The new three-step lock system runs parallel to the existing Gatun Locks built in 1914. “Bigger ships are generally more efficient and have lower per unit costs”. But that is about to change.
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On Sunday, a Chinese vessel will become the first ship to sail through the newly expanded Panama Canal.
The $5.4-billion project, nine years in the making, is aimed at boosting the competitiveness of the 50-mile shortcut between the Atlantic and the Pacific and maintaining its ability to generate billions of dollars a year for the Central American nation.
The inauguration of the $5.4 billion project will put to rest the decade-long speculation on the impact of the expanded canal on trade flow between Asia and the eastern half of the USA, where most of the goods-consuming population resides. Mr.de Marotta says: “We were being maxed out”.
The upgrades have implications far beyond Panama. Miami; Savannah, Ga.; Charleston, S.C.; and the Port Authority of NY and New Jersey have been most aggressive in readying for the big new- (or neo-) Panamax container ships. “After all this time we still don’t have a definitive sense of what will happen”.
The overhaul is its own epic story. It will enter from the Atlantic Ocean and after few hours exit into the Pacific Ocean. In addition, the Panama Canal Authority, which operates the canal, is offering what Kemmsies called “frequent flyer”-type volume discounts on fees charged to use the new locks”. The gates, each weighing thousands of tons and soaring more than 100 feet in the air, were then installed into grooves with the help of remote-controlled vehicles resembling giant skateboards. However, outstanding disputes between the Spanish- and Italian-led consortium that carried out the work and the Panamanian government could yet hike that figure by hundreds of millions more.
The project was plagued by cost overruns, delays and infighting. Eight workers died in construction accidents.
“It’s important to remember that the canal does not create demand”. The maximum load is almost three times as big as it used to be.
World trade should also benefit from what will essentially be an inter-oceanic highway for goods between the United States and Asia.
Europe, until being convulsed by the Great War that began the same month the canal opened, had been a major shipper of goods to the Americas.
REUTERS/Carlos JassoREUTERS/Carlos JassoREUTERS/Carlos JassoA floating gate closes during a test of the new set of locks of the Panama Canal expansion project on the Pacific side in Cocoli, on the outskirts of Panama City, Panama June 23, 2016. Consultancy Drewry Supply Chain Advisors had calculated that, as recently as March, rates on the rail portion of an eastbound intermodal move from Los Angeles to Chicago had declined at a much slower pace than the port-to-port component from Shanghai to Los Angeles, where spot rates had virtually collapsed.
Ports on the East Coast and the Gulf of Mexico – including New York, Miami and Houston – have been frantically gearing up. The ports of Miami, New York and Houston have deepened their harbors, expanded rail access and installed enormous cranes to service the massive ships.
More cargo, revenue and jobs will come Georgia’s way, backers say, with metro Atlanta and its welter of warehouses and trucking terminals taking the lion’s share of new business.
Kemmsies said in an e-mail that the railroads, as publicly traded, private-sector companies, have a “natural conflict of objectives” with West Coast ports.
That could be bad news for the Southern California ports.
Savannah’s past success – the fastest growing US container port over the last 15 years – may also lessen the canal’s impact.
Paul Bingham, a shipping economist at Boston-based EDR Group, predicted the canal expansion’s global impact will be small. “If you lose that cargo, the income doesn’t go to Californians, it goes to those other ports”. So it behooves them to use the first suitable port. “Port authorities want a lot of volume”. “We may lose a little bit of business there”. But neither the world nor the canal are as they appeared in 2007. “It’s now at a point of equilibrium with the West Coast”.
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Ports on the East Coast have been busy preparing, somewhat like Seattle and Tacoma a century ago. One reason why this is so is because Arctic shipping is still too unpredictable for shippers. Since April, the name Panama has been more quickly associated with the “Panama Papers” scandal than the canal.
