Now scheduled for completion in June, 2015, the Panama Canal expansion project will double the size of the canal’s capacity. Recent delays due to questions about concrete mixtures will mean that the opening date of the renovated complex will miss 100th anniversary celebrations around the original opening of the canal1. The project will allow more and larger ships to transit through the canal.
The full project includes2:
- Building two new lock complexes, each with three chambers and water-reutilization basins. One is located on the Atlantic and one on the Pacific side of the channel.
- Excavating channels to access the new locks.
- Deepening and widening the existing channels.
- Raising Gatun Lake’s operating level.
The Panama Canal Authority stated in its original proposal that the objectives of the expansion are three-fold. First, to achieve sustainability and growth along with safety and efficiency; second, to maintain the canal’s competitiveness on the global stage; and third, to meet growing tonnage demand and to ease the current congestion. The project is projected to cost $5.3 billion and is expected to pay for itself in 11 years (a 12% return). Each of the new lock complexes are estimated to cost approximately $1.1 billion3,4,5.
Funds were secured from a variety of global organizations including the Japan Bank for International Cooperation, the European Investment Bank, the Inter-American Development Bank, the Corporacion Andina deFomento and the International Finance Corporation5.
When completed, the project will handle post-Panamax ships -- the supertankers (Suezmax liquid-bulk tankers), modern US Navy aircraft carriers, the largest container ships, and liquefied natural gas carriers, that are now unable to transit the Panama Canal. At present, the US ports of Baltimore, Norfolk and Long Beach, as well as the UK port of Southhampton can handle these vessels. New York City and Miami are working on improvements to their ports now. Other ports are considering whether to do the dredging, bridge-raising and renovations necessary to accommodate these larger ships7.
The new, third set of locks will be 1,400 ft in length (427 m), 180 ft in beam (55 m) and 60 ft in depth (18.3 m)4. They will not be able to accommodate Maersk E-class and future Maersk Triple E class container ships, TI class supertankers and Valemax ore carriers. As well, although the world’s largest cruise ships will fit into the locks, they will not be able to pass beneath the Bridge of the Americas (even at low tide)3.
Before the expansion project, the Panama Canal had two traffic lanes, each with a set of locks. The project adds a third lane and two lock complexes, as mentioned earlier. The new locks will have three successive chambers that will lift vessels from sea level to the Gatun Lake level and lower them for exit. They will use rolling gates as well as tugboats to position vessels. This new technology replaces miter gates and locomotives for positioning2. Lock operation will use gravity and valves, rather than pumping of water for lock operation.
A recent article in the Australian Financial Review indicates that this expansion will impact coal exports from the US to Asia, as well as have a major impact in LNG and LPG exports from the US to Asia. It will cut transit time from 41 days at present, (requiring a route around South America’s Cape Horn), to only 25 days, possibly halving freight costs. The investment firm, Goldman Sachs is forecasting that about 60 million tons a year of US LNG exports by 2020 will transit the Panama Canal, noting that 46 million tons of capacity has already secured government approval6.
Last month’s three-day TOC Container Supply Chain conference in Miami discussed the impact of the expansion. Presently, products destined for the East Coast of the US will travel a route through the Suez Canal. Merchandise produced north of Singapore will head to the Panama Canal. At present vessels that travel the existing canal can carry between 4,500 and 5,000 TEUs (standard 20-foot containers). The expansion will allow ships to carry 13,000 containers7.
All is not rosy for the Panama Canal Authority, however. A Hong Kong businessman has recently announced his intention to build a new, competing canal through Nicaragua and due to global warming, the possibility of a Northwest Passage (through the Arctic from Asia to the Americas) is becoming a real possibility8. As well, ships are getter ever bigger and building the infrastructure to manage these lags behind the ability of companies to build them.