2035

Views

Western Med Transshipment Ports and Northeastern North America

file photo

By Harry Valentine 2019-07-11 19:00:52

The opening of deep-draft container ports in East Asia invites future development of larger container ships of 28,000 to 35,000-TEU that would expand transshipment opportunities at Western Mediterranean container ports to include Northeastern American destinations.

Introduction

Work is underway along the Suez Canal to reduce future transit time from 18-hours to 11-hours, increasing permissible draft to 20 meters (66 feet) and doubling the number of vessels that sail the canal by 2023. By the end of 2020 (or perhaps very early 2021), India plans on opening the deep-draft container port at Kerala State to both compliment and compete with the deep draft container terminal at Port of Colombo, Sri Lanka. Being Asia’s deepest draft container ports allows both to function as container transshipment terminals for smaller ships sailing to and from multiple East Asian ports.

The Port of Tangier and companion Port of Algeciras in the Western end of the Mediterranean Sea are ideally located to function as transshipment ports that within the next few years, could serve container ships of 24,000 to 30,000TEUs. Container ships of such capacity arriving simultaneously from both India and China would feasibly be able to transfer containers to a fleet of smaller ships sailing to multiple European ports, West African ports and even smaller Northeastern American ports and American and Canadian ports located along the St. Lawrence River and Seaway.

Transshipment Competition

While plans are underway to develop container transshipment ports in Eastern Nova Scotia in Eastern Canada, Canadian “cabotage” regulation imposes comparatively higher maritime transportation costs between Eastern Nova Scotia and Canadian ports located along the St. Lawrence Seaway. The viability of the container port at Port of Sydney would depend on regulation-free container shipping rates to and from Port of Montreal as well as Canadian inland waterway ports located along the St Lawrence Seaway. Under present regulations, competitive shipping rates would only be possible between Eastern Nova Scotia and American ports at Ogdensburg NY and Cleveland OH.

To the north of Ogdensburg is a region located half way between Canada’s most populous cities and the region is also home to several distribution warehouses. Due to regulation, domestic shipping rates between Eastern Nova Scotia and Canadian inland waterway ports would be little different if containers were switched to smaller vessels at Western Mediterranean ports then sailed across the North Atlantic to Canadian ports located along the St. Lawrence River and Seaway, carrying combined loads of containers that originate from both China and India. These ports would include Montreal, Toronto and Johnstown (across from Ogdensburg). 

Competitive Small Ships

A future generation of supersize container ships sailing from Indian and Chinese ports would carry containers at extremely competitive rates to Western Mediterranean transshipment terminals. At the present time and for the past several years, a relatively small size of container ship of under 1,000-TEU capacity has feasibly carried containers between Port of Antwerp and Port of Cleveland OH, at lower transportation costs per container than the combination of carrying the containers aboard larger trans-Atlantic ships to either Boston or Newark/New York followed by comparatively short distance railway transportation to Cleveland that is half Nova Scotia – Toronto distance.

Extended length long-distance trains that feature mid-train locomotives carry high priority containers arriving at North American west coast ports to east coast destinations very efficiently in double stacked formation and at higher than maritime rates. Freight forwarders serving customers seeking to save on transportation rates could examine the container transshipment option at the Western Mediterranean terminals at Tangier and Algeciras, involving transferring containers from mega-size ships sailing from the Far East to smaller ships sailing to smaller North American ports located in the northeastern region and along the St. Lawrence Seaway.

Trans-Arctic Shipping

The geological record suggests that the Arctic region has undergone several earlier ice-free periods, the last occurring some 10,000-years ago. That record also indicates that a massive volume of carbon dioxide is trapped in the Arctic permafrost and that melting permafrost would release the gas and accelerate warming of the Arctic region, with the possible opening of a Canadian trans-Arctic shipping route capable of being able to transit mega-size container ships between early May and early October, when container ships will carry much pre-Christmas retail merchandise. Some of these ships could sail to Eastern Nova Scotia.

There would likely be a market for transshipment services in Eastern Nova Scotia from mega-size container ships to small ships sailing only to American destinations if Canadian “cabotage” regulations remain in effect. Along the inland waterway, this means line-ups of Seaway-max size container ships at the ports of Ogdensburg NY and Detroit MI offloading containers to trucks going to both nearby domestic American as well as Canadian destinations. Politically, there would be much opposition in Canada to revising the domestic maritime “cabotage” regulations, despite the prospect of Canadian destined containers being transferred via American ports. 

