Panama Canal expansion moving full steam ahead
By Dialogo May 09, 2013
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PANAMA CITY, Panama – The expansion of the Panama Canal, a massive, US$5.2 billion project, is a little more than halfway done.
The project, which started in 2007 and should be complete by mid-2015, will allow the Panama Canal to handle vessels much larger than those that currently transit the waterway, known as Panamax, according to Irvin A. Halman, president of the Panama Chamber of Commerce.
“This investment will double the canal’s capacity, increase operational efficiency and provide economic benefits that will improve the quality of life for Panamanians,” said Daniel Muschett Ibarra, executive manager of Resource Planning and Project Control for the Panama Canal Expansion Program. “With the expansion of the canal, revenues are estimated to exceed US$6 billion per year during the first 11 years of operation.”
After the expansion, post-Panamax ships that are twice as large as Panamax ships will be able to cross from one ocean to the other through the canal within 24 hours.
“We have two catastrophes that we are managing. The first is the hurricane and the second is cholera,” Préval said in a speech broadcasted nationally.
Currently, the maximum dimensions for Panamax vessels are 32.3 meters wide by 294.1 meters long with the capacity to transport 4,000 containers, whereas the maximum dimensions for post-Panamax vessels are 49 meters wide by 366 meters long.
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Post-Panamax ships can carry between 12,000 and 13,000 containers. These huge ships are comparable to the length of the Empire State Building, or four soccer fields long by three basketball courts wide, according to Muschett.
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The expansion consists primarily of constructing new locks or compartments that serve as “lifts” to raise the water level so ships can cross the canal, Muschett said.
“At the moment, structural concrete is being poured for the construction of lock gates and walls,” he added.
The new locks will be 427 meters long by 55 meters wide. The current locks are 320 meters long by 33.53 meters wide.
Thanks to the project, giant vessels will be able to cross the 80-kilometer shortcut in a single day, instead of the 18 to 20 days that it currently takes to transit from one ocean to the other by having to sail through the Northwest Passage or around South America.
So far, the expansion project has generated 28,000 direct jobs throughout its various stages. It is expected to create about 250,000 indirect jobs by the end of the project, according to Muschett.
Specifically, the commission is recommending governments:
End criminalization and mass incarceration of drug users;
Redirect money currently dedicated to the counter-narcotics fight toward public health projects aimed at drug users;
Make sterile syringes available and offer treatment programs, such as opioid substitution therapy for heroin users;
Better report hepatitis C cases by improving surveillance systems and other measures;
Reduce the cost of medicines that can treat hepatitis C by negotiating with pharmaceutical companies and making the drugs more widely available.
In addition to being a landmark change in world trade relations, the canal’s expansion will bring “huge benefits” to the isthmus by way of toll fees and other related services in ports and shipyards, according to Halman.
While the majority of countries see the canal as a means to shorten trade routes, Panama views it as the nation’s largest source of income, as it generated US$1.032 billion in profits in 2012.
Since 2000 when it was officially turned over to the Panamanian government, the canal has contributed US$7.6 billion to Panama’s coffers, according to Muschett.
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Halman added the money generated by the canal is allocated to initiatives to reduce poverty and improve public services and public safety.
Rushing to modernize
The expansion also has sparked a “race” among the region’s ports to increase capacity so they can handle the needs of post-Panamax ships, according to Muschett.
It is expected that once post-Panamax ships are able to use the expanded canal, ports in the region benefit. But first, they must be adapted to receive these megaships, Muschett said.
“Those ports that are prepared to handle post-Panamax ships passing through the expanded canal will be the ones that will benefit from this expansion,” he added. “This will bring progress – not only to our ports but also to the region, as the benefits will result in more cargo and therefore more jobs.”
However, Central America lacks the road and port infrastructure to meet the demands of large ships that will pass through the canal beginning in 2015, according to a report by the Inter-American Development Bank (IDB) released in March.
“In Central America and the Caribbean, only two countries have ports adequately equipped to handle the new vessels that will cross the canal after its expansion,” the report stated.
Those ports are Balboa, on Panama’s Pacific Coast; Manzanillo, Colón, and Cristóbal, on Panama’s Atlantic Coast; and Caucedo, in the Dominican Republic.
Carlos Urriola, vice president of the Manzanillo International Terminal (MIT) in Colón, said the company plans to invest US$270 million in 2013.
Meanwhile, Giovanni Benedetti, commercial director of Cartagena’s Regional Port Authority (SPRC) in Colombia, said they plan to invest US$400 million in the next three years to double the handling capacity of the port to attract more ships from Asia.