May 17, 2020

What Panama Canal's Expansion means for Eastern ports

what-panama-canal-expansion-means-us-ports-east-coast
Freddie Pierce
4 min
What does the Panama Canal Expansion means for U.S. ports on the East Coast? Supply Chain Digital breaks it down.
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What Panamanian citizens may not realize is that when they approved the Panama Canal Extension project in 2007, it sent a shockwave through every seaport in the United States, particularly those on the East Coast that were designed specifically to adhere to “Panamax” regulations. The Panama Canal expansion is a microcosm for the entire U.S. seaport system because the ports that will stay competitive in global trade markets are the same ones that need to modernize their sea terminals to accommodate the larger ships that will be traveling through the Panama Canal in 2014 when the extension is complete. Three years doesn’t leave much time for seaports to complete massive infrastructure projects, which is why most have already started dredging deeper ports to make way for the supersized ships.

The Panama Canal extension is “going to almost triple the size of vessels that are going to be able to transit the canal,” Kurt J. Nagle, president of the American Association of Port Authorities said in a recent interview. “I don’t think it’s over-hyped to say it’s a game Panamax” where the maximum size of a ship that can pass is 1,200 feet long by 160 feet wide, opposed to the current standard of 956 feet long by 106 feet wide. The container capacity of ships will swell to 12,000 TEU from 5,000. TEU or twenty-foot-equivalent describes the volume of the total intermodal containers that are being transported. The maximum draft of vessels travelling to and from the U.S. East Coast will increase to as much as 50 feet from 39.5 feet.

ECONOMIC LIFELINES
Seaports are economic lifelines that grow international trade and strengthen local and national economies alike. Now that the Panama Canal is positioned to begin accepting the larger ships in 2014, the burden of upgrading port infrastructures shifts to the East Coast, where their race has intensified in recent months. The first Port Authority to prove that its port can meet New Panamax requirements will have a substantial advantage over its competitors. The potential is limitless from an economic standpoint because the favored port could ultimately become the epicenter for U.S. international trade in the New Panamax Era.

It’s worth noting that a port will be judged as much by its sea terminals as it is the supporting infrastructure around the terminal, i.e. roads, highways, waterways and rail systems. The importance of supply chain infrastructure cannot be understated. U.S. seaports actively generate $3 trillion in economic activity annually and support more than 13 million American jobs. Additionally, President Barack Obama’s call to double exports by 2025 is paramount because every $1 billion in exports creates 15,000 American jobs, according to the AAPA. The seaports that look at Obama’s $50 billion infrastructure budget as a potential source for monetary assistance should look elsewhere because the Commander-in-chief has already devoted most of the infrastructure budget to fixing dealing with passenger-related travel issues.

Here’s an overview of where the seaport projects on the eastern seaboard currently stand:

  • The Port of New York/New Jersey, which is the busiest port on the eastern seaboard and second only to the Port of Los Angeles, already has a $2.3 billion project under way to deepen its harbor to 50 feet. However, the Bayonne Bridge spanning the shipping channel is too low for the biggest ships, and port officials say at least $1.3 billion more is needed to raise that span.
  • The Port of Baltimore is nearly two years ahead of the 2014 deadline as workers are set to complete a $105 million project by July 2012 to accommodate supersize vessels within a new 200-acre terminal. It is a part of a greater infrastructure project totaling $1.3 billion in the Baltimore-area.
  • The Port of Savannah sought $105 million from Obama’s infrastructure budget to begin dredging a deeper shipping terminal, but was rewarded with only $600,000. The Georgia Ports Authority has made the argument that a deeper port in Savannah, the second-busiest port on the East Coast, was necessary to meet Obama’s goal of doubling U.S. imports.
  • The Port of Miami already has permission to dredge and is asking for $75 million to start the project’s first phase. Studies are also under way to deepen two other Florida ports in Ft. Lauderdale and Jacksonville

To the victor go the spoils.

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Jun 19, 2021

Driver shortages: Why the industry needs to be worried

Logistics
SCALA
supplychain
Brexit
Rob Wright, Executive Director...
4 min
Logistics professionals need urgent solutions to a shortage in drivers caused by a perfect storm of Brexit, COVID-19 and compounding economic factors

While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks. 

A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so. 

What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.

"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"


That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.

But where has this skills shortage stemmed from? 

Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.

COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.

It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing. 

So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done? 

Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change. 

Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.

Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line. 

On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains. 

Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months. 
 

Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector

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