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Panama Canal expects boost from US ports dispute

Recent months' disruption at US west coast ports could provide a substantial boost to Panama Canal traffic after next year's expansion, the canal's administrator said, in the latest sign that the dispute has done long-term damage.

Jorge Quijano said the canal had been expecting to win an additional four to five weekly container shipping services from Asia to the US east coast after it completed its expansion next year to allow bigger vessels to use the canal. However, after months of disruption at West Coast ports, it now believed another two might shift to the Panama route.

The numbers are a substantial increase on the 10 services that currently serve the US east coast via Panama.

Mr Quijano was speaking after addressing the annual TPM container shipping conference in Long Beach, whose port suffered some of the most severe effects from the sharp slowdown in west coast port traffic that started last November. Movements at the ports, some of which were already suffering congestion from operational problems, slowed to a crawl during a union go-slow. Substantial backlogs of cargo remain to be shifted despite the settlement of the underlying contract dispute behind the slowdown.

"There's an opportunity here," Mr Quijano told the Financial Times. "If the west coast has some difficulty, of course Panama is an option. We will be ready to do what we can to attract whatever amount of cargo is there."

Container ships using the canal - which is currently close to full capacity - have been operating with an additional 5 to 7 per cent loaded containers while the west coast ports have been congested, Mr Quijano said. The increase in cargo volumes from Asia to the US east coast via the Suez Canal had been still more marked, he added.

Surveys of shippers say they will seek to move more of their cargo away from the west coast in the future, if possible. A new lane of locks in Panama, capable of handling container ships with nearly three times the current capacity, is due to open in the second quarter next year.

"We expect that some traffic will be diverted from the west coast, at least for some time," Mr Quijano said.

Mr Quijano also stressed to the conference the Panama Canal's determination to seize back some market share from routes to the US east via Suez, which can already take far larger vessels than Panama. About 30 per cent of container shipments from Asia to the US east coast currently go via Suez.

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>Referring to the piracy threat that faces vessels crossing the Gulf of Aden near Suez, Mr Quijano said he would tell shipping lines: "We're a shorter route; we're an economical route and we have no pirates."

Mr Quijano was brusquely dismissive, meanwhile, of the Nicaraguan government's support for plans by a Chinese entrepreneur, Wang Jing, to build a rival to the Panama Canal across Nicaragua. Mr Quijano expressed doubt about Mr Wang's projections that the project would cost $50bn and take just five years, and pointed out that the canal would have to compete with the Panama Canal for traffic.

"From a private investment standpoint, it's not a feasible investment," Mr Quijano said.

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