Panama's Great Canal Expansion
27 July 2010
Panama Canal is halfway through the construction period and moving rapidly toward completion.
Unlocking Panama’s riches
Panama Canal Authority’s (APC) dramatic US$5.25 billion canal expansion project officially started in September 2007 after Panamanian citizens approved it by national referendum on a substantial 76.8% vote the previous year. It is expected that the work on the Panama Canal will be completed in 2014 and by 2025 it will have doubled in capacity.
When work began back in August 2007, the world economy had already suffered a series of blows. Recession was the word on everyone’s lips as global trade fell for the first time in a quarter of a century. And this is when the ACP started digging to improve Panama’s future economic prospects. At the time of its inception the project was hailed as the route to steering Panama to First World country status. The project has in fact been estimated to reduce poverty by a generous 30%.
A brief history
Sandwiched between Costa Rica and Colombia, Panama’s canal has been used by ships since 1914. As well as being a shortcut for battleships the canal was used for trading. Since the 1970’s merchant vessels have been growing in size so that today’s container ships can carry more that 12,000 boxes. The Panama Canal’s passageways are limited to containers ships that carry 4,500. Equating to 37.5% of the modern container ships capacity. Since the mid-1990s it has become obvious that regeneration of the canal was a necessary move.
Previously American-owned, The ACP has increased Panama canal’s commercial value in their ten-year ownership, adapting tolls to different cargoes and charging more for additional services. Since 1998 the average toll has risen by 70%. Transit times have also shorter and more predictable, attracting container lines.
The task at hand
The new Panama Canal system consists of the large Gatun Lake, the small Miraflores Lake and two mouths to the Atlantic and Pacific Ocean where the Gatun Lock and Miraflores Lock are to be situated. At the centre of the developments are the two new lock complexes. Gatun Lock is set on the Atlantic Ocean side and Miraflores Lock on the Pacific side of the canal.
As ships have to be lifted 26 meters from the ocean in order to enter the canal and lowered again on the other side the locks will all have three chambers and additionally three water-recycling basins. The new locks will be 40% longer and 60% wider than the existing locks (each lock chamber dimensions are- l:305m, b:33.5m, d:25.3m.)
The project requires dredging the canal structure and widening and deepening the existing navigational channels plus blasting an access channel to the new set of larger locks. Basalt from the excavation will be used to make concrete to build the locks and a total of four dry excavation projects have to be executed.
The canal project will increase Gatun Lake’s maximum operating substantially. The canal will be able to handle all but eight of the world’s largest container vessels, including supersize tankers and bulk carriers. The ACP forecasts that, thanks to the expansion, total tonnage load will rise from 280m tonnes in 2005 to 510m in 2025. Container traffic should triple to about 300m tonnes.
The owners of global shipping firms, who are on the ACP’s advisory board, pushed for expansion as soon as Panama took over. “Hardly anybody is building smaller container ships now,” says Jürgen Harling, group vice-president of the Danish A.P. Moller-Maersk, the world’s biggest container-shipping line. “With big vessels you need fewer of them, say, five to run a regular service from China to (America’s) West Coast, compared with eight or nine to run a similar service through the canal at its present size.”
By the time the construction project is completed in 2014, it will have cost an estimated $5.25 billion, more than a fifth of Panama’s GDP in 2008. Of this, $3 billion will come from retained earnings, the rest from lenders. Recent investments have seen US$200 million from the Japan Bank for International Cooperation and US$100 million from the European Investment Bank.
According to the ACP, the project is currently on time and within budget.
Today 1 million Panamanians are poor out of a population of 3.4 million. The ACP estimates that the expansion will increase Panama’s annual growth rate by 1.2 percentage points, improving Panama’s GDP to 2.5 times the 2005 level by 2025. Based on these figures 100,000 Panamanians would be lifted out of poverty by 2025. But a direct explanation of how an improved canal system will raise the living standards of the country’s people is missing.
The APC (Panama Canal Authority) has environmental factors to consider. As well as taking responsibility for re-homing the native animals that live on the marshland surrounding the site, the APC has a contract with the Smithsonian Tropical Research Institute for the identification, recovery and analysis of paleontological remains. Paleontological material collected in February 2010 included mammal, crocodile, shark and fish teeth; mammal and reptile bone fragments; invertebrate marine fossils; and plants remains.