Memphis-based shipping company Mallory Alexander International Logistics has opened an office in Houston in anticipation of changes in shipping patterns as a result of the Panama Canal’s expansion.

NEELY MALLORY III

This isn’t the first time Mallory Alexander has entered the Houston market. When Mallory Group president W. Neely Mallory III first joined the company in 1981, he worked with oil exports in Houston.

“We left as more and more cotton and agricultural exports left the bulk of ship loading and went into containers going over to the West Coast instead of the Gulf Coast,” Mallory said. “That’s sort of turning around now with the expansion of the Panama Canal.”

The $5.4 billion expansion of the Panama Canal opened late June. The new, larger locks can accommodate container ships with nearly triple the capacity than what could pass through the earlier Panama Canal infrastructure.

Dan Pallme, senior associate director of the Intermodal Freight Transportation Institute at the University of Memphis, said traffic through the Panama Canal could shift trans-Pacific shipping patterns from the West Coast to the East Coast and ports in the Southeast. Before the canal was expanded, oversized liners traveling from Asia had to dock on the West Coast where goods were moved to rail or trucks to reach final destinations.

With the East and West Coast ports more in competition, shippers are willing to accept the additional time to travel solely by water because of the savings on inland rail costs and fuel, Pallme said.

A small shift in shipping patterns could turn into a large shift based on consumer demands and population migration to the Southeast, transloading potential and costs associated with Panama Canal container fees and the cost of rail fuel compared to ship liner fuel, he said.

Mallory Alexander has been shoring up its Southeast presence by expanding warehouses in Mobile, Ala., and opening a Houston office to complement existing offices in Dallas and New Orleans.

To meet international demand, the Houston team specializes in customs consultation and clearance as well as Free Trade Agreement proficiency.

“People are bringing these huge ships into the Gulf Coast now,” Mallory said. “With the expanded canal opening, they’ll will be looking for cargo to head back to Asia, and that’s where I think we can help fill a void for those vessels and expand on our ties in agriculture in the Gulf Coast and Houston.”

Mallory Alexander has a personal pulse on Asia’s traffic to the Southeast. Last year, the company gained a freight license from the Chinese government and opened the Mallory Asia Pacific division in Shanghai. Mallory said traction from the Shanghai office has been unexpected.

“We thought they were going to be more successful going to the Northeast, but we’ve gotten a lot of traction going to the Houston area,” he said. “One of the things we’ve seen some volume in is the medical side of things, which is huge in Memphis and huge down there (Houston) as well.”

Pallme said that outside of incremental growth with increases in demand, Memphis will see little change in volume because of the Panama Canal’s expansion.

Still, with Memphis’ railroad intermodal capacity at less than half of potential volume, Pallme said the region is poised to see potential growth regardless of whether ships adjust from the West Coast to the East Coast.