support the overall economic growth. The expansion of the Panama Canal has enabled new routes, distribution patterns, and hub formations (Rivera & Sheffi, 2011).
As a port owner/administrator, there are several courses to explore when looking at how to create a competitive advantage following the widening of the canal. Despite all the advantages that the Panama Canal has to offer, the utilization of the canal also has significant disadvantages. When looking to remain competitive, I would look to the disadvantages of the canal as my overall starting point. The most significant factor turning business away is surrounding the environmental impacts created by cargo vessels utilizing the canal. I would start by exploring options for how the canal can reduce its carbon footprint, enabling them to be competitive with the west coast and inland rail transportation considering their carbon footprint is significantly smaller (Rivera & Sheffi, 2011). While widening the canal and significantly increasing the capacity, I would look at establishing collaboration with shipping companies and ports to guarantee competitive cost and service options (Rivera & Sheffi, 2011). The maximum amount a vessel could pay to travel the canal, whether loaded or empty, is roughly 907,200 dollars (Rivera & Sheffi, 2011). Considering this is a high cost and is not competitive with utilizing west coast port and railroads, the canal must consider ways to reduce the cost to operate, while at the same time creating a profit for the business.
Going forward and as we continue to see an increase in technology and the complexity of the supply chain, port owners and administrators will need to remain innovative to remain competitive.
Rivera, L., & Sheffi, Y. (2011, April 27). Logistics: Shipping on the Panama Canal. Americas Quarterly. https://www.americasquarterly.org/fulltextarticle/logistics-shipping-on-the-panama-canal/
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