Panama Canal expansion now projected to be completed by 2016

panamalocksmaxvessell-300x203Packnet has written several posts about the Panama Canal expansion project and its potential impact on US shipping infrastructure.   This post is an update to the latest developments and answers some common questions:

What is the Panama Canal Expansion?

The Panama Canal expansion project consists of creating another lane of traffic and expanding the capacity of the locks while widening and deepening existing channels with the goal of doubling the existing capacity by its completion.

How much does this project cost?

Current projections have the project costing 5.25 Billion dollars.   There are expected to be 1.6 billion dollars of cost over runs.

What is the timeline of the project?

The project was conceptualized and funded starting in 2006.  The first actual dredging started in 2009.  The completion was originally scheduled for early 2014.  The project has been plagued by cost overruns, labor strife, and delays over funding disputes.  The results of those delays have pushed project completion into 2016.

What specifically does the Panama Canal Expansion Accomplish?

The project specifically will (Source)

  • Build two new locks, one each on the Atlantic and Pacific sides. Each will have three chambers with water-saving basins.
  • Excavate new channels to the new locks.
  • Widen and deepen existing channels.
  • Allow ships around one and a half times the current width and length, with over twice as much cargo to pass.
  • Raise the maximum operating level of Gatun Lake.

The project will also significantly improve efficiency as the new locks will be easier to maintain and are projected to utilize 7% less water.  It will allow ships that are 50% wider and 25 % longer to use the canal; existing container capacity per ship should go from 5000 TEU to 13000 TEU.  TEU is Total equivalent 20 ft container units.

What is the expected impact on US shipping?

The exact economic and infrastructure impact on US commerce and shipping is hotly debated, but potentially the project could result in:

  • Less traffic to the US west coast ports
  • More traffic to south and south east US ports
  • Significant impact on intermodal US shipping as railways and roads are constructed to adapt to the changes in port traffic.
  • Shipping costs can decrease for many industries, there will be more options for shipping product from the Midwest to Asia, and this is particularly significant for US agriculture.

Why does Packnet blog about the Panama Canal Expansion?

Packnet blogs about topics relating to packaging and shipping of industrial products.  The Panama Canal expansion can potentially impact shipping costs and transit times for export and importing products.

Sources

http://en.wikipedia.org/wiki/Panama_Canal

http://www.pancanal.com/

http://www.bnamericas.com/news/infrastructure/panama-canal-expansion-strike-ends

http://en.wikipedia.org/wiki/Panama_Canal_expansion_project