Plenty of room to grow

The intra-America trade is one of the world’s faster growing markets and is outpacing mature market trades.

maersk_golden_gate_oakland
San Francisco, United States.

Craig Mygatt, CEO of the new SeaLand, expects container volume growth of more than 6% this year in the region, up from 4.3% last year. The total trade volume is estimated at 3.2 million forty foot containers per year. With only 6% share of that pie, or approximately 200,000 containers, SeaLand has plenty of room to grow.

One factor contributing to the region’s current and expected growth is the trend among some businesses to move production to Central and South America (and also the USA) to be closer to the US consumer market.

With wages in China rising at an annual rate of 15% or more for several years, other factors such as distance are becoming increasingly important. For instance, Mexico has become a regional base for electronics, apparel and car manufacturers due to its proximity to the US and Latin American markets, even though labour costs are up to 40% higher than in China.

Emerging opportunities
The Panama Canal expansion is another development SeaLand expects will bring opportunities for the company to pick up Asian cargo headed to the US on Maersk Line, MSC, CMA and other large carriers. These carriers currently prefer the Suez Canal for US-bound cargo, even though the route is 5% longer, because of lower transit fees per container and the much larger vessels it can handle.

The canal’s expansion, expected by the end of 2015, will enable vessels as large as 12,000 TEUs to transit. If the economics are attractive enough to large carriers such as Maersk Line, CMA CGM and MSC, these carriers would unload in Panamanian ports like Balboa or Colon for carriers like SeaLand to “tranship” the cargo the rest of the way to ports like Savannah and Charleston in the United States.