Maersk’s Panama Canal Bypass Strategy

Maersk’s recent decision to incorporate a land link into its OC1 service, connecting Oceania to the US east coast while bypassing the Panama Canal, presents an intriguing prospect for forwarders. However, the success of this strategy hinges on maintaining sufficient capacity to meet growing demand, says an article published on loadstar website.

Summary

• Maersk’s OC1 service will bypass the Panama Canal. Cargo from Australia and New Zealand to the Pacific coast will be unloaded at the port of Balboa, transported by train to Manzanillo on the Atlantic coast, and then picked up by a vessel destined for Philadelphia and Charleston.
• While Maersk assures no northbound delays, southbound shipments could face delays. Concerns about the canal’s long-term viability due to global warming persist despite recent increased rainfall prompting the Panama Canal Authority to raise daily transits.
• DHL Global Forwarding has used the rail route for certain transit cargo. Transit time varies between 36 to 48 hours based on space availability. Carriers are responsible for directly moving cargo by rail.
• Transloading introduces additional handling, impacting overall transit time. For clients dealing with pharmaceuticals or perishables, the solution may be less attractive due to the extended time required to reach their destination.
• Maersk suggests an alternative to the isthmus rail crossing by continuing its weekly sailing from Oceania to the US west coast. The importance of preparedness is emphasized, with the need for sufficient trucking and rail capacity in case of increased demand.

OC1 Service Overview

Maersk’s OC1 service will no longer traverse the Panama Canal. Instead, vessels from Australia and New Zealand bound for the Pacific coast will unload cargo at the port of Balboa. Subsequently, the cargo will be transported across the isthmus by train to Manzanillo on the Atlantic coast, where it will be picked up by a vessel destined for Philadelphia and Charleston. The reverse pattern applies to cargo traveling from the US east coast to Oceania.

Capacity Challenges And Weather Concerns

While Maersk assures no northbound delays, there is a possibility of delays for southbound shipments. Recent increased rainfall prompted the Panama Canal Authority to raise daily transits, but concerns about the canal’s long-term viability due to global warming persist. Maersk’s 80km rail bypass may become a regular feature.

DHL’s Use Of Rail Route And Capacity Evaluation

DHL Global Forwarding has utilized the rail route for certain transit cargo, primarily serving customers of the Colon Free Zone. Transit time varies between 36 to 48 hours based on space availability. Carlos Herrera, DHL’s ocean freight head for Panama, emphasizes that carriers are responsible for directly moving cargo by rail, and forwarding services cannot use this service directly on a spot basis.

Bob Imbriani of Team Worldwide raises the crucial question of rail volume handling capacity. While port and rail infrastructure are currently adequate, Herrera emphasizes the need to raise rail capacity. With over 80% of cargo in transit, the current capacity stands at 500,000 TEU annually.

Impact On Transit Time And Cargo Suitability

Transloading introduces additional handling, impacting overall transit time. For certain clients dealing with pharmaceuticals or perishables, the solution may be less attractive due to the extended time required to reach their destination.

Maersk’s Alternative And Future Preparedness

Maersk suggests an alternative to the isthmus rail crossing by continuing its weekly sailing from Oceania to the US west coast. Herrera sees the relatively short transits for rail and truck as favorable compared to other routings, even if the canal situation worsens. However, he stresses the importance of preparedness, emphasizing the need for sufficient trucking and rail capacity in case of increased demand.

Potential Challenges And Rate Differences

Herrera notes that the rate difference between trucking from the Atlantic to the Pacific is currently no more than $200 per container. However, this may become a significant issue if trucking and rail capacities do not increase, potentially leading carriers to rely more on trucking for transshipments from both coasts if the rail reaches full capacity.

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Source: loadstar

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