Gateway City: Miami, everyone else, await Panama Canal expansion

09/07/2014 7:00 PM

09/12/2014 9:31 AM

“What will be the impact,” I am asked frequently, “of the expansion of the Panama Canal?”

“I don't know for sure,” I often respond, “and don't believe anyone who says they do.”

In Canada, in Mexico, in Panama, and at PortMiami and other East Coast ports, billions of dollars is being and has been invested largely in an attempt to do one thing: capture imports from China that have traditionally found their way into Southern California.

One thing is certain, though: If PortMiami had not decided to gamble on deepening its channel to handle the larger ships that will be able to traverse the canal, it would not have had a chance to gain additional business. In business as in life, you have to show up.

When asked the question, I am often in South Florida, but not always.

I have been asked the question while on the West Coast, where we produce Los Angeles TradeNumbers annually, similar to the publications we produce in Miami and around the country. Currently, the Los Angeles Customs district — which includes both the Port of Long Beach and the Port of Los Angeles — accounts for about 40 percent of all U.S. trade with China, the nation’s second-largest trade partner after Canada.

I have been asked about the canal in Laredo, Texas.

There, the trade community hopes that traffic looking for alternatives to the two California ports might look not to a wider Panama Canal and deeper Port of Miami but to rail and truck options from the Port of Lazaro Cardenas on the West Coast of Mexico to their World Trade Bridge. (Laredo is nothing to sneeze at: The bridge, which crosses the Rio Grande into Mexico and Nuevo Laredo, is the nation's second-busiest “port” among more than 475 airports, seaports and border crossings in the nation, after only the Port of Los Angeles, having recently passed JFK International Airport.)

On Canada’s West Coast, the Port of Price Rupert is becoming increasingly important for Asian container traffic that is sent, principally via rail, to Chicago and other U.S. entry points.

In South Florida, the question is often asked not only because of the deepening of PortMiami’s channel but also because of the resumption of rail traffic on and off port grounds, and the opening of the tunnel connecting the port to Interstate 395 and, by extension, I-95.

As the $5 billion canal expansion nears completion — presumably in 2016 — here are seven things to ponder about its impact on South Florida:

1. China is PortMiami’s No. 1 trade partner, overwhelmingly so, and has been for years. A decade ago, China accounted for 11.44 percent of all PortMiami trade while today that market share is 26.43 percent, according to WorldCity analysis of U.S. Census Bureau data for the first six months of 2014, the most recent available.

2. PortMiami is not likely to face challenges with China trade from either of the local two larger “ports,” Port Everglades and Miami International Airport. The former counts China as its 20thtrade partner, and handles an entirely different type of product — generally lighter and more valuable. PortMiami also offers the “first strike” advantage, since it is far ahead of other ports in adding depth.

3. PortMiami, while holding steady with its market share of U.S. trade with China over the last decade, has slipped in relative importance, from No. 17 to No. 20 among all airports, seaports and border crossings in the United States. PortMiami accounts for 0.77 percent of all U.S.-China trade, which has been relatively constant over the last decade, while China accounts for 26.43 percent of all PortMiami trade. The deepening of the PortMiami channel, then, could be just the boost needed here to allow it to gain more relative importance.

4. PortMiami’s market share might have been relatively constant but not so for the two L.A.-area seaports. They last accounted for more than 40 percent of all U.S.-China imports in 2009.

5. The biggest gain in percentage of Chinese imports over the last decade? Chicago’s O’Hare International Airport, with a percentage swing of more than 5 percentage points to 9.15 percent. Why? Chinese manufacturing is changing to higher-value, more expensive and more lightweight products. (Think cell phones, for example, but it also includes perishables going both ways.) That means flying rather than sailing. The airports in Dallas-Fort Worth, New Orleans, Miami and also Atlanta have also all added to their market share over the last decade. MIA, which ranked No. 42 among “ports” in 2004, ranks No. 27 in 2014.

6. But it’s not just about China. Two nations which have moved up rapidly among PortMiami’s top trade partners in the last decade are Indonesia, which has advanced 21 positions to rank No. 9 this year, and Vietnam, up 27 positions to No. 12. That is helpful to the port.

7. What’s going on with China and its neighbors? As China sheds, or becomes less competitive in, manufacturing lower-end goods in favor of electronics and other higher-end products, Vietnam and other Asian nations (and even Mexico) are picking up the slack.

In the end, the larger ships, when fully laden, will not have too many options. While there are non-port issues that will have an impact as well — customs clearance, road and rail infrastructure, warehousing options — South Florida is well positioned to garner additional import business when the Panama Canal expansion is completed.

Ken Roberts is founder and president of WorldCity, based in Coral Gables; kroberts@worldcityweb.com.

Top imports into Miami

Change in rank June 2014 YTD Miami Imports June 2014 YTD 1-year change 1-year change 10-year change 10-year change
Total, All Miami Imports $ 25,073,961,409 -$1,121,360,349 -4.28% $11,414,744,697 83.57%
0 1 Gold $ 2,886,057,505 -$671,369,207 -18.87% $2,560,743,427 787.16%
1 2 Gasoline, other fuels $ 2,062,866,011 $154,960,601 8.12% $1,460,044,381 242.20%
-1 3 Computer chips $ 1,573,747,122 -$855,395,785 -35.21% $1,411,207,288 868.22%
1 4 Cellular, landline phones, parts $ 1,291,323,789 $213,617,717 19.82% $1,239,239,751 2379.31%
-1 5 Imports of returned exports $ 1,259,764,130 -$13,850,930 -1.09% $694,384,683 122.82%
1 6 Fish fillets, chilled or frozen $ 758,481,019 $139,017,579 22.44% $487,408,640 179.81%
4 7 Aircraft $ 722,463,879 $251,612,188 53.44% -$211,440,879 -22.64%
-2 8 T-shirts, tank tops, knit or crocheted $ 582,203,387 -$196,932,467 -25.28% $36,017,000 6.59%
0 9 Fresh-cut flowers $ 523,368,890 $2,477,754 0.48% $178,398,745 51.71%
-2 10 Sweaters, pullovers, vest, knit or crocheted $ 465,155,854 -$140,654,845 -23.22% -$42,976,397 -8.46%
1 11 Medical instruments for surgeons, dentists, vets $ 440,946,149 -$28,782,503 -6.13% $163,811,879 59.11%
-2 12 Computers $ 375,175,557 -$101,058,790 -21.22% $131,373,971 53.89%
3 13 Exports of charitable items, returned as imports $ 366,852,718 $42,374,469 13.06% $355,275,094 3068.64%
3 14 Perfumes $ 350,695,632 $48,256,511 15.96% $200,661,171 133.74%
3 15 Cigars, cigarettes $ 312,826,847 $25,539,244 8.89% $207,324,860 196.51%

Source: WorldCity analysis of U.S. Census Bureau data

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