Panama Canal expansion may spur new era of global trade
PANAMA CITY, Panama — Huge yellow dump trucks look like Tonka toys in a sand pile as they haul tons of rust-colored dirt and basalt rock from a 56-foot-deep gash in the earth that will become a new access channel in the $5.25 billion expansion of the Panama Canal.
The trucks keep rumbling up muddy terraced slopes as a quickmoving storm blurs the horizon, but the rain chases away workers pouring concrete for a mammoth new set of locks that will lift super-size ships for their transit across the narrow Isthmus of Panama.
The sun returns and workers pile back into the pit. They’re part of a workforce of nearly 13,000 people who labor around the clock every day of the week on the canal update.
By April 2015, the trench where workers in lime-green safety vests pour concrete and excavators take bites out of the earth will all be under water — flooded and ready for the ever-bigger vessels revolutionizing international trade. The expansion is expected to double the canal’s capacity.
The 2015 target is about six months behind schedule, but U.S. ports are still scrambling to ready their
channels for so-called postPanamax ships and some say they welcome the reprieve. At this point only Baltimore and Norfolk, Va., have channels deep enough to handle fully loaded post-Panamax vessels.
Call it the race for deep water as ports up and down the East Coast, including PortMiami and Port Everglades, make plans to dredge their channels, shore up their docks or try to rustle up funding for renovations to receive the big ships.
PortMiami is further along than most and is hoping that early advantage and its position as the first major U.S. port north of Panama will translate into making it a preferred port of call for post-Panamax ships.
While the 50-mile-long Panama Canal has provided a maritime shortcut between the Atlantic and Pacific for the past 98 years, it’s just about maxed out.
This year vessels from the four corners of the globe — car carriers from Japan, bulk carriers loaded with soybeans and wheat from the U.S. heartland, oil tankers, towering container ships carrying the output of Chinese factories to U.S. retailers — are expected to move a record 332 million tons of cargo through the waterway, said Jorge Quijano, chief executive of the Panama Canal Authority.
That’s only about 20 million tons short of the canal’s capacity, he said. The canal is also popular with cruise lines and dozens of cruise ships are being built that exceed the size limits of the current canal. But the more immediate problem is that the huge cargo ships increasingly favored for trade with Asia are too wide, too long and too heavy for the current canal, which was designed to handle the largest military vessels of a century ago.
NEED OF THE HOUR
With about half of the world’s existing or planned cargo fleet in the post-Panamax category — exceeding the specifications for the largest ship that can fit through the existing locks — the Panama Canal must expand or risk losing mark share to the Suez Canal, U.S. West Coast ports or even potentially the Northwest Passage if global warming makes maritime traffic feasible some day.
And post-Panamax vessels aren’t even the biggest on the high seas. Panamax Plus ships, such as most U.S. tankers that carry liquefied natural gas bound for Asia, are five times too big for the Panama Canal and must go through the Suez Canal or around the Cape of Good Hope.
While Panamanians take great pride in their canal and their success in running the waterway since the United States returned the canal to Panamanian hands in 1999, there’s still plenty at stake for the United States with the expansion.
Two-thirds of the goods that move to and from the United State cross the Panama Canal, and the United States is the canal’s leading customer.
U.S. retailers such as Walmart, Lowe’s, Home Depot and Target are clamoring to import products from Asia to the U.S. market not only more quickly but also more cheaply and U.S. exporters also want to move their containers faster.
“Time is money,” says U.S. Trade Rep. Ron Kirk. The expansion of the canal “can have an explosive impact on our ability to move goods from the United States to other parts of the world — and for areas that are uniquely situated like Florida, it could be a huge benefit.”
If construction of the original Panama Canal, which was completed in 1914, was the moonshot of its era, the current canal project also is something of an engineering marvel.
Some 4.2 million cubic meters of concrete — about 40 percent more than for the original canal — will be poured by the time the new three-chambered locks are completed. Each 180foot wide, 1,400-foot long chamber could fit the Empire State Building laid on its side. The gates for the locks, which are being fabricated in Italy, will soar 10 stories high.
Panama’s new set of locks will be 180 feet wide, which will allow a ship with a 160foot beam to pass with ease. The current canal can only accommodate ships that are no more than 106 feet wide and 965-feet long with a draft of 39 1/2 feet, instead of the 50 feet required by post-Panamax vessels. Some of the largest ships in this category — with containers stacked seven deep on their decks — look like they’re barely able to squeeze through today’s locks.
Most of these vessels carry around 5,000 standard containers. But the post-Panamax behemoths can stretch the length of three football fields and will carry as many as 13,000 containers as they make the eight-to-10-hour journey through the canal. In terms of tonnage, they’re three times as heavy as current Panama Canal ships, hence the need for deeper channels and wider locks.
