Linda McMahon, President & CEO of TREC recently spoke with Alberto Zubieta about his upcoming talk in Dallas. Friday, the Dallas Regional Chamber and TREC will co-host World View: Panama’s Master Builder with guest speaker, Alberto Alemán Zubieta, Chief Executive Officer, Panama Canal Authority. Here’s a little insight from Zubieta about the canal’s expansion and it’s effect on Texas.
Please tell us a little about the Panama Canal in terms of its value to global commerce.
The Panama Canal serves more than 140 different transportation routes from every corner of the world and is a critical global link between ports, commodities, and consumers. According to a study titled “The Complex Network of Global Cargo Ship Movements”, published in January 2010 by the Journal of Royal Society Interface, the Panama Canal is the most central port in the world’s network. Every year, more than 14,000 vessels carrying over 200 million long tons of cargo transit the waterway.
Why is the Panama Canal being expanded?
The Panama Canal is being expanded to maintain the waterway’s competitiveness and enhance the value of the Panama route.
What does this expansion mean for Texas, and, more specifically, North Texas?
The expansion will allow the deployment of larger vessels through the Panama Canal with destination at the Port of Houston. Vessels of over 8000 TEUs could be traveling their way to Houston through the all water route, providing economies of scale to shippers. Currently Houston is home of big-box retailers, like Wal-Mart and Home Depot, which have placed huge distribution centers near the port. The cost reduction of deploying an 8000 TEU ship vs. a 4000 TEU through the Panama Canal could be as much as $175 per TEU. Similar savings apply to the cost of transporting containers from Houston to a distribution center in Dallas, as shown in the attached graphs.
What little known fact about the Panama Canal do you find most interesting?
- Railroad connectivity Houston – Dallas:
There are 3 class I railroads serving the Houston area. [UP (Union Pacific), BNSF (Burlington Northern Santa Fe), KCS (Kansas City Southern)] There are 96 intermodal trains per week moving between Houston and various points across the USA, 16 of which operate between Houston and Chicago (Dallas is an intermediate point on this service.Presently, there are containers moving southbound from Dallas to Houston on a spot basis. There is presently no dedicated weekly intermodal service between Houston and Dallas, however, Port of Houston Authority is working closely with the railroads in developing a 3x per week service that would cut off at 18h00 at the port of Houston’s public terminal at Barbours Cut and arrive at 23h00m in Dallas. The new on dock service would start 1Q2013
- Volumes Houston – Dallas
According to our information, there are more than 500,000 truck loads between Houston and Dallas per year. A dedicated rail service would reduce the transportation costs to shippers and carriers operating this lane and would reduce carbon emissions caused by trucks. Intermodal trains moving from Houston off dock rail intermodal facilities operated by the UP and BNSF carry more than 400,000 units per year between Houston to points across the USA like Chicago, Los Angeles, Kansas City and St Louis.