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United States port facilities are making plans for changes in shipping patterns and cargo volumes once the Panama Canal expansion is completed. In a recent interview the management of the US port of Long Beach speculated on the effects of the Panama Canal expansion on shipping volumes for the US West and East coasts. Currently the Long Beach and Los Angeles ports account for 40% of goods coming into the United States. Cargo volume through the Panama Canal will likely double when the expansion is completed providing more jobs and investment opportunities in Panama.

Panama Canal Expansion

The Panama Canal expansion project is moving forward with the guarantee of loans of up to $2.3 Billion USD and the soon to be completed bidding for the new Panama Canal locks. US port facilities on the East coast are upgrading for the larger container ships that will be able to pass through the new Panama Canal locks. The administration of the large US port at Long Beach, California recently discussed the consequences of a completed Panama Canal expansion.

United States Ports and Shipping Patterns

The Panama Canal locks were made to allow passage of the largest US warships at the start of the 20th century. Today a boat that just fits the Panama Canal locks is called a Panamax. Larger ships, especially those used to ship grain and ore, are often called Capesize vessels referring to the need to ship around the Cape of Good Hope or Cape Horn when a vessel cannot pass through either the Suez or the Panama Canal.

Much of the cargo coming from Asia for North American consumers is shipped in Capesize vessels. US West coast ports have benefitted from this fact. Railways have too. The Long Beach management notes that with the choice of an all water route from Asia to the US East coast things will change. East Coast ports are already putting in cranes and docking facilities to unload larger container ships. Savannah, Charleston, and the New York/New Jersey are expecting higher shipping volumes post Panama Canal expansion.

Long Beach management talks in terms of TEUs. A TEU is a “twenty foot equivalent.” This refers to a shipping container twenty feet long and eight feet wide. Long Beach currently handles 5,000 to 6,000 TEUs per acre making it extremely efficient and profitable. Almost all cargo passing through Long Beach in incoming and is loaded onto trucks or trains for distribution throughout the USA. This fact differentiates it from Ports such as Singapore where cargo arrives from Indonesia on smaller boats and is transferred to larger ships.

Long Beach will continue to be very busy. First of all California is a big state and much of Long Beach’s cargo goes to the US West Coast. Fifty percent of Long Beach’s cargo goes to Southern California, Arizona and New Mexico. Also, it is faster to ship by water to the US West coast and then by rail into the Midwest and East. So called “time sensitive” shipments will likely continue to ship from Asia to West coast ports such as Long Beach.

Panama Canal Capacity and Panama Investment

Container shipping will likely double through the Panama Canal post expansion. Already 40% of Latin American container shipping passes through the Panama Canal. The Colon Free Zone receives, breaks down, and reships cargo to all of the Americas but especially to Central and South America.

Increased container traffic through Panama means more jobs in Panama. Someone needs to make the investment in Panama real estate and build contain storage facilities, facilities for breaking down shipments, trucking facilities for shipping North in Central America, and more.

Investment in Panama need not require that you run a business here. A targeted real estate investment in property used to support Panama container shipping, trucking, communications, and more can provide lease income. Panama’s economy is growing with the Panama Canal expansion and other mega projects such as the anticipated oil refinery at Puerto Armuellas. Commercial real estate investment will prosper along with Panama’s growth and development.

If you are interested in exploring a target commercial real estate investment come to see us at ABPanama. We do business throughout Panama and have over 23 years experience managing real estate portfolios.