The first ship will officially sail the Panama Canal on June 26 after a $5 billion expansion.
This waterway is expected to accommodate larger ships, which is spurring alliances among shipping companies all over the globe. Specifically, the expansion will boost capacity to 1.7 billion cubic metres from the recorded 9.6 million cubic metres in 2015.
Among others, China’s two largest lines merged early in 2016 to form the world’s fourth largest shipping concern. Last year, Maersk and MSC launched 2M, a venture to manage mutual capacity. Last month, six other sipping lines that comprise 18% of the global market, formed “The Alliance”. There are further talks of more mergers among medium sized shipping lines.
The dynamics of capacity management and load sharing could redound to the creation of new customised insurance products to cover the special and specific needs of such arrangements. It could also open opportunities for carriers to join forces to cover the exponential increase in exposure.
In addition, the expansion is seen to open up more trade opportunities in East Coast ports in the US. The Port Authority of New York and New Jersey is in response planning to spend $2.7 billion in widening terminals and shipping lanes, and allocating $1.3 billion in bridge refurbishment to accommodate the increase in traffic.
With these alliances, the increased capacity of shippers, and the construction of bigger vessels, the Panama Canal expansion brings with it more opportunities for insurance firms and brokers.
