As global trade grows, so do container barges and shipping. The Panama Canal, which has been a vital link in international trade for almost a hundred years, is no longer big enough for all the ships trying to get through. The Panama Canal Authority was reported to have finalized a plan to enlarge the canal. A third lane would be added, large enough for the extra-big ships already built and used in shipping. (However, as comments below indicate, it is not a sure thing at all.)
The idea is not new. The USA was already working on it back in 1939, but the project was discarded when world war II came along. This time around the US wouldn't be involved directly, since control of the canal was handed over to Panama in 1999. Since then the place has been doing well, shipping almost 200 million more tons than was envisioned when it was designed, and making money off it.
The push now for a bigger canal is based a great deal on the emergence of China as an economic power. Not only is there more shipping than ever, but other canals (such as the Suez Canal) are threatening to take larger bites out of the market. While Panama set the standard size for many years, with "Panamax" being the largest containers that could go through its locks, even larger containers are already in use elsewhere.
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I've seen this on a PBS show. I think it might have been NOVA but I'm not sure. These larger cargo ships are the future of shipping. I never thought of how China was causing this untill I read your article. The rest of the world sends raw material to them and they send products back.
Hello. My name is Teresa Arosemena and I manage international communications for the Panama Canal Authority. We saw your blog entry and just wanted to let you know that nothing has been decided on a potential expansion. In fact, the BBC just issued a correction on this for its April 4 piece by Jane Monahan, which you currently have linked to your blog entry. We thought you would find this of interest: http://news.bbc.co.uk/2/hi/business/4876322.stm. Thank you for your interest in the Panama Canal. Please feel free to visit the Panama Canal’s Web site at www.pancanal.com for the latest developments and news on the waterway.
There are more than 50 articles about the expansion of the Panama Canal available at:
http://www.panama-guide.com/index.php?topic=canal
We've been tracking the plan for a long time, and expect Panama's President Martin Torrijos to release the details soon, probably next week. The project will cost more than $6 billion dollars, and is one of several "mega projects" Panama is looking at right now that will reshape the nation's economy for a generation. Other projects are the "mega-port", the construciton of an oil refinery, and the clean-up of the Bay of Panama. Stop by www.panama-guide.com if you want to know what's going on down here...
Perhaps some of you will be interested to know that there is a significant and GROWING opposition to the proposal of spending $7 to $8 billion to enlarge the Panama Canal building a third set of locks.
Those opposed to the Canal widening project, including myself, are convinced that it would NOT be convenient to Panama.
Why not? Because it is not a financially viable project...! Projected "additional" net earnings (in actualized terms) would NOT be high enough to compensate projected net "additional" costs. This, assuming a moderately "optimistic" scenario including: 3% yearly increase of transit; 5% yearly increase of tariffs; 6 to 7% interest rate and 15 years amortization span.
And a more probable scenario would be a SMALLER transit increase rate than 3%, given the fact that the Chinese economy will lose momentum in the next decades, two artic routes will open (thus robbing the Panama route of customers), and the US inter-modal system will expand (ditto).
Panama would be better off, we believe, if it was to instead spend the Canal's profits to foster the country's development and overall well being.
O yes, a few would benefit from the project: construction companies, banks, and law firms tied to maritime companies. A few maritime transport companies would probably benefit too. But Panama would waste millions that it desperately needs to escape underdevelopment and poverty...!
If you need more information you may visit our site: http://cip3000.tripod.com. It is mostly in Spanish, but it has an English translation link. You may write me if you need further information in English, and I will do my best to help.
Cheers from Panama, (Prof.) RN Mendez.