Abstract
Abstract Since cargo capacity increases faster than fuel consumption, the significantly larger capacity fleets which will accompany expansion of the Panama Canal will introduce additional fuel economies and cost savings. Enabling larger, more fuel-efficient vessels to carry cargo the entire distance from Asia to US east-coast ports allows vessel operators to realize significant and meaningful savings compared with the alternatives of using smaller Panamax vessels for the whole distance, or sending the cargo over the US land bridge by train or truck. Fuel savings are quantified along with the monetary savings based on various assumptions for the price of fuel. These savings are dramatic and will increase directly with the price of crude petroleum. Finally, microeconomic theory is deployed to determine how cost savings will be distributed between shipping customers and vessel operators.
Highlights
The substantial East Asia trade with US east-coast population centers uses both the Panama Canal and the US land bridge
Most of this cost saving comes from differences in fuel consumption, facilitating a comparison of pollutant emissions
Canal cost savings may be concentrated in higher profit margins for ship operators or lower freight costs borne by cargo shippers, or some combination of the two, but it is unambiguous that there will be benefits distributed among both groups
Summary
The substantial East Asia trade with US east-coast population centers uses both the Panama Canal and the US land bridge. The cargo is either transferred to Panamax vessels for movement through the canal to an east-coast port, or via the US land bridge by rail or truck transport. Larger container vessels currently unable to transit the canal will be able to do so once the expansion project is completed. The expanded canal will be able to accommodate new Panamax vessels with lock dimensions of 1400 ft (426.72 m) in length, 180 ft (54.86 m) in width, and a draft of 60 ft (18.29 m).. The Panama Canal Authority forecast the canal would have market share, experiencing a decrease in vessel transits despite increased trade between East Asia and the east coast of the USA.
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