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Published: 13 October 2016      

Bad timing for new capacity

In Mexico additional container capacity is coming on stream just as the market is experiencing a step slowdown in container traffic growth, TOC Americas conference hears.

There was not a lot of good news in the Mexican port sector at the TOC Americas conference in Cancun this week. Maersk Line Managing Director for Mexico and Middle Americas Mario Veraldo said container traffic across Mexico’s ports grew just 1.4% in H1 2016, and the forecast for the full year is 2%, a significant slowdown on previous years, just as new terminals in Tuxpan and Lazero Cardenas are coming on stream.

Mexico’s big growth story is the automative industry, and output from that sector continues to rise, but it mostly generates ro ro traffic. Veraldo urged Mexico to look wider, diversify its markets, grow its reefer exports and position itself as a “regional hub”.

Elsewhere, the conference heard that the new expanded Panama Canal is not yet seeing the number of vessels it planned for, though it has not yet been open six months. The Panama Canal Authority has created slots for a total 12 transits per day for container vessels. But less than a third of that is being used at present, according to Matthias Dietrich, Hamburg Süd's Senior Vice President for the Caribbean and Latin America West Coast region.

“Bookings for the Neo-Panamax [up to 14,000 TEU] vessels have been slow to come – last month, there were a few days which saw four vessel transits, but on most days it has been two or three transits,” he said.

“There is still a lot of room,” he continued, adding that this would mean it unlikely that the Panama Canal Authority would be able to increase transit fees in the short term.

The larger locks have led to Panama winning back considerable volumes from Suez – but this increase in volume is being carried on fewer ships. MSC’s West Coast South America planning manager Hernan Salazar told delegates that prior to the expansion, there were 16 weekly service strings through the Panama Canal, which has subsequently been reduced to 13.
MSC itself has reduced the number of its vessels transiting the waterway from 18 per week to nine, while the average size of vessels transiting the waterway has increased to 6,400 TEU.  “And that will continue to increase – there has been a 13% increase in capacity altogether on services through Panama - there is a lot of room for more,” he said.

With regard to changes in services and port calls in response to the Canal expansion, Dietrich said there has actually been remarkably little so far. “There’s some reshuffling of service patterns possibly still to take place, but the main Asia-US East Coast, South America West Coast-Europe and Asia-South America East Coast services will likely remain as they are.
“There is a theoretical opportunity for vessel upsizing on the route from Asia to northern Brazil, but that is unlikely while the ports of Northern Brazil are not able to handle ships of that size – so it won’t happen anytime soon,” he said.

With the new shipping line alliances not scheduled to start until 2017, the transhipment picture is still very unclear. Charles Baker, Director General from TC Mariel in Cuba noted that some carriers are still calling four different transhipment hubs in the Caribbean today. Carriers are holding off on major network changes until the new alliances are ready, and the transhipment market is “hamstrung” he added. 

Whether Cuba can take advantage of its location is a key question. Baker noted Mariel is well positioned to offer carriers the opportunity to consolidate some of their existing services, but Cuba needs to see key regulatory changes from the US before it can begin handling US cargo. Commercial relations between the two countries “have not come as fast as was hoped,” he said. 

 


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