THIS YEAR MARKS THE 100TH ANNIVERSARY OF THE OPENing of the Panama Canal. Even though it remains today a marvel of
engineering and construction, not to mention perseverance, it is
quickly becoming functionally obsolete. Not only is it inadequate
for the traffic volumes now flowing through it, but it is also unable
to accommodate today’s largest containerships.
In 2006, Panamanian voters approved a $5.25 billion expansion
of the canal, which is now about 70 percent complete and scheduled
to be fully operational by June 15, 2015. A third “lane” is being
added, with one set of locks constructed at the Pacific end and one
at the Atlantic. Each set of locks will have three chambers, each
of which will measure 1,400 by 180 feet and be
60 feet deep. When finished, they’ll be able to
accommodate ships measuring