Bring up the Panama Canal to most Ohioans and they’ll likely raise an eyebrow at the suggestion the 100-year-old waterway can lead to jobs in Ohio.
Since 2007, the canal has been the center of a $5 billion project, the first serious upgrade since it was opened in 1914. The expansion, expected to be complete next year, will allow larger ships to make it through to the East Coast, leading to cheaper shipping to and from Asia.
Although it’s discouraging news for West Coast ports, for the East and Midwest, the shift in shipping traffic will be an economic boost.
“It really improves our position in terms of distribution out and shipping our products internationally,” said Chris Manegold, CEO of the Economic Development Alliance of Southern Ohio.
Appalachian Ohio could benefit most, in part because the Ohio River could receive goods from the canal after they’ve made their way to the United States via the Gulf of Mexico and the Mississippi River or the East Coast and the Port of Virginia.
Shifting goods
The expansion involves adding a third set of locks as well as deepening and widening the canal to allow for larger ships carrying about twice as much as those that currently use it. A total of 224.9 million freight tons of cargo were shipped through the Panama Canal in fiscal year 2014, with nearly 60 percent of goods being grains and petroleum products.
Once completed, the expanded canal will relieve major congestion issues at West Coast ports by shifting traffic to to the Gulf of Mexico and the East Coast, said John Molinaro, president of the Appalachian Partnership for Economic Growth.
Trade experts with the Panama Canal Authority say it is probable that liquefied natural gas, coal and grains will be leading export products from Ohio through the expanded Panama Canal. Top imports include steel products for the automotive industry and containerized cargo carrying multiple manufactured goods.
Ohio’s former tagline, “Heart of it All,” is rooted in its reputation as a logistics nexus — it’s within a day’s drive of 60 percent of the population in the United States and Canada. As a result, Ohio already receives imports from the East and West coasts, but it will see a boost in opportunities with the canal’s expansion. At least 20 percent of the tonnage could shift from West Coast ports to the Gulf of Mexico and East Coast ports, Manegold said.
There also are safety benefits for international shipping: The expansion will help ships from Asia avoid routes laden with pirates and remain on the water longer, Manegold said.
“The mantra is to get to water as fast and as long as you can. … Goods can stay on the boat much longer, decreasing cost and travel time by a day or two,” Manegold said.
Job projections
There aren’t job projections for Ohio specifically related to the anticipated shipping increase from the Panama Canal project, but the promise is there for “substantial industrial expansion,” Molinaro said.
“We benefit in a lot of ways,” Molinaro said. “It’s going to be a good thing for us moving goods overseas from Ohio.”
While the scope of the effect is elusive, it will increase the amount of goods on Ohio’s railroads, trucks and rivers. Manegold anticipates central and southern Ohio will benefit most, but Lake Erie ports also could see a boost, according to a 2013 canal study.
The Appalachian Partnership for Economic Growth has been working with communities along the Ohio River and an engineering firm to evaluate key properties for development of heavy manufacturing. As manufacturing shifted overseas over the last several decades, demographic data for river development sites were not kept up, Molinaro said.
Although Molinaro couldn’t share specifics because of confidentiality agreements, he said there has been “quite a bit of interest” in sites along the river.
What makes the sites attractive is the ability to ship and receive materials on barges along the Ohio River, and the expansion of the canal will make international shipping more cost efficient.
The shift could bode well for an increase in warehousing and distribution centers as items from electronics to toys to clothing make their way to the U.S. from Asia.
“We’re in the right place at the right time, and I think it will bode well for this part of Ohio. The network is there,” Manegold said.
The Joint Economic Development of Southern Ohio has been targeting transportation-sensitive areas — along U.S. routes 35 and 23, as well as Ohio 32 — when talking with site selectors. Manegold points to farm and home store Rural King’s decision to build a distribution center in Pike County as a major example of capitalizing on the increased shipping efficiency happening in Ohio in part because of the Panama Canal expansion.
Maximizing opportunity
The investments being made in the canal could be huge for intermodal transport. Intermodal shipping involves shipping containers — tractor trailers — moved by ship, barge or rail and then taken to their final destinations by trucks.
The Heartland Corridor, with an initial $321 million cost, doubled the capacity for double-stacked intermodal transport and shortened the route from Port of Virginia through Ohio to Chicago by two days.
The project was completed in 2010 and included a $68.5 million intermodal terminal at Rickenbacker Global Logistics Park in Columbus. The terminal, completed in 2008, is projected to create 20,000 jobs by 2038, according to the 2011 GoOhio Transportation Futures Plan.
“We’ve seen the growth even without the Panama Canal opened,” said Ohio Norfolk Southern Project Manager Paul Jeffers. “Those are projects we undertake because they’re good for our business, good for our network.”
Intermodal business for Norfolk Southern has been on a continuous upward trend. The company most recently reported a 5 percent increase in revenue from intermodal shipments in the fourth quarter of 2014.
CSX also is working on a similar project that includes Ohio, the $850 million National Gateway, that will allow double-stacked containers at several key freight corridors between Mid-Atlantic ports and consumption centers and the Midwest. The gateway is cleared for double-stacked containers from Chambersburg, Pennsylvania, to the CSX intermodal terminal in northwest Ohio, said Kristin Seay, CSX corporate communications.
“We do know that doubling the canal capacity will improve efficiencies for steam ship lines. Significant infrastructure development is needed and underway at east coast ports and efficient rail connectivity will be a key factor to success. CSX is working with ports up and down the east coast and in the Gulf (of Mexico) as they expand and improve their infrastructure in advance of the canal expansion,” Seay said.
Heart of it all
•Ohio is a single day’s drive from 60 percent of U.S. and Canadian population.
•Ohio has the fourth-largest interstate system at 6,700 lane miles.
•Ohio’s maritime ports and river terminals handle more than 103 million tons of commodities valued at $11 billion per year.
•Ohio is fourth in the nation for total active rail miles with 5,288 miles.
•Ohio in 2012 was fifth for the number of freight railroad employees with 7,619.
•Ohio shipped 66.2 million tons of goods by railroads in 2012 and received 77.3 million tons.
Source: Ohio Department of Transportation, Association of American Railways
Expanding the canal
The $5.2 billion Panama Canal expansion project is based on six years of research, which included more than 100 studies on the economic feasibility, market demand, environmental effect and other technical engineering aspects.
The project will create a new lane of traffic along the canal through the construction of a new set of locks, doubling the waterway’s capacity. Work began in September 2007 and is 84 percent complete. The majority of work left to finish is on the third set of locks and is projected to be complete in early 2016.
Source: Panama Canal Authority
From Chillicothe Gazette | February 14, 2015
By Jona Ison
