There are many facets to the Panama Canal expansion project, which was scheduled to be completed by October 2014 but has been pushed back to early 2015. The project is building new locks and wider and deeper channels that are expected to double the canal’s capacity. This will allow megaships carrying 14,000+ containers to move through the Canal. Shipping containers through the Canal on these larger ships could reduce costs by as much as $75 to $100 per container per voyage, which adds up quickly if there are 14,000 containers on a single ship.


     When such ships are able to pass through the Panama Canal, business will consequently pick up along both the U.S. Eastern and Gulf coast ports because the ships can take an “all-water” route from Asia to the U.S. East or Gulf coast—bypassing West coast ports and the roads and railways now used to transport goods across the U.S. However, these ships require depths of up to 50 feet of water to navigate. As a result, port authorities along the U.S. Eastern seaboard and Gulf coast are spending hundreds of millions of dollars to dredge the bottoms of their bays and river bottoms to deepen harbors to accommodate the larger ships.


     It seems that one overlooked aspect of all this is the possible environmental impact. SupplyChainBrain pointed me to an Environmental Defense Fund blog post that announces the release of a peer-reviewed paper that analyzes the environmental implications of potential changes in container shipping as a result of the expansion. Panama Canal Expansion: Emission Changes from Possible U.S. West Coast Modal Shift,” is featured in a special issue of the journal Carbon Management. The paper, a collaboration by researchers at the University of Delaware, Rochester Institute of Technology, and Environmental Defense Fund (EDF), estimates changes in carbon dioxide emissions and regional criteria pollutant emissions such as nitrogen oxides and particulate matter.


     Given that ocean transport is more carbon efficient than truck or rail, it is expected that the use of larger ships and more water routes will reduce the carbon dioxide footprint of freight transported through an expanded canal. However, the authors found that using larger, more efficient container ships instead of the traditional truck/rail overland network used to transport cargo from the U.S. West coast ports to Eastern states may not necessarily offset the increase in carbon emissions resulting from a longer waterborne distance traveled. Although the carbon effects may be negligible, localized air pollution is expected to rise in ports with projected growth in cargo volume. This includes the emissions of criteria pollutants that increase the risk for health impacts, such as asthma and lung disease.


     As carriers and shippers look to reduce their environmental footprint, the report’s authors believe a systems approach must be taken to fully understand the effects of route selection, modes, and distribution networks. An intermodal strategy can best take advantage of infrastructure developments such as the Canal expansion, provided all of the costs and benefits are thoroughly evaluated.


     While infrastructure investments like an expanded Canal will help shipping shift to lower-emission vessel designs, the multimodal supply chain must be considered as a system to fully realize the sustainability benefits of freight innovation, says Dr. James Corbett, Professor of Marine Policy at the University of Delaware. He adds that the researchers look forward to helping all parts of the freight sector—industry and policy decision makers—visualize the potential for green freight networks.


     Are you or your company considering the impact the expanded Panama Canal will have on your supply chain? If so, is carbon footprint part of those discussions?