Container Cargo Market Share Northeast Asia to the United States East Coast, 1999-2017

Container Cargo Market Share Northeast Asia to the United States East Coast, 1999-2017

Source: Panama Canal Authority.

Conventionally, the American East Coast was dominantly serviced for the Asian trade through West Coast ports and intermodal services since transit times were advantageous and capacity was abundant. This trade pattern supported the development of the North American landbridge, a network of trade corridors linking the west and the east coasts. The dominance of this transport chain started to be contested in the 2000s, particularly after a major strike impacting West Coast ports in 2002, which created significant disruptions. By 2004, the growth of the transpacific trade was causing significant capacity and labor shortages along the West Coast. Major importers, particularly retailers, started to build distribution centers along the East and Gulf Coasts, inciting a growing share of Asian imports to use the all-water route through the Panama Canal. Although this involved longer transit times, they could be mitigated with inventory management strategies such as considering the inventory in transit as part of the inventory ready to be allocated to distribution centers across North America.

By 2007, several landbridge rail service contracts were up for renewal at significantly higher rates, which again promoted the competitive advantage of East Coast ports through the all-water route. At the same time, the application of economies of scale on the Asia-Europe route transiting through the Suez Canal led to the use of Mediterranean transshipment hubs to service East Coast ports through transatlantic services. By 2014, the respective shares of the landbridge, the Panama Canal, and the Suez Canal to service the East Coast from East Asia was roughly equivalent. After the expansion of the Panama Canal in 2016, the usage or larger containerships further incited the growth of the share of both the Panama and Suez canal routes.