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Panama Canal Expansion Puts a Squeeze on New Jersey’s Infrastructure

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It seemed like the day might never arrive, but after multiple delays and several billion dollars in budget overrun, the expanded Panama Canal will finally open this weekend. 

On Sunday, a Chinese container vessel will navigate its way through the expanded locks, in what shippers around the world hope will be the first of many successful passages by today's larger commercial ships. It's been a long time coming for shipping lines especially, many of whom have invested heavily in the 14,000 TEU capacity vessels that the expanded waterway is designed for.

However, even this delayed arrival has come too soon for some. Most notably for ourselves - and everyone else bringing in cargo via the East Coast - the expansion has caught the Port Authority of NY/NJ on its heels.

Loaded container vessel - front view

Burden on the Bayonne

Commuters in our area will be familiar with the Bayonne Bridge, which links northern New Jersey to Staten Island and, by extension, the rest of New York City. What those going over it might not know is what's going on underneath and above the heavily traversed bridge.

For many years, the port authority has been working to raise the roadway and increase the height capacity underneath the bridge. It will achieve this with a series of adjustments to the traffic flow on the existing roadway and simultaneous construction work to create a highway that is both higher and wider than its predecessor.

The downside of this ambitious infrastructure improvement - aside from the inevitable commuter complaints you'll hear throughout the tri-state! - is that it's a slow process that isn't expected to be finished until late next year.

Sizing Up the Panama Canal Expansion

With the larger vessels expected to start passing through the Panama Canal in the next month or two, that's a full year in which the Port of New York/New Jersey still can't take advantage of increased container volumes of these Post-Panamax vessels.

Puzzle piece cube spheres

Oddly enough, some relief for the Bayonne-based construction crew has come in the form of a shipping industry slump.

Although the efficiency of moving more cargo on a single voyage is evident, the demand to do so is not what it once was. After more than a decade of enviable growth, carriers are now seeing the reality of containers shipped lag behind the volumes they had forecast during the boom years, when growth of up to eight percent was not uncommon. Factor in an associated slump in the road freight sector and the need to squeeze in spectacularly large vessels becomes less of a priority, unless you're one of the carriers that has splashed out on them.

The long-term inevitably paints a different picture. As with the squeeze on commercial real estate,  demand for container shipments is a problem that the industry expects to correct itself in a matter of years.

container ship under bayonne bridge
A smaller container vessel passes under the current Bayonne Bridge. Raise the Roadway is due to be completed in late 2017.

At that point, with the expanded Panama Canal hopefully having proved its value and vessels with tens of thousands of TEU volume becoming the norm, it's to be hoped that the Bayonne Bridge work and other East Coast infrastructure challenges are complete and that cargo is flowing freely.