The competitive position of the Panama Canal is a routing option for vessel operators across the major shipping sectors and the main trade lanes. The value of the Panama Canal routes to ship operators comes from the role of the Canal as a time and distance saver for voyages between Atlantic and Pacific regions.
All the analyses done until now have been focused on Panamax containerships and the total transportation cost from the vessel operator's viewpoint. With the opening of the Third Set of Locks in 2016, now there is an opportunity to analyze the total transportation cost for the new neopanamax, which allows up to a little more than 14,000 TEUs.
The total transportation cost for neopanamax vessels should take into account fuel, capital/charter costs, and operational costs. A comparison of neopanamax and panamax vessels should shed light on the issue of deploying the fleet in the best possible way to minimize transportation costs.
Besides the total transportation cost, there are other elements that enter into play in the definition of the routing for delivering goods from origin to destination. In this paper, we would evaluate the potential impact of factors such as inventory carrying costs (stocks), handling costs, value of frequency, reliability, etc on the routing decision. Hence, we would expand the conventional vessel operator’s point of view to a more generalized cost perspective from the shipper.
Shippers' profitability is greatly impacted by additional in-transit in- potential impact of ements he potential impact of ements that entrer into play lyze the tinventory holding costs. For example, if a route is longer, the shipper shall take into account additional inventory costs which depend crucially on the values of the cargoes shipped. Second, the reliability is an important consideration for shipper's choice of supply channels. In general, routes with less reliable "in-transit" time due to congestion will require more safety stock at destination distribution centers to avoid stock-outs. Finally, more frequent services will allow shippers to reduce replenishment times and inventory levels at their warehouses, reducing inventory and handling costs.
This paper will analyze the generalized cost in the case of neopanamax containerships with a comparison with panamax containerships. By analyzing other factors besides transportation costs, such as inventory cost, reliability and frequency, a better understanding of their effects on the competitiveness of the Panama Canal routes can be obtained.