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Weighing relative merits of landing cargo at east and west coast ports by using Panama versus Suez canals

There are relative merits to both landing cargo at North American west coast ports and North American east coast ports using the Panama or Suez Canals.

West coast ports offer rapid access to Asian markets for exports, while the east coast ports provide easy access to European markets. But these are secondary functions of these coastal ports as far as Asian trade is concerned.

West coast ports handle comparatively little in terms of exports, and have been known to turn farm produce away, much to the chagrin of the California agricultural sector because it is undesirable to have containers diverted to carry low value produce, requiring cleaning and pest inspections, when they should be ready to carry high value goods to and from Asia to US markets.

More relevant than the large transatlantic trade for Asian exporters, is that east coast ports are that located nearer to the 80 per cent of US consumers who live east of the Mississippi River Valley. A third of the US Lower 48 is mostly sparse badlands of open range with rain fall blocked off from the Pacific by the Rocky Mountains. Eighty per cent of that western 20 per cent of the US population west of the Mississippi, reside in California which, despite its trouble, is a rich consumer market, with the population the size of Canada's population of 39 million.

The Suez Canal offers a more direct route to Europe, while the Panama Canal offers fewer delays. Ultimately, the choice will depend on the manufacturers' and shippers' logistical requirements, transit times and cost considerations.

With the continuous advancements in technology and the increase in international trade, the need for efficient and cost-effective means of transport has become a significant issue.

One question that companies have been grappling with is whether to land Asian cargo at North American west coast ports or North American east coast ports using the Panama or Suez canals.

North American west coast ports a handle significant volume of imports from Asia, mainly from countries such as China, Japan, and South Korea, while the North American east coast ports handle an increasing amount of this cargo routed through either the Panama or the Suez canals.

East coast ports also serve the European and African export and import markets. The Panama Canal and the Suez Canal are vital in both scenarios since they provide the high volume routes for goods bound for Asia and Europe.

Let us first consider the merits of landing Asian cargo at North American west coast ports. One of the significant benefits is that west coast ports have more ready access to Asian markets, making them ideal for manufacturers that need to get their goods from Asian consumers quickly.

Additionally, the ports of Los Angeles and Long Beach are the largest container ports in North America, accounting for more than 40 per cent of all container cargo. These ports are well-known for their excellent intermodal transport infrastructure, making them the best options for manufacturers and shippers that require rapid and efficient transportation of their products.

But landing cargo at west coast ports also has its downsides. One major problem is the long transportation times and high costs of inland transport, as most of the major Midwestern markets are located at least 1,000 miles from the coast.

This leads to higher transportation costs and longer lead times, which can impact the speed and cost of distribution logistics. Additionally, west coast ports are susceptible to labour disputes, which can lead to disruptions in operations. For instance, in 2015, there was a nine-month slowdown at ports of Los Angeles and Long Beach due to labour disputes which caused significant disruptions and delayed many shipments.

Now, let us consider the relative merits of North American east coast ports. One major advantage is that these ports offer manufacturers and shippers an opportunity to reach the large markets of Europe and Africa.

Container vessels coming from Asia with cargo destined for the US can offload at the east coast ports, allowing for a more cost-effective delivery of goods to the Midwest markets. The east coast ports also offer better connectivity to the Midwest and east coast markets due to the excellent highway and rail infrastructure, further shortening transportation times.

But landing cargo on the east coast also has its disadvantages, including the longer transit times from Asia. Containers must travel through the Suez Canal, which is one of the busiest shipping lanes globally, leading to often unpredictable transit times. There is also the potential for delays in offloading the cargo due to issues such as labour disputes or additional inspections in more heavily-regulated ports.

The choice of canal also plays a significant role in determining the merits of these two options. The Suez Canal is the fastest and most direct route between Asia and Europe, with a transit time of around 16-18 days from Shanghai to Rotterdam. However, the Suez Canal is narrower than the Panama Canal, and traffic can get congested, leading to delays for any ships that passes through it.

The Panama Canal, on the other hand, offers a shorter route between Asia and the east coast ports of the United States. With the recent expansion of the canal, the panamax vessels can now carry more cargo, and more larger ships can use it. Additionally, the canal is subjected to fewer delays, providing shippers with a reliable and predictable route to the east coast ports.

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China Trade Specialists