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An Evolving Trend in the Europe - North America Container Trade

An Evolving Trend in the Europe - North America Container Trade
Prior of the development of the Port of Newark to serve neo-Panamax ships, transportation analysts had formulated projections that pertained to container trade at east coast North American ports.

The opening of the port to larger container ships has revealed a possible trend that could impact container trade between Europe and Canada.

Railway Connections

While two railways carry container trade between west coast Canadian ports and central Canada, only one railway had for several years carried containers between eastern and central Canada. Guided by the Canada Competition Act, senior government transportation officials decreed that two railway companies shall carry containers to and from eastern Canada, then provided government assistance to develop the Port of Saint John, the eastern terminus of Canadian Pacific Railways, to serve neo-Panamax ships. Announcements were made as to the expected development of railway container transportation connections. A few weeks later, the redeveloped Port of Newark opened to serve neo-Panamax ships.

The Port of Newark connects directly on to a major multi-lane motorway as well as a major railway corridor. A population of 30 million connects to Newark within the work day of a truck driver, not to mention direct railway connections to multiple large metropolitan areas. While some neo-Panamax ships sail via the Panama Canal to and from Port of Newark, the same ships have also been introduced to service on to the trans-North Atlantic route between Europe and North America, mainly at Port of Newark and due to the volume of trade that moves between the two continents.

The Halifax Diversion

The eastern Canadian Port of Halifax is very conveniently located close to the Newark – Europe shipping lanes. Trans-North Atlantic ships incur minimal delay diverting to the south terminal at Halifax for a brief call, to transfer containers. While the Eastern Canadian population of nearly two million makes such a call feasible, Halifax is ideally located to serve as a transshipment terminal for Europe – North America trans-Atlantic trade. Neither Boston nor Montreal can berth the largest ships that can now sail the North Atlantic service, except that Halifax can do so and has recently installed cranes to serve such ships.

Halifax can serve ships that can carry 2.5 times the containers as ships that sail to Boston, four times the load as the largest ships that sail to Montreal and over 12 times the containers as the ship that sails between Europe and Cleveland. A container ship of 13,500 TEUs capacity could offload some 4,500-TEU at Halifax before continuing its voyage to Port of Newark. Interconnecting ships could then sail from Halifax to Boston, St John’s, Toronto, Cleveland and even Chicago, but not Montreal that seeks to maintain its special status as a world class maritime port.

The Boston Connection

The combined population of Eastern Canada and Boston exceeds six million while the lowest per-container Europe – Boston transportation cost may be via a mega-ship that stops at Halifax, with smaller interlining ships sailing to/from Boston. The Halifax – Newark sea distance is 50 percent greater than the Halifax – Boston sea route, which in turn is double the Newark – Boston railway distance. A study undertaken by Prof. Jerry Fruin at University of Minnesota indicated that inland waterway maritime is cost-competitive with railways when moving 80-containers. A Europe –Boston maritime connection via Halifax is time and cost competitive against a railway connection.

A study by Sea Point of New Orleans compared the cost of moving containers between Long Beach and Memphis. Despite maritime covering 2.5 times the distance and incurring a $200 per container transit fee at the Panama Canal, maritime incurred a savings of some $2,000 per container over railway transportation. Compared to railway transportation, interlining seaway-max ships will incur lower per-container transportation costs sailing from Halifax carrying Europe – North America containers to any of Toronto, Cleveland, Detroit and Chicago. Halifax – Toronto may be exempt from certain Canadian maritime cabotage regulations, enhancing the cost competitiveness of ship vs rail transportation.

Cape Breton Ports

Transshipment terminals that are under development at Cape Breton are aimed at serving the Asia – North America trade using the largest container ships presently afloat. At present, five ports internationally require very little dredging to berth the draft of even larger ships that could carry double the container load as the largest ships that transit the Panama Canal, while the port quaysides are already of sufficient length. Cape Breton super ports would serve distinctly very container transshipment different markets than Port of Halifax. Due to cabotage regulations, interlining ships would sail to American ports along the St Lawrence Seaway.

Power political forces in Montreal defend Montreal’s status as a world class maritime port and especially in matters that pertain to Canada – Europe container trade. They have been reluctant to support the option of ship-to-ship container transshipment in Atlantic Canada involving both Canada – Europe trade and Canada – Asia trade destined for Montreal, leaving Ogdensburg NY as the closest inland waterway port to Montreal. There is however scope to increase the beam of ships that sail along the Lower St Lawrence River from 32m to 44m, with identical draft and length, to sail the Montreal – Europe trade route.

Winter Operations

For three months every winter, the St Lawrence Seaway closes to ship traffic. At this time, container traffic is at an annual seasonal minimum. Railways have traditionally sought to carry the winter minimum traffic throughout the year, at competitive prices and would likely negotiate to transfer Europe – North America containers destined for Cleveland, Detroit, Toronto and Chicago at Port of Newark. This arrangement would allow maritime to carry the peak loads that move during the latter part of each year. During winter, Halifax would likely continue to transfer Europe – North America containers destined for Eastern Canada and Boston.

Conclusions

The introduction of larger container ships on the trans-North Atlantic route between Europe and North America at Port of Newark suggests a possible future market niche for Port of Halifax in Eastern Canada, the result of its close location to the shipping route.

The size of population to which Port of Halifax connects through container transshipment of Europe – North America trade enhances the economics of the trans-North Atlantic ships. The possible transshipment connections can extend to include Boston, Toronto, Cleveland and even Chicago. Cape Breton transshipment terminals will serve the Asia – East Coast North America trade, with the possibility of even larger container ships appearing in the future.

The Port of Saint John is being redeveloped to serve neo-Panamax ships. Details about the business plan and unique market niche would likely become available at some time in the future.

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