WORKERS at a fish market in Panama City disagree on the
benefits of the country’s newly widened canal. One optimistically hopes the
government will have more funds to pay for air-conditioning in their workplace.
Another draws a finger across his throat and says, “The people will get
nothing.” A third calls it “the biggest opportunity” in Panama. The last
verdict is certainly true of the government’s take. The revenue it receives
each year from the Panama Canal Authority (ACP) is expected to double to around
$2 billion in 2021.
The ACP will be able to charge more for passage to bigger
ships now that massive new locks have been built at both the Pacific and
Atlantic ends of the canal and channels are deeper and wider. The $5 billion
venture will be inaugurated on June 26th when the first vessel officially sails
through.
Over 960m cubic metres of cargo passed through the canal in
2015, a new record and an amount that Francisco Miguez of the ACP calls “the
maximum we could do in the existing locks”. The expansion increases capacity to
1.7 billion cubic metres.
The biggest container ships that could use the old canal,
known as Panamaxes, can carry around 5,000 TEUs (20-foot equivalent units, or a
standard shipping container). Neo-Panamaxes that will use through the new locks
can carry around 13,000 TEUs. Although the world’s largest ships have space for
nearly 20,000 TEUs, the majority of the global fleet will now fit through the
canal.
The expansion will also change how freight moves around the
world. Traffic will probably divert from the Suez Canal since larger vessels now
have the option of going through Panama. America’s east-coast ports should get
busier.
In the past, many
containers heading from Asia to the eastern seaboard arrived at west-coast
ports, such as Los Angeles and Long Beach, and then travelled to their
destinations by road or rail. Bigger ships may now sail directly to ports in
the Gulf of Mexico or the east coast, though shipping times will be longer. And
vessels carrying liquefied natural gas from America’s shale beds will be able
to pass through the locks for the first time, heading to Asia. They are
expected to account for 20% of cargo by volume by 2020.
East-coast ports are preparing for the windfall, says Mika
Vehvilainen of Cargotec, a maker of cargo-handling equipment. Ports in
Baltimore, Charleston, Miami, New York and Savannah are updating facilities to
accommodate the Neo-Panamaxes. The Port Authority of New York and New Jersey
plans to spend $2.7 billion on enlarging its terminals and shipping lanes, and
a further $1.3 billion to raise a bridge by 20 metres.
Shipping lines’ costs will also fall because ports are
automating facilities at the same time as preparing them for Neo-Panamaxes,
says Kim Fejfer, boss of APM Terminals, the ports division of Denmark’s Maersk
Group, the world’s biggest shipping firm. Ports in the Gulf of Mexico are
already embracing these new technologies.
Widening the Panama Canal should certainly give some parts
of the shipping industry a boost. Customers may not, however, benefit much from
the reduction in shipping costs.
