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5/5/2016 10:00:00 AM Write a Letter to the Editor Write a letter to the Editor

Panama Canal Expansion Exposes US Infrastructure, Shipper Woes

Rafael Ibarra/Reuters

The $5.2 billion expansion of the Panama Canal was expected to make U.S. East Coast ports more competitive for cargo ships carrying televisions, tennis shoes and other products from Asia.

But those hopes are fading. As the wider, deeper canal nears its debut next month, ports that stand to gain aren’t ready to handle the bigger ships that will come through.

The harbor in Charleston, South Carolina, for instance, is too shallow. The Bayonne Bridge outside New York and New Jersey terminals is too low.

Delayed port fixes, a freighter glut and a wobbly global economy mean that, in the short term, the benefits of the expanded waterway along the U.S. East Coast will be marginal at best, shipping executives and analysts say.

Hopes were much higher when the project started nearly a decade ago, amid cheerleading from U.S. ports officials.

“There was a lot of hyperbole,” said Lawrence Gross, a partner at FTR Transportation Intelligence. “It will have an impact, but it’s not a game changer.”

A new lane will double the capacity of the 48-mile shortcut between the Atlantic and Pacific oceans. New locks will lift freighters carrying up to 14,000 standard, 20-foot-long cargo containers — nearly three times as many as ships fit now.

U.S. port officials embraced the project and promised to make changes to accommodate bigger ships. Traffic already had been shifting east for several reasons, including labor disputes at the twin ports of Los Angeles-Long Beach. East Coast ports’ share of containers from Asia to the United States rose to 31% in 2015 from 26% in 2012, according to Drewry Maritime Research.

The competition centers on cargo bound for the middle of the country. It has been cheaper for retailers as far east as the Ohio Valley to bring goods through West Coast ports. The new canal is expected to push the battle line west — just how far depends on energy prices, canal tolls, infrastructure investments, economic growth and other variables.

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By Nick Carey

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