Panama Canal vs alternative routes: estimating a logit model for grains

Abstract

Purpose: The purpose of this paper is to fit a logit model for dry bulkers transporting grains through the Panama Canal versus alternative routes destined to East Asia, originating on the US Gulf and East Coast. This is with the purpose of better understanding the attributes. Design/methodology/approach: In this paper, grain transits both through the Panama Canal and alternative routes, which are examined, and a logit model is developed to explain the route decision from a carrier/vessel operator point of view. Findings: Transit draft is the most important attribute in the route decision process for grains according to this study. Also, Panamax bulkers are the preferred vessel size into China, especially through the Cape of Good Hope route, impacting Panama Canal’s market share for grains. Research limitations/implications: This research used only a full year of grain traffic data approximating fiscal year 2018 (October 1, 2017 to September 30, 2018). Data will come mostly from the Panama Canal transit data and observations using IHS’s Market Intelligence Network (MINT). Originality/value: This paper is highly dependent on visual observations of grains vessels through alternative routes using AIS data from MINT software.