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According to the Journal of Commerce Online website two shippers are sharing two shipping routes to maximize efficiency. Maersk and CMA CGM will start the two services in May of 2009. One service will connect Asia to New York via the Suez Canal and the other will connect Asia to New York via the Panama Canal. The shippers note that shipping volumes are “flat” or declining on major East West trade routes.

The first route mentioned will start at Shanghai taking in Hong Kong, Yantian, Singapore, Suez, New York-New Jersey, Norfolk, Tangier, Suez, Singapore, Hong Kong, Yantian, Shanghai, Busan, Seattle, Vancouver, Yokohama and end at Shanghai. This loop will take 91 days and will pass through the Suez Canal twice.

The Panama Canal route will start in Ningbo, Shanghai, Qingdao, Busan, Balboa, Panama, Savannah, New York-New Jersey, Miami, Panama Balboa, and end in Ningbo. The route will take 56 days.

According to the Journal of Commerce website, “Earlier this year, Maersk, CMA CGM and Mediterranean Shipping Co. replaced four competing services with three on which the lines share space between Asia and California. Maersk and CMA CGM said the trans-Pacific cooperation has worked well, and Maersk said the latest announcement represents further rightsizing in the trans-Pacific trade."

Maersk and Others’ Downsizing and the Panama Canal

Major shippers are working together to survive the tough economic times ahead for world trade. What does this mean for the Panama Canal and for Panama? Panama’s shipping volume did not increase in 2008 versus 2007.

The Panama Canal Authority released its end of fiscal year statistics October 24, 2008. According to the press release tanker and passenger transits were up over the previous year whereas total number of ships transiting the Panama Canal and total tonnage remained nearly the same. Container shipments bound for the USA were less but this shipping volume was replaced by other destinations such as an increase in tankers carrying petroleum from Gulf Coast refineries to Chile whose natural gas supply from Argentina had been suspended. Passenger ship transits were also up by 17.6% although this greater number reflected more trips by smaller cruise ships.

It would appear as though some of any shortfall in Asia to US East Coast trade can be made up by trade within the Americas. For example 40% of South American container shipments pass through the Panama Canal.

Another issue is the pirate attacks in the Gulf of Aden, the Arabian Sea and the Indian Ocean. With press reports of oil supertankers being boarded and held for ransom, ships that can bypass the widening area of pirate attacks may well take the Panama Canal. Reports are that ships are already taking the Southern route around the Cape of Good Hope to get to Europe.

The Panama Canal and the World Economy

Despite worries of declining trade the Panama Canal Authority received loan guarantees of $2.3 Billion USD for the Panama Canal Expansion which will double Panama Canal capacity and allow much larger vessels to pass. Even through there may be less trade passing through the Panama Canal in the near term business cycles reverse and over the years Panama Canal shipping volume will steadily grow.