Summary:
- The U.S. president has claimed Chinese-owned carriers have received preferential treatment in the Panama Canal.
- Based project44 shipment data, there are no clear indications that this is occurring.
- China has the lowest overall transit time from Yantian to New York over the past year at 43 days compared to the overall average of 48 days, but countries including Singapore and Germany outperformed Chinese carriers in certain months, showing lack of consistent domination.
- French carriers show stronger transit times on major lane Shanghai to New York, demonstrating that China is not consistently outperforming other countries.
Overview
In his inaugural speech at the start of his second term, President Donald Trump made strong claims regarding the Panama Canal, accusing Panama of ceding control of the vital waterway to China. However, there is no evidence to support the claim that China controls the canal, which is operated by an independent authority appointed by the Panamanian government.
Despite this, concerns about potential favoritism have surfaced, as any preferential treatment in Panama Canal transit times could have significant implications for global shipping efficiency, costs, and competition. To address these concerns, we analyzed hundreds of thousands of shipments moving through the canal over the past 13 months. Our findings show no evidence of preferential treatment for any specific country. Instead, transit times across various routes appear to reflect the operational efficiency of global carriers rather than any form of favoritism.
Transit times across different countries
An examination of Panama Canal transit times shows that while Chinese carriers are active on several lanes, they are not the only ones benefiting from efficient transit. For example, while Chinese carriers hold the overall lowest average transit time for the past year on the lane from Yantian (Shenzhen) to New York, this trend is not consistent every month. As demonstrated in the chart below, vessels owned by carriers from Singapore, Germany, South Korea, and Hong Kong all outperformed Chinese-owned vessels in certain months over the past year.
Carriers from other countries also demonstrate fast transit times on various lanes. For example, French carriers achieve a notably low average transit time of 30 days on the Shanghai to New York lane, which is notably faster than the overall lane average of 37 days.
While Chinese carriers remain competitive, there is no clear sign of favoritism exhibited in the overall transit times. Our analysis suggests that the performance of individual carriers has a stronger correlation with transit times than carrier’s country of origin. Several factors contribute to this, including:
- Fleet and Operational Efficiency: Carriers with a well-optimized fleet, experienced routing, and effective scheduling can significantly reduce transit times. For example, French carrier CMA CGM on the Shanghai → New York route is known for its streamlined operations and high efficiency, contributing to their superior performance.
- Vessel and Route Selection: Carriers prioritize different vessels and shipping routes, which can impact how quickly shipments are processed. Carriers with faster vessels or those taking more direct routes tend to outperform others, regardless of the carrier’s country of origin.
- Industry Practices: Carriers that invest in technology for route optimization and data-driven scheduling can gain a competitive edge in terms of speed, leading to more consistent and shorter transit times.
Diverse carrier presence and global competition
The Panama Canal serves a broad range of international carriers, which promotes healthy competition and ensures diverse representation. Although Chinese vessels are prominent on certain routes due to their extensive shipping networks, carriers from other countries like Denmark, Switzerland, and Taiwan also operate efficiently on key lanes. For instance, Shanghai to Savannah features one of the fastest average transit times, with Swiss carriers showing a significant presence, highlighting the competitive nature of the canal.
This diversity of carriers means that no single nation dominates the Panama Canal’s operations. As global shipping networks continue to grow and diversify, carriers from various countries are contributing to the efficiency of the canal. This competition helps drive faster and more reliable transit times, benefiting global trade.
The importance of the Panama Canal for U.S. trade
The Panama Canal remains a vital link for U.S. trade, facilitating around 10-12% of the U.S.’s global commerce. By connecting the Atlantic and Pacific Oceans, it significantly reduces shipping times compared to other routes. The canal plays a key role in moving goods between the U.S. and markets in Asia, Latin America, and beyond, ensuring efficient supply chains.
Given the canal’s importance, it is essential that the canal operates fairly and efficiently for all countries. The current trends in transit times reflect the competitive nature of global shipping and the various factors that influence transit efficiency.
Summary
Analysis of Panama Canal transit times suggests that global competition, rather than favoritism, is driving efficiency in the region. While Chinese carriers perform very well for some routes, they are often outperformed by carriers from Singapore, Denmark, Switzerland and others, demonstrating the dynamic nature of transit times across various lanes. As the Panama Canal continues to play a central role in global trade, the focus remains on its importance as a neutral and efficient conduit for international commerce.
