Logistical rivalries and port competition for container flows to US markets: Impacts of changes in Canada's logistics system and expansion of the Panama Canal

Abstract

Shipments of container imports are heavily concentrated in a number of ports, which has resulted in pressures on logistics networks. Partly in response to such pressures, several new routes are being developed to gain access to US markets. One involves the port of Prince Rupert; the other is the expansion of the Panama Canal. The purpose of this article is to estimate prospective traffic flows through these logistics channels for container shipments to US markets. An optimization model is developed that accounts for congestion and demand uncertainty. It determines the optimal route, ship size, port and hinterland shipping channels based on cost minimization. Our results show that inter-port competition is very intense. Prince Rupert can become an important rival of US ports and routes and the expansion of the Panama Canal can have similar impacts.