TRG | The Bottom Line – 2/17

TRG first wrote about the potential impact of the widening of the Panama Canal back in 2013, a $5.25B construction project started in 2007 and finally wrapped up in 2016. By 2019, the CEO of the South Carolina Port Authority presented at TRG’s annual C&I Conference, and as discussed, in three short years the Port of Charleston (an early mover in deepening ports and prepping infrastructure for post-Panamax ships) was already seeing a surge in demand. While 85% of shipping volume from Asia went to western U.S. ports in 2002, by the timing of TRG’s 2019 C&I Conference, 65% of Asian imports were to the U.S. west coast and 35% to East. Bigger ships (carrying 2.5-3x the capacity) and a more developed eastern U.S. port system has changed the landscape for the flow of goods on both U.S. coasts. TRG has always prided ourselves in getting out the field to “kick the tires” in order to better understand industry and company dynamics…so a decade later after we first wrote on the Panama Canal, this analyst had the opportunity to sail through the Panama Canal. The “small” side of the canal is still impressive: Gates stood at the height of a 7-story building and locks are 110 feet wide and 1,000 feet long (max 965 feet ship length). There is a mere two feet clearance for auto cargo ships. An incredibly cool experience to see up close the mechanics of an undertaking that was many decades in the making. What else did we learn on this trip? As the above pic demonstrates, cruise ship traffic is back!