The Panama Canal Expansion

In the 16th century the Spanish conceived the idea of constructing a canal across the Isthmus. In 1846 the United States concluded a treaty with Colombia. In 1855 the United States extended financial interest for the project. The Panama Canal Company was formed, headed by Ferdinan de Lesseps, the builder of the Suez Canal. However, within ten years, due to faulty planning, graft and the ravages of yellow fever, malaria and cholera, the company became bankrupt. In 1894 the New Panama Canal Company re-organised the work but lacked sufficient funds. Panama declared its independence from Colombia in 1903, with US collusion, and signed the HayBunau-Varilla Treaty with the U.S.A that year. Under the treaty, canal building rights passed into U.S. hands. Work began in 1904 and the canal was first opened to traffic on August 1914. The Panama Canal is currently undergoing a massive expansion that will transform shipping in the Western Hemisphere and perhaps the world. Ports from Miami to Colombia are rushing to cash in on the expansion, scheduled for completion in 2015. If construction of the original Panama Canal was the moonshot of its era, the current canal project also is something of an engineering marvel. The $8 billion to $10 billion project includes dredging Kingston Harbor, expanding port facilities and building a dry dock. It also hinges on linking ports and airports through road and rail networks. Since the expansion began, some 25,000 people, about 90 percent of them Panamanian, have worked on various phases of the project. Currently three sets of locks two on the Pacific side and one on the Atlantic side help ships step up or down to the water level of Gatn Lake, an artificial lake that is 85 feet above sea level. These will continue to function for smaller ships after the expansion is completed. The expanded section will use much of

the existing canal, whose channels are being dredged to make them wider and deep enough for post-Panamax ships, but it will operate with just a single set of locks on the Pacific side instead of the current two. Some 4.2 million cubic meters of concrete about 40 percent more than for the original canal will be poured by the time the new three-chambered locks are completed. Each 180-footwide, 1,400-foot-long chamber could accommodate the Empire State Building laid on its side. The gates for the locks, which are being built in Italy, will soar 10 stories high. The canals new set of locks will allow a ship with a 160-foot beam to pass with ease. The current canal can accommodate only ships that are no more than 106 feet wide and 965 feet long with a draft or depth of 39.5 feet, instead of the 50 feet or so required by post-Panamax vessels. Some of the largest ships in this category with containers stacked seven deep on their decks are barely able to squeeze through todays locks. To connect the new Pacific locks to the original canal, a 3.8-mile access channel that runs parallel to the current canal is being dug. Most of the vessels using the Canal today carry around 5,000 standard 20-foot containers. But the post-Panamax behemoths can stretch the length of three football fields and will carry as many as 13,000 containers as they make the eight-to-ten-hour journey through the canal. In terms of tonnage, they are three times as heavy as current Panama Canal ships, hence the need for deeper channels and wider locks. The canal expansion isnt about moving more ships so much as accommodating bigger ones. Since 1965, the number of ships traversing the canal annually has remained at about 14,000, but the tonnage they transport has tripled. Current charges of around US$ 400,000 per ship are being recalculated for the expanded canal and the post-Panamax vessels.

Of 161 ports in South and Central America, only 21 have channels of 50 feet or more, and 13 of those are in Brazil, according to data provided by the American Association of Port Authorities. Colombia, Argentina and Chile also have deeper ports. In Mesoamerica, only Mexico and Panama are in that league. But several ports in the regions have plans to reach that depth. Buenaventura on the Colombian Pacific coast reflects the regions challenges. The port is reinforcing its pylons and moorings to keep the larger ships from, literally, dragging the dock into the sea. The port is already deepening its access canal to 41 feet, but its planning to dredge to more than 50 feet to be able to receive post-Panamax vessels. At the Moin Container Terminal in Costa Rica, APM Terminals is pushing a $992 million project to dredge the canal to 52 feet and have six super-post-Panamax gantry cranes. Puerto Caucedo, in the Dominican Republic, is also in the midst of an expansion project. Anthony Hylton, Jamaicas minister of industry, investment and commerce, recently returned from a two-week trip to China and Singapore where he was promoting the governments plan for the Caribbean nation to become a global trans-shipment and logistics hub. Cuba is another case in point. While the island is renovating its Mariel port, the U.S. embargo is an obstacle to keep it from fulfilling its potential as a trans-shipment hub. Current US policy prohibits any vessel that has touched a Cuban port from touching any point in US territory for six months, complicating routing, fuelling plans, etc. While Mariel may not be able to receive post-Panamax ships, deepwater areas near Santiago on the eastern end of the island might be a logical location for a Cuban deepwater port

Chile is currently the third largest user of the canal after the United States and China, and nearly one-third of its maritime foreign trade is transported through the canal. Some 37 percent of Ecuadors maritime foreign trade travels via the canal, and over 30 percent of Perus trade. With Asian markets and trade growing at a faster pace than with the US and Europe, Latin America needs more capacity to ship bulk commodities to China, India, Japan and Korea, as well as to transport the growing shipments of manufactured goods such as automobiles, textiles, chemicals and others from that region.