The widening of the Panama Canal next year will allow much bigger ships to sail through. But should carriers rush to upgrade?
When the canal is expanded, carriers will have the opportunity to replace their 5 000 TEU maximum ships that currently transit the Central American waterway with ships of anything up to 14 000 TEU. But just because they can, doesn’t mean they should, cautions Drewry.
In this week’s Container Insight Report, the maritime analyst points out that the temptation to alleviate the stress on the Asia-Europe routes and cascade the biggest ships possible from there to the Asia to East Coast North America trade will be immense.
However, Drewry expects carriers to resist the urge to flood the Asia to USEC via Panama market with the biggest ships possible. “Ships will get bigger and there will be fewer weekly services, but the vessel upgrades will be incremental and in line with demand growth,” the analyst said.
“More likely, carriers will take an incremental approach with the average size of ships rising to between 6 000 to 8 000 TEU at the outset, rising as demand dictates, which will still provide carriers with improved scale economies and at the same time maintain satisfactory competition and conditions to generate profits,” said Drewry.
