Posted on June 22, 2016

 

Mega Containerships Now Headed to Panama – Can Your Hotel Benefit from the Change?

 

On June 26 the newly expanded Panama Canal will finally be open for business. This 9-year massive project will have a final price tag of $5.2 billion USD. This expansion will allow mega containerships to pass through the 102-year-old canal, doubling its cargo capacity. The first mega vessel is currently in transit from Asia to East Coast of the US. Six mega vessels are due to arrive at the Canal in the next month. This is exciting news for the hospitality industry, as shifting shipments to the East Coast reduces the risk of damage due to multiple handling of those shipments. In turn, freight costs will be reduced significantly on shipments going direct to the east coast. In addition, the canal expansion is causing all major ports on the East Coast to gear up for major structural updates in order to accommodate the reception of larger vessels.

 

 The expanded canal, which is confirmed to be open for business on June 26, has begun accepting reservations for commercial vessels starting June 27. The canal is offering four additional spots per day, in addition to the existing 25 spots of the current canal.

 

Hotel owners should expect significant reduction on concealed damages due to the fact that containers loaded with FF&E items can be shipped direct to the port nearest the property. This avoids having to transload items into road trucks or railways in California. In addition, inland shipping costs could be reduced by 10-30% based on the location of the hotel.

 

With the logistical shift of larger vessels headed to the East Coast, major ports and industries are moving quickly and spending serious money to be prepared for changes that will affect more than speed of shipments. Initial predictions show a 10 percent increase of containers moving to East Coast and by 2030 Post-Panamax vessels could represent 62 percent of the total container ship capacity. This will require much more investment to ports and local industry. An example of enhancements projects include; port expansion, rail and road improvements, larger vessel cranes, and warehouse space throughout the East Coast to accommodate the influx. The American Association of Port Authorities (AAPA) estimates that ports and their private sector partners are investing over $9 billion a year to modernize and expand port facilities. When all is said and done, the newly expanded Panama Canal will not only increase speed times and capacity of cargo coming to the East Coast of the US, but will necessitate heavy investment to port infrastructure and local industry.