NATIONAL PRIDE
The canal expansion isn’t about moving more ships so much as accommodating bigger ships. Since 1965, the number of ships traversing the canal has remained at about 14,000 but the tonnage they transport has tripled.
“The business of the canal is to move cargo, not vessels. It’s basically how much tonnage can you move. The expansion makes the canal much more efficient,” said Alberto Aleman, the former chief executive of the Panama Canal Authority.
Quijano, who succeeded Aleman in September, works out of the same landmark building high on a hill above the canal’s Pacific entrance. It has been the nerve center for the waterway’s operations since the United States completed the canal, but now only one flag — the Panamanian one — waves from atop the building.
During a recent interview, Quijano apologized for his construction boots and work shirt but explained he had just returned from Colon where he was checking the progress on the new Atlantic locks.
But Quijano, a U.S. trained engineer, is used to getting dirty. He served as project manager for the expansion until his promotion and has worked for the canal since 1975 when both the canal zone — a five-mile strip of land on either side of the canal — and the canal itself were still controlled by the United States,
Despite initial fears about Panama’s ability to run the canal after the turnover, the canal authority has proved up to the task and the canal is a source of national pride for Panamanians.
This year the canal will contribute close to $1 billion to the Panamanian government — a figure that Quijano expects to double 10 years beyond completion of the expansion. Canal officials say they run it as a business, rather than as a public utility as the United States did.
Right now the canal authority charges as much as $400,000 for a container ship to use the canal and it’s working out a fee schedule for the new locks. “We need to make sure we attract volume, so we don’t want to charge prices that will be too high,” said Rodolfo Sabonge, vice president for market research and analysis. He said the fee schedule also needs to provide enough incentive so shippers will continue to send smaller ships through the current locks rather than switching all their cargo to post-Panamax vessels.
The canal authority be- gan studying the expansion in 1998 and spent $40 million commissioning more than 150 studies to come up with its plan. Panamanian voters approved the costly project in a referendum held on Oct. 22, 2006 and work began the next year.
The canal authority is financing 55 percent of the expansion with its own funds and the remaining 45 percent through a loan from five multilateral lending agencies, including the Inter-American Development Bank and the European Investment Bank.
Currently three sets of locks — two on the Pacific side and one on the Atlantic side — help ships step up or down to the water level of Lake Gatun, an artificial lake that is 85 feet above sea level, and they’ll continue to function for smaller ships after the expansion is completed.
The expanded section will use much of the existing canal, whose channels are being dredged to make them wider and deep enough for post-Panamax ships, but it will operate with just a single set of locks on the Pacific side instead of the current two.
To connect the new Pacific locks to the canal, a 3.8-mile channel is being excavated and a coffer dam is being built to buffer the new waterway from the existing canal, which parallels it and has a slightly higher water level. To expand water resources for canal operations, the water level of Lake Gatun is also being raised nearly 16 inches.
The new locks have rolling gates that slide in and out of concrete lock heads while the current gates open outward to let a ship pass.
Since the expansion began, about 25,000 people, about 90 percent of them Panamanian, have worked on various phases of the project.
HURDLES ON THE WAY
Despite the scope of the expansion, it is still a far different from the last century when steam shovels carved the channel for the canal out of the jungle with dirt trains running on tracks along what is now the bottom of the canal hauling out tons of rock and earth.
Workers had to blast through the rock of Culebra Cut and tens of thousands of laborers — most from Barbados and other Caribbean islands — succumbed to malaria, yellow fever, precarious living conditions and the perils of hauling boxes of unstable dynamite. Since the expansion began, there have been four deaths.
“I take my hat off to those who built the original canal. The projects are comparable in some ways terms but the times are so different. They didn’t have the technology; they had to overcome huge sanitation problems; people were buried by slides; the explosives they used weren’t stable,’’ said Quijano. “And there really wasn’t any infrastructure in Panama at the time — just a small port and a railway built in the 1850s.’’
This time around there’s a lot more equipment and far fewer people involved in canal construction, said. Ilya Espino de Marotta, engineering and programs management executive vice president for the expansion, and there are more water-saving features built into the design.
The canal authority had hoped all work on the expansion, including six months of testing of the new locks, would be done by October 2014, the 100th anniversary of the opening of the canal, but the consortium building the $3.2 billion locks says a 2015 delivery date is more likely, she said.
Still, Quijano expects water will begin flowing into the new locks in September 2014 with testing beginning that October.
“It hasn’t been an easy task, but we may recover some of the lost time,” Quijano said. “I haven’t changed my contract date.”