On June 14, Nicaraguan president Daniel Ortega signed a 50-year concession granting to HK Nicaragua Canal Development Investment Co. (HKND) the right to explore—and possibly build and operate—a canal between the country's Pacific and Caribbean coasts. As if digging a canal were not ambitious enough (experts say the canal would cost $40 billion and require the excavation of over 125 miles of new waterway), the proposed project would also include a pipeline, two ports, two airports, and a cross-country railroad. The timing is interesting in that the concession comes right before the opening of the $5.25 billion expansion of the Panama Canal. Even more interesting is the fact that HKND is a Chinese company whose owner's experience lies in telecommunications, not canal building.
Building a canal across Nicaragua is not a new idea by any means. As far back as colonial New Spain, the concept has been studied, surveyed, and ultimately abandoned. In 1828, Antonio Jose Caoaz, Guatemalan minister to the United States, presented the idea to John Quincy Adams, who proved a receptive audience. The U.S. dove into the project, spending considerable time and resources on it. However, the effort was soon derailed by instability in Nicaragua.
In 1882, the French, who had been constructing the Suez Canal, decided to tackle the Central American canal project but chose Panama as the venue. Under the leadership of Ferdinand de Lesseps, work began on a ground-level canal. However, the project was plagued from the start by yellow fever, malaria, and financial difficulties. The plan was changed to a lock canal, but in 1889, the company was forced into liquidation, and another new company was formed in France only to fail five years later.
In 1889, Cornelius Vanderbilt and others had begun construction of a canal in Nicaragua, but in 1893, a stock panic halted that construction. Finally in 1902, Congress voted to go back to Panama and gave President Theodore Roosevelt $40 million to buy out the French and continue the project. Construction was not easy and came at an enormous human cost. Over 10,000 workers had already died between 1882 and 1888, primarily from disease. Another 6,000 would die before the canal was finally completed in 1914. The expansion currently under way is scheduled for completion in 2015.
So why do we need another canal? There are several good reasons to have a second canal across the Americas. Obviously, the threat of terrorism always hangs over our heads. The loss of the Panama Canal would create an almost unimaginable global shipping crisis. From an operational perspective, just last month Maersk introduced the first of its Triple E ships. As of today, they are too large for any port in North America and will be too large to traverse the enlarged Panama Canal. The Triple Es are 1,312 feet long and 194 feet wide. The new Panama Canal lock will be 1,400 feet long, but only 180 feet wide. Finally, the new canal would be good for Nicaragua. Estimates are that it would double the per-capita GDP of the country.
But will it really happen? I wouldn't bet on it. Certainly, canals are easier to build than they were 100 years ago, but destruction of pristine rivers and lush jungles in Nicaragua would be an environmentalist's nightmare. Also, there are 12 active volcanoes in Nicaragua, some of which erupt on a fairly regular basis. Some experts do not believe even $40 billion is enough for such an ambitious project, and others have suggested this may be some sort of scam by Ortega, who is not the most trusted leader in Central America. Finally, there is a concern by many that if the canal were actually built, the Chinese would hold too important a position in global commerce.
And by the way, there has been no indication of where the $40 billion is coming from.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.