Panama Canal Expansion and US Trade and Domestic port Impact

A New York Times article (August 16, 2011) describes the construction in the Panama Canal, scheduled to be completed by 2014, that will permit ships that are 25 % longer and 50 % wider to pass through while relieving the capacity constrained current delays of a day or more faced by ships.  The impact is estimated to be increased trade in the ports of Savannah and New Orleans that have to deepen their harbors and increase their handling capacity. It is also expected to decrease shipping costs for grain from the US to Asia. But the ultimate impact of this capacity expansion and its links to flows through the Suez Canal are unknown.  Given the expected cheaper shipping routes for US agriculture, do you expect increased production in the US ? How would you expect the costs to use the expanded Panama Canal to be set to capture some of the shipper’s savings ? Given that the  decreased delays will reduce shipper intransit inventory costs, what impact will you anticipate for  the supply chain ? Given the advantage of the new channel is for large ships with greater capacity, what impact will these new routs have on shipment sizes ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , . Bookmark the permalink.

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