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Canal expansion may spur US trade: study

Dec 05, 2013 | 04:02 PM |

Tags  Panama Canal, expansion, impact study, Panama Canal Expansion Study, U.S. Dept. of Transportation Maritime Administration, U.S. exports, U.S. imports, ferrous scrap finsihed steel

CHICAGO — The expansion of the Panama Canal, when completed in 2015, will not only allow shippers to deploy larger vessels but could translate into increased U.S. imports and exports of finished steel and steel scrap and smoother movement of iron ore to Asia.

Scrap metal, in particular, may see increased traffic due to greater containerization, as the larger vessels plying the oceans are primarily container ships.

The Panama Canal Expansion Study, published by the U.S. Department of Transportation’s Maritime Administration, projects that metals imported via container will increase more than fivefold to 5.2 million containers by 2040 from 1 million in 2010, while metal exports by container will increase to 300,000 units from 100,000 units in the same comparison.

The United States imported 6.67 million tons of metals valued at nearly $17 billion via container from northeast Asia in 2010. Roughly 77 percent of the iron and steel products imported to the U.S. from northeast Asia was containerized in 2011, the study shows.

The average size of dry bulk vessels, like that of container ships, has been increasing. More than 1,900 vessels in the global dry bulk carrier fleet are unable to transit the Panama Canal’s existing locks while fully laden. Another 350 such vessels were on order for delivery as of July 2012.

Iron ore, metallurgical coal, steel and ferrous scrap have long been transported via general cargo and dry bulk ships.

Among the ships to be delivered by mid-decade include Very Large Ore Carriers, almost all of which are used in the iron ore trades from Brazil and Australia to China and other Asian steel-producing countries, the study said.

Reductions in overall transportation costs due to canal expansion could affect the movement of goods through U.S. inland waterways, researchers suggested.

A reduction in ocean transportation costs out of Gulf ports due to the use of larger, more efficient bulk ships will tend to reduce the aggregate costs of exporting bulk commodities by the Mississippi River route rather than by rail through Pacific Northwest ports, the study found. As a result, bulk volumes would tend to increase on the Mississippi River and decrease on rail routes to West Coast ports. Lower transportation costs attributable to canal expansion could also lift export volumes as the transportation element of U.S.-produced commodity costs helps to make U.S. exports more competitive in world markets.

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