By Sara Mayes, President and CEO Gemini Shippers Group
On June 26th, the container vessel Andronikos operated by China COSCO Shipping will make the first transit through the expanded Panama Canal. The ship, with a maximum capacity of 9,400 TEU, will be almost twice as large as the largest ships currently able to transit the canal.
The expansion work on the canal started in September of 2007 and was slated to be completed by 2014 to roughly coincide with the canals 100th anniversary, but construction delays and problems with the canals contractors delayed start the start of operations of the expanded canal until this summer.
The enlargement of the canal encompasses a number of significant construction projects, including the building of a new third set of locks, a new Pacific Access Channel, improved navigation channels, improvement and dredging of navigational channels and improvements to the canal’s water supply. At a cost of 5.3 billion dollars, the expansion cost will represent a sum of 14 times the initial $375 million spent by the United States when the canal was constructed in 1913.
The new canal with its larger locks will double the canal’s capacity, allowing ships of up to 14,000 TEU to transit, versus a maximum of 4,000 to 5,000 TEU today. To achieve this increase in capacity, new locks were constructed with larger dimensions of 1400 feet long and 180 feet wide and 60 feet deep. The current locks are 1000 feet long and 106 feet wide.
This increase in capacity will have a significant effect on the economy of Panama and on global maritime trade. For Panama, the canal, which today takes in almost two billion dollars in fees each year, has secured a strong future in international trade which will remain a large driver in the Panamanian economy. For the almost 14,000 ships which cross the canal each year, the canal represents a significant cost savings versus the long route around South America. For the nearly 3,000 containerships transiting the canal and the shipping lines that operate them, the expanded canal offers the opportunity to expand ship sizes bringing increased cost efficiently to their shipper customers. For US importers this expansion will lead to new deployments of East Coast all water services, changing the economics of cargo flows from Asia to US markets.
While maybe not as dramatic as the canal’s opening in 1913, this new phase of expansion is for sure an industry changing event rivaling the largest changes in marine transportation we have seen in our generation.