The expanded Panama Canal in mid-2015 will undoubtedly lead to carrier network shake ups but there is little clarity about their intentions as far as Central American and Caribbean transhipment hubs are concerned. At present, it is more instructive to look at what ports in the region are planning to do – and this suggests that the existing hub port locations will be the main beneficiaries.

The Panama Canal Authority is currently engaged in discussions with major container lines about its new tariffs for the use of the expanded Canal after mid-2015. Whilst the Canal tariffs are important, they are a relatively small factor in a much bigger equation involving the potential network advantages to be gained from deploying bigger ships, along with greater hub and spoke transhipment in the Caribbean, and more mother ship to mother ship relay transhipment.

Carriers are giving nothing away about their intentions but must be talking to ports – and no port developer will build or expand without some certainty. In Kingston, Jamaica, the story seemed clear. CMA CGM was lined up to redevelop and expand the port, reportedly having signed a 35-year deal in 2011 which committed them to invest $100m. However, this deal has lapsed and CMA CGM is now back on a shortlist of three bidders through a consortium involving its Terminal Link subsidiary. The other shortlisted bidders are DP World and PSA International.

DP World already operates the Caucedo hub in the Dominican Republic whilst PSA has a terminal in Panama – but at present it is a small, under-utilised facility with just three cranes. However, PSA may be playing the long game because it is likely that in the post expanded Canal era, terminals in Panama will strengthen their role as regional hubs. The existing facilities at Colon and Balboa (operated by Hutchison, SSA and Evergreen) already dominate the region’s transhipment activity.  Certainly the Panama Canal Authority is bullish – it expects there to be 20 million teu p.a. of transhipment capacity in Panama by 2020 – double the current figure of around 10 million teu p.a.

But what of potential new transhipment hubs in the region? At present, few seem likely.

In Costa Rica, APM Terminals’ Moin greenfield project will initially have 14.5m water depth alongside, 1.3 million teu p.a. capacity and is due to become operational in late 2017. However, whilst its location close to the main shipping routes could conceivably allow it to engage in the transhipment market, the company says that this is not their intention.

In Puerto Rico, the long running Port of the Americas project in Ponce appears to be stalled. With $250 million already invested so far, the project has been around for over 10 years, but to date has not found an operator let alone any significant traffic – and with only two gantry cranes it is unlikely to. Bureaucratic wrangling, funding challenges and political issues have dogged the project and the ultimately planned 2.2 million teu p.a. capacity facility seems a long way off.

Meanwhile an intriguing development is taking place in Mariel, Cuba. This new development, close to Havana port and designed to replace it, is being built with the help of Brazilian government money. The planned 800,000 teu p.a. capacity container terminal is due to open its first phase next year with 18 metres draft and four super post-Panamax cranes. Last year the port of Havana handled just 240,000 teu, so in theory there will be capacity at Mariel for transhipment activity.

PSA is reportedly the operator although this remains unconfirmed. In terms of location, Mariel is feasible as a transhipment hub especially given its proximity to the US, but at present the US trade embargo is a major obstacle for any US bound cargo and ships.
Our View

Existing main hub ports and terminals in Central America and the Caribbean are likely to be the biggest beneficiaries of the growth in transhipment traffic that takes place after the expanded Panama Canal opens in mid-2015.
Source: Drewry Maritime Research