Panama Canal Expansion Project: Completion and Impact on Global Trade

Diana MaureNews, Ocean FreightLeave a Comment

Panama Canal expansion project

The Panama Canal is one of the greatest engineering accomplishments known to man. France began working on the Canal in 1881 but did not continue due to a high mortality rate and engineering problems. In 1904, the United States took over. It took 75,000 people to create the 50-mile channel and during the project an artificial body of water, Gatun Lake, was created. The canal claimed the lives of 25,000 workers during its creation. On August 15, 1914, the Canal was officially opened and was the world’s largest earthen dam. On June 26, 2016, the new set of locks will open, impacting global trade once again.

The Expansion Project

The most recent Panama Canal project was a nine year, $5 billion effort to deepen navigation channels by adding a third set of locks. The locks are a set of chambers that are sealed by 3,200-ton doors which lower and raise the water levels. Ultimately, a wider lane for ships was created – 180 feet compared to the original width of 109 feet. Also, the Gatun Lake lanes were deepened and widened. This is where ships spend the majority of the time during their voyage through the canal. While not as tragic as the initial construction of the canals, this project had it’s own set of complications. Leaking locks delayed the project by two years.

Benefits, Growth and Goals of the Expansion

This upgrade will double the canal’s capacity for carrying cargo between the Pacific and Atlantic oceans. However, not all of the canal’s problems are solved. Although the canal can now receive cargo vessels that are three times larger, the largest crude tankers and ships still won’t fit. This expansion was crucial to the ongoing success of the canal as shipping vessels are growing in size worldwide. If the canal didn’t accommodate these larger ships, it risked losing relevance.

The expansion is great for shippers as well. Everyone from food importers, to wheat, soybean, and corn growers will benefit. Crude oil and gas companies, who have been feeling the pinch of the recent price plunge, will see a reduction in their shipping costs and transit times. Bill Diehl, President of the Greater Houston Port Bureau, a maritime industry trade group, said “We can send gas ships that couldn’t fit through the canal before…Asia looks like a good market for us now. The shipping costs look like a fair fight.”

The expected growth has created rapid multibillion dollar planning and building of ports in South America, the Caribbean, and the U.S. Panama is also making a push to become a global distribution hub for manufactures. They are planning to add additional room for over 5 million cargo containers.

U.S. cities all along the Gulf and East Coasts have been upgrading their facilities to handle the largest ships and higher volumes that are projected in the coming months. In total, the American Association of Port Authorities estimates that $150 billion will be spent by American ports over the next four years to accommodate bigger ships and reduce congestion. As ships get bigger, the Panama Canal and logistics facilities all across the world will grow as well.

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Diana Maure
Recently promoted to Sales Manager, Diana started in 2004 as the Foreign to Foreign Manager for ShipLilly. Her unique background has allowed her to help improve the supply chain of many international clients and provide customized logistical solutions throughout the years.

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