Nicaragua's Canal – A Competitor to the Panama Canal

Posted by PortVision

A formerly quiet lagoon in southeast Nicaragua will soon bustle with activity. Lake Nicaragua and the San Juan River will become the new Interoceanic Grand Canal by 2019-2020. The total length of the Canal will be 172 miles. Construction began in January, 2015, according to The Independent.

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Considered by Spanish conquistadors in 1581 as a possible highway to the Pacific, and used by Cornelius Vanderbilt with a steamer and stagecoaches, this route has long been Nicaragua's dream. In 1900, when the US government was searching for the best route between the Atlantic and the Pacific, the Nicaraguan plan was in play; at that time the US put their money into the Panama Canal. The current Nicaraguan route is much the same as planned before: widen and deepen the 12 mile-long San Juan River from the Caribbean to Lake Nicaragua and then cut through the remaining one mile of land to the Pacific.

In 2012, Wang Jing, a Chinese businessman approached Daniel Ortega, President of Nicaragua, the largest nation in Central America. As reported by Reuters, the government awarded Wang  a 50 year renewable concession to develop the canal and its related facilities. Wang has established the development firm HKND to design, build and operate the canal. The 42-year old billionaire is chairman of 20+ business in 35 countries. According to Forbes, he is worth $7.7 billion; the Interoceanic Grand Canal project will cost around $50 billion and Wang is in the process of interesting investors.

The Canal would be three times longer than the Panama Canal and will be able to accommodate ships carrying up to 25,000 containers. Vessels of this size are larger than the newly expanded Panama Canal could handle – in fact Panama is already considering an additional expansion in 15 years, according to the Financial Times. US ports and shipbuilders are planning ever bigger vessels for the export of gas to the Far East.

New roads, bridges, power plants and an airport are included in the Nicaragua plan, in addition to two ports, lighthouses, locks, resorts, ferry terminals and a free trade zone. 175 billion cubic feet of earth will be excavated and moved to level the route. Thousands of people will need to be relocated. HKND optimistically estimates five years to completion, when it is hoped it will serve 5% of the world's shipping traffic.

Nicaraguan government officials expect the Canal to entirely change their economy – the country is now the second-poorest in the Americas. The project will create 50,000 jobs; some of them would go to local workers, some to imported construction labor. There is opposition from citizens who see this as a unfair land grab and also from environmentalists who worry about the fragile wetlands through which the project is routed.

When completed, this additional canal from the Atlantic to the Pacific is sure to impact ship traffic in the Caribbean, and the competition between the two possible routes will be interesting to observe.

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Posted on Jun 9, 2015, 9:05:00 AM

Topics: Blog