Trade Disputes

The current U.S. – China trade dispute involving escalating tariffs has the potential to reduce container volumes moving through American ports and especially if the dispute and related tariffs extend many years into the future. A prolonged dispute could prompt freight forwarders to seek cost competitive ways of transporting declining numbers of container to North American markets. One option would involve a single neo-Panamax sailing via the Panama Canal ship serving a pair of comparatively nearby ports, such as Miami and Jacksonville, Savanah and Charleston as well as Norfolk/Newport News and Baltimore.

Declining container volumes that result from the trade dispute could also make container transshipment at either Eastern Nova Scotia or Western Mediterranean an attractive option, involving mega-ships sailing extended distances from East Asian ports and small interlining vessels involved in short-distance sailing to destination ports. An extended trade dispute that reduces trade could also enhance business prospects for transshipment ports serving small vessels that connect to American east coast ports as well as ports located along the inland waterway where Canadian “cabotage” regulations could enhance business prospects for American inland ports.

Slightly Bigger Ships

At the present time, the largest container ships carry 24 rows of containers across the deck and sail a draft of up to 16 meters (52 feet). An incrementally larger container ship could sail a draft of 16.5 meters to 17.5 meters depth carrying one to three additional levels of 25 to 27 rows of containers across a beam of 64 meters, up to 425 meters length and 64 meters overall height that would conform to the Suez Canal 68 meters air draft restriction. The modifications currently underway along the Suez Canal along with port initiatives at Tangier, Kerala and Colombo provide berthing and transit access for such a ship. 

Current orders for container ships under construction at Asian ship yards involve vessels of 23,000 and 24,000TEUs. The air draft of 53 meters at Hong Kong and Shenzhen would require China to consider deepening other ports located between Hong Kong and Shanghai to provide service to future larger container ships of over double the capacity of the largest neo-Panamax ships. Within the next few years and courtesy of Arctic warming, the largest container ships could sail via Canadian channels carrying trade between East Asian and Western Mediterranean ports. Such development could prompt Suez Canal to transit identical size of ships.

Competition between Navigation Channels

Ongoing expansion of the Suez Canal to transit larger vessels provides competition to the possible future opening of a seasonal Canadian trans-Arctic navigation passage. Together, these competing navigation channels provide the basis to develop larger container ships to carry containers between East Asia and Western Mediterranean ports. Without competition from the Suez Canal, the Canadian trans-Arctic passage would enhance prospects to develop and operate a transshipment terminal in Eastern Nova Scotia, Canada, where containers would be transferred from ships of 25,000 to 35,000 TEUs to smaller vessels sailing to several American east coast and inland waterway ports.

If the Suez Canal were developed to transit the identical mega-size of container ship as could sail the Canadian trans-Arctic channels, such strategy would coincide with the combination of port expansion at Tangier along with port development at Kerala in India and Colombo, Sri Lanka. The prospect of mega-size container ships sailing between Asian and Western Mediterranean transshipment terminals provides a basis for trans-North Atlantic transshipment of containers destined to several North American east coast ports as well as Canadian and American ports located along the St. Lawrence River and Seaway.

Conclusions

As the Suez Canal Authority develops the canal to transit larger ships in less time, the authority would need to develop the canal to transit as a large a container ship as could sail via the Canadian trans-Arctic route. Such development would enhance future prospects for port business at Ports of Tangier, Algeciras, Kerala (Vizhinjam) and Colombo. China would likely consider developing a port located between Hong Kong and Shanghai to berth and provide service to future mega-size ships that would sail to and from Western Mediterranean transshipment ports, from where smaller ships would sail to many smaller ports.

Courtesy of Canadian “cabotage” regulation, container ships would be able to sail at competitive per container rates between the Western Mediterranean ports and Canadian ports located between Gulf of St. Lawrence and the Great Lakes, compared to the rates involved in sailing between a container transshipment terminal located in Eastern Nova Scotia and Canadian ports located along the St Lawrence River, Seaway and Great Lakes. The ongoing U.S.-China trade dispute enhances prospects for trans-transshipment to American east coast ports from either Eastern Nova Scotian or Western Mediterranean container transshipment ports.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.