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The Widening of the Panama Canal Opens New Doors for the Region
From Universia-Knowledge@Wharton
Considered one of the most important public works projects in the world, the widening of the Panama Canal is much more than a source of national pride for Panama. The Canal is the principal economic engine in the Central American isthmus and a pillar of international trade, connecting the Atlantic and Pacific oceans – and, with them, commerce between Asia and Europe. Its importance explains the high profile that the project has had ever since it was begun in a referendum in 2006, when Panama's population decided that it wanted to carry it out. In 2014, the Canal will open its sluices with a new series of locks, amid events commemorating its centennial. According to experts interviewed by Universia Knowledge@Wharton, a sea of economic numbers and other data support the critical nature of this infrastructure project for Panama and the region.
Vielka Vasquez de Avila, a professor at the University of Panama, notes that currently, "4% of world trade" passes through the Canal, and thanks to its widening, "we will be in optimal condition, starting from 2015, to deal with what could be a possible increase of up to 6% of world trade through the Isthmus of Panama." This increase is a response to various factors. On the one hand, the mere announcement of the widening project has already sparked an increase in the capacity of vessels. Ultimately, authorities expect a doubling in the number of tons that will pass from the Atlantic to the Pacific, to reach 600 million tons a year, compared with 340 million today. According to a report by the Panama Canal Authority (PCA), the governmental entity that runs the Canal, this spectacular increase will come thanks to the new series of locks that have been designed to handle the "Post-Panamax" generation of mega-ships, whose enormous dimensions enable economies of scale and, at the same time, reduce operating costs per ship by from 7% to 17%. ("Panamax" ships are the largest that can fit through the Canal as it currently exists.) Their length of 366 meters is equivalent to more than seven Olympic swimming pools, enabling the vessels to hold up to 12,000 containers.
One of the reasons that Panamanian authorities decided to go ahead with the widening project was the pending loss in the competitiveness of the current infrastructure, which cannot service Post-Panamax ships. Growing demand for these mega-ships will mean they will represent 37% of the global fleet of container ships in 2011, which explains the overwhelming need that the Isthmus had for adapting to them. After hundreds of studies, the Panama Canal Authority concluded that widening the canal would mean its market share in the Northern route from Asia to the Eastern United States would increase from 38% to 41%, compared to the decline that it would suffer if it continued with its current infrastructure. That would have relegated its share of the market to only 23%.
The Suez Canal and the U.S. intermodal system (where ships arrive in port and the cargo is shipped by land across the country) are the main rivals of the Panama Canal. In addition, there could have been new competitors interested in taking the attractive piece of the pie represented by the growing maritime traffic between the Atlantic and the Pacific. Juan Carlos Martínez Lázaro, a professor at the IE Business School who is an expert in macroeconomics, notes, "Mexico and Nicaragua also planned to connect the two oceans through their respective territories." In Mexico's case, the model would have been similar to the current U.S. intermodal network. In the case of Nicaragua, the country analyzed the possibility of connecting the two coasts by river canals, with an infrastructure similar to what Panama has. >>> Go to Full Story >>>
Panama Canal Project Opens a Tropical Window
By NATALIE ANGIER / The New York Times
THE CULEBRA CUT, Panama — You can't leave Aldo Rincón alone for a moment.
As a small knot of scientists and visitors dressed in hard hats and orange safety vests milled around on the banks of the Panama Canal, chatting about the $5 billion expansion program now under way to widen the storied canal and so accommodate the ever-fatter freighters that ply the planet's seas, Mr. Rincón, 30, quietly pulled a few digging tools from his backpack. He squatted down near an unremarkable-looking patch of pebbles and broken rock and began methodically scraping away in the dirt.
The helmeted throng wandered off briefly to inspect a sloping chop of sedimentary and volcanic layer cake that the construction project had exposed nearby. On returning to Mr. Rincón and his rasping trowel, scientists and guests alike gasped with amazement. In a mere 15 minutes of work, Mr. Rincón, a paleontology intern with the Smithsonian Tropical Research Institute, had unearthed a big, beautiful fossilized femur bulging up pertly from a sedimentary substrate. The bone was about seven inches long and so flawlessly preserved it looked fit for a soup pot.
The five-year Panama canal expansion project, begun last year, offers scientists a kind of drive-by canyon experience, a brief yanking back of the chlorophyll cloak. Using dynamite, bulldozers, backhoes, excavators and many, many shovels, workers will be rearranging hundreds of millions of cubic meters of dirt and rock. "There’s nothing else like it, to get this much exposure in the tropics," Dr. Montes said. "We cannot lose this scientific opportunity." >>> Go to Full Story >>>
