The document summarizes presentations made to the Texas Department of Transportation regarding the expansion of the Panama Canal and its effects on Texas ports and industries. It finds that the expanded canal will benefit Texas exports of liquefied natural gas, plastics, and grains to Asia due to reduced transit times and ability to accommodate larger vessels. It also notes the canal expansion could increase containerized imports to Houston ports from Asia and facilitate more transshipment cargo through Gulf ports.

1. September 6, 2017
Policy Research Project
Presentations
Presented and prepared by the LBJ School of Public Affairs for the
Texas Department of Transportation

2. September 6, 2017
Panama Canal Utilization
By
Chi-Hsiang Chu & Nina Ledermann

3. September 6, 2017
Panama Canal and Suez Canal Expansion
The $5.4bn Panama Canal expansion project
has doubled the canal’s capacity by creating a
new set of locks that facilitates the expanding
trade between North America and the Far
East.
The expanded canal can now accommodate
Neopanamax vessels carrying up to almost
14,000 TEUs.
The $8.5bn Suez Canal expansion project added
a new 35km long lane to allow two-way traffic
for the first time.
Overall, the Panama Canal is increasing its
competitiveness relative to the Suez Canal.

4. September 6, 2017
Panama Canal Utilization
Doubled Fleet
Capacity - 79% of
global fleet
Neopanamax Vessels
– 5.9/daily
New Market Segment
- LNG

5. September 6, 2017
Effects of Panama Canal Expansion
 The Asia-US maritime trade via the Panama Canal is expected to see growing profit.

6. September 6, 2017
Effects of Panama Canal Expansion
 Texas LNG and LPG export industries are likely to benefit from the expansion
due to reductions in transit time and costs.

7. September 6, 2017
Takeaways
 Both the Panama Canal and the Suez Canal improved their
services but the Panama Canal is significant for Texas.
 Several shipping companies have started rerouting some of their
Asia-US East Coast services through the Panama Canal and
could transload for Gulf ports.
 The Panama Canal expansion will benefit Texas exports to Asia,
especially the LNG and LPG exports.

8. September 6, 2017
By
Alex Payson & Chase Porter
Texas Ports and the Panama
Canal: Commodities and
Infrastructure
From TxDOT Project 5-6690-01:
Impact to Texas’ Multi-modal Freight Networks:
Panama Canal and South American Markets

9. September 6, 2017
Key Takeaways and Findings
 Locks opened in June 2016Rebound in transits, cargo at
canal, general rebound in Asian trade at Texas ports
 Impacts at Texas ports will be commodity, port specific
 Location of cargo’s ultimate origin/destination
 Seaside accessibility and infrastructure
 Terminal operations
 Rail and road connectivity, efficiency, and reliability
 Imports: Locks will facilitate increased containerized trade
 Exports: Larger locks present new economy of scale for bulk
cargo

10. September 6, 2017
Containerized Imports
 “Anything that fits comes in a container.”
 Organic increases due to population growth in the Texas Triangle
 Possible shift of existing or would-be traffic from West Coast to
Atlantic-side
 Disagreement, uncertainty if Texas will be effected
 Increases will (almost) exclusively be seen at the Port of Houston’s
Barbour’s Cut and Bayport Terminals
 Unclear if there will be more vessels, larger vessels, or a combination
thereof
 Transshipment is a possible outcome
 POHA upgrading infrastructure to handle larger vessels; expanding
Bayport Terminal to increase capacity

11. September 6, 2017
Transshipment
Shipping Patterns
 Conventional – call at all ports
 Direct – region specific
 Dominant pattern
 Transshipment – feeder loops
How Viable is Transshipment?
 Ports vs Shipping Companies
 Containerized goods only
 Transshipment policy of Panama
Canal Authority

12. September 6, 2017
TransshipmentTransshipment Opportunities
 Transshipment Triangle
 Benefits: Proximity to trade routes and
port productivity
 Windward Passage Cluster
 Benefits: Proximity to Gulf and East Coast
ports
 Panama Gateway Cluster
 Little deviation from the transatlantic and
transpacific services
 Corozal, Panama
 Benefits: Closeness to Canal
 Mariel, Cuba
 Benefits: Development Space

13. September 6, 2017
Bulk Exports
 Expanded locks favor commodities with “large-vessel” global fleets
 Bulk energy liquids and other petroleum and natural gas related exports
 LNG
 Plastic resins
 Dry bulk: Grain
 Corpus Christi case study exemplifies that exports will be driven by
industrial developments, including land availability, and seaside
accessibility
 Development trending towards La Quinta on north side of Corpus
Christi Bay (oil refineries, LNG export terminal, ethylene producers,
etc.)
 Port hopes to lengthen, deepen ship channels and build new Harbor
Bridge, but most development will come as industry demands it

14. September 6, 2017
Plastic Resins
 Commodity driven growth
 4th largest exporter of plastic resins (2014)
 Greatest demand in Asia and EU
 Asian demand for plastic resins rise from 20.5
million metric tons to 25.3 million by 2020
 Houston and Freeport – all water route
Challenges:
 Tight supply of empty containers
 Competition with rail

15. September 6, 2017
LNG
Producing Areas
▪ Anadarko Basin in the Texas Panhandle
▪ Barnett Shale in the Dallas/Fort Worth and Arlington region
▪ Bossier/Haynesville Shale of East Texas
▪ Eagle Ford Shale in South Texas
 37 active storage facilities
 Existing: Import – Sabine Pass, Freeport
 Approved: Import – Corpus Christi; Export – Freeport, Corpus Christi, Sabine Pass
 Proposed: Brownsville, Port Arthur, Freeport
 LNG net exporter by 2020
 Growth of exports to Asia and Mexico