Monday, January 20, 2014

The Panama Canal Expansion Project

article from June 15, 2011
By Jamie Douglas

It will be 97 years ago this coming August 14 from when the Panama Canal formally opened to the world’s shipping traffic, with the passage of the first ship, the SS Ancon, changing forever the way freight and passengers would travel from the Unites States’ east coast and gulf ports to reach the far east and the US west  coast. No more would fragile vessels have to travel the length of the Americas twice, passing through Cape Horn, one of the most dangerous ocean passages in the world, the graveyard of many ships and final resting place of thousands of brave sailors. Instead, the Panama Canal cuts 8,000 miles of hazardous travel off the voyage that can now be made in a matter of hours.

Shortly after the opening of the Canal, the first Great War broke out in Europe, emphasizing the strategic importance the Canal had for the US fleet on both coasts. The transit time from San Diego, CA, to Norfolk, VA, was reduced to a third of what it had been, with a concurrent reduction of risk. Between the two World Wars, traffic through the canal was not what it could have been, due to the worldwide economic depression. But after 1945, things really picked up until a few years ago, when the Canal reached a saturation point where transiting ships lay at anchor on both sides of the passage for days waiting their turn to cross the isthmus at a cost of about $40,000 per day per vessel. So the canal was effectively maxed out, mostly by Panamax (maximum size for the Panama Canal) vessels while, due to the rapid expansion of trade between all the developed nations, traffic between Europe, North America and the Orient grew at a rate that soon saw construction of vessels exceeding the Panamax limitations.

Panamanian President Martín Torrijos announced an ambitious project in 2006, realizing that some of the larger vessels were now transiting the Suez Canal because of size limitations for the Canal and no waiting time there. The project would involve the building of a third but larger set of locks and water conservation measures that would recycle great amounts of fresh water from Gatun Lake. The new locks will be 1,400 feet long and 180 feet wide, accommodating today’s largest vessels, and also providing passage for US aircraft carriers. The entire project, which is well under way now and is slated to be completed in 2014 (to be seen!), has a projected price tag of US$15-25 billion (before the 20% devaluation of the US dollar). The construction project has already brought great benefits to the population of Panama in the form of fairly well-paying jobs as well as infrastructure improvements that benefit a large segment of Panamanians. After the opening of the third lane, which will double the capacity of the canal, revenues are supposed to allow the government to spend more money on anti-poverty programs and the general improvement of the welfare of Panamanian citizens, more than one-third of which live below the poverty line.

The project has its opponents, as any project of this dimension would. There are environmental concerns that have been raised as well as organizations that are flatly stating that the employment figures of 35,000 jobs created is grossly exaggerated because most jobs will be filled by foreigners, as there are not enough qualified Panamanians. In my opinion, that is a very shortsighted outlook. The infusion of an additional several billion dollars into the coffers of the nation is sure to have a positive effect on the nation as a whole.

Jamie Douglas
San Rafael, Mendoza
Where the Malbec Wine is Always Fine!

[Image: of SS Ancon passing through the Panama Canal in 1914]

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