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A $7 billion voyage.
It was perhaps fitting that it was a French company that last month made the largest ever containership call at a port on the US East Coast. At 366-metres long, the 14,414-teu CMA CGM Theodore Roosevelt is four times larger than the Statue of Liberty gifted by France to the people of the United States in the nineteenth century, and in a further sign of the ties between the two countries, one of six units named after former US presidents. The ship called at Norfolk and Savannah at the end of August before arriving in New York on 7 September, sailing under the newly elevated Bayonne Bridge roadway.
The voyage would not have been possible without the completion of two major projects; the $1.6 billion raising of the Bayonne Bridge that increased the navigational clearance from 151 feet to 215ft, making headway for containerships of up to 18,000 teu (previously 9,800 teu); and the $5 billion Panama expansion that permitted the likes of CMA CGM’s leviathan to navigate through the channel when before the size limit was around 5,000 teu.
With the inauguration ceremonies over, how many more of these so-called Neo-Panamaxes will follow the CMA CGM ship into hard rotation on the Asia-East Coast North America route?
As we outlined in August (Baby, come back) the average size of ship sailing between Asia and ECNA has increased since the Panama Canal widening in the summer of 2016 to around 8,000 teu, but the adoption of bigger ships in the 10,000-14,500 teu range has been slow. There are a total of 314 ships (3.95 million teu) in that size range in service worldwide as of today, but only a handful (23) operates in the Asia-ECNA corridor. Most are deployed in Asia-Europe (176) as well as other major trades such as Asia-West Coast North America, Asia-Middle East and Asia-Latin America, while some have landed in more incongruous locations such as Asia-West Africa, where MSC has a series of 13Ks on its Africa Express loop.
There will inevitably be more ships of similar stature to CMA CGM Theodore Roosevelt that will enter the Asia-ECNA waters, and the challenge is clear to all ports on the Eastern seaboard that they must invest in getting Neo-Panamax ready if they want to maintain or better their market share. What magnitude and how quickly that occurs is harder to judge. The process might be hastened if the supply-side pressure in Asia-Europe from newbuild deliveries becomes a problem for carriers and rates crash there, but on the flip-side that might not become too worrisome if demand picks up, or if carriers can temper the influx of new capacity by pushing back deliveries and intensifying scrapping.
The fact that such decisions are likely to be prompted by the situation in another trade is hardly ideal and sums up the difficult choices that carriers face when juggling capacity across their networks. There is always a trade-off and decisions are rarely optimal at the trade-route level.
The Neo-Panamaxes will come in greater numbers to the US East Coast, but the speed of their arrival might not be dictated by conditions in the Asia-ECNA trade. Regardless, USEC ports must prepare for their arrival, or risk losing out as the number of services dwindles.
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