Ask any area chamber of commerce, railroad or university official about what the widening of the Panama Canal means to central Ohio, and they become excited.
The widening, they say, means companies will be able to ship products to Ohio and the Midwest more easily and cheaply. That, in theory, should translate to stronger companies and more jobs.
But ask them to put numbers to those expectations, and they hesitate. While the possibilities seem great, the variables make that too difficult, at least at present, experts say.
“It just puts us in a more competitive position to be a good transportation point for products and services from Asia,” said Michael Dalby, the Columbus Chamber’s CEO and president.
The $5.25 billion project to widen the canal will allow it to handle bigger ships. That means that products coming to the U.S. from Asia will be able to skip West Coast ports and head to ports on the East and Gulf coasts.
From there, goods can be loaded onto trains and sent to terminals in Ohio. Once here, containers crammed with apparel, toys and other goods will be unloaded and sent by truck and train to warehouses and store shelves throughout the U.S.
The biggest ships that can squeeze through the Panama Canal now carry 4,400 to 5,000 containers. A wider canal would accommodate some of the biggest ships — vessels with 12,600 containers.
The neighboring ports of Los Angeles and Long Beach, which together handle about 40 percent of the nation’s imported Asian goods, could lose as much as a quarter of their cargo business by some estimates after the Panama expansion is completed in 2014. By one estimate, job losses there could total 100,000, about a fifth of all the jobs tied to shipping.
Central Ohio business and political leaders see the region’s system of roads, airports and railroads as a major driver of the economy, especially given the easy reach to much of the U.S. population within a day’s drive. The region has about 3,200 businesses in warehousing, transportation and other sectors that employ 80,000 workers, according to the Columbus Chamber’s website.
Two of the main railroads that serve Eastern and Midwest markets, Norfolk Southern and CSX, have invested heavily in Ohio. Meanwhile, ports along the East Coast also are investing to be able to handle bigger freighters.
CSX is expected to finish a $59 million upgrade and expansion of its Buckeye Yard intermodal facility on the Far West Side this year. The facility connects to the company’s new $175 million National Gateway terminal in North Baltimore, north of Findlay in northwestern Ohio. Intermodal terminals are designed to transfer goods seamlessly from one transport method to another — in this case, from railway to truck.
Drew Glassman, assistant vice president of marketing for CSX Transportation, said the company is well-positioned in Ohio to handle the expected influx of freight shipments into the region.
“We think the Panama Canal is a great opportunity for our intermodal business,” he said.
With the expansion, Columbus becomes one of several spokes in the North Baltimore hub, greatly increasing the number of direct shipping connections to and from Columbus, he said.
Norfolk Southern has finished its $191 million Heartland Corridor project, which expanded shipping capabilities between Ohio and points to the east and south, including the increasingly important port of Norfolk, Va. Unlike many other East Coast ports, the Norfolk port already is capable of handling the bigger freighters.
Now, shipments destined for the Midwest from Asia often go by rail from the West Coast to Chicago and are distributed from there by rail and truck.
John Saldanha, an Ohio State University professor in marketing and logistics, said it stands to reason that central Ohio will benefit from the expansion.
Opening up East Coast ports to Asian shipments will save shippers transportation and fuel costs, although it will take about a week longer for goods to arrive at East Coast ports, he said. Congestion also should be less of a problem.
At the same time, companies have to balance how quickly items are needed on store shelves, he said. Fashion retailers, for example, may not be able to wait the extra few days for shipments to arrive because of quickly changing styles.
“You have all these tradeoffs,” Saldanha said. “If the customer walks into a store and you don’t have the product, you have lost a sale.”
West Coast ports, meanwhile, aren’t expected to stand by and give up business to other U.S. ports without a fight. The Los Angeles and Long Beach ports, neighboring towns and railroads have launched improvement projects aimed at keeping them competitive. One proposed project, for example, would speed the loading of cargo onto trains; others eliminate bottlenecks or increase capacity so that the ports remain alluring to importers.
The railroads, for their part, say they are trying to keep a network that can adjust as business needs change along with the economy.
“We built our network as it relates to service in Columbus to be as flexible as possible,” said Jeff Heller, group vice president for intermodal marketing for Norfolk Southern.
The railroad’s local operations can serve markets on either coast. How much Columbus will benefit from international trade depends on a growing economy and customer needs for speed, cost and service, he said.
Any potential employment gains in the region may not come from Norfolk Southern, but from the companies that choose to locate operations here to take advantage of the transportation opportunities, Heller said.
At the moment, most of the international shipments to Columbus come from Los Angeles via Chicago, with companies in China, South Korea and Japan shipping such things as consumer goods and auto parts to the U.S.
With the investments in the Rickenbacker terminal, the Heartland Corridor and elsewhere, “we are positioned in major markets to either take more freight or handle a large steamship,” Heller said.
“What happens when the Panama Canal opens? We think we’ll see business continue to grow,” he said.
Heller said the operations in Columbus have just scratched the surface of what they are able to handle.
“It’s a big, brand new, state of the art facility, with a lot of expansion room,” he said. “So we’re just waiting for the tap to turn on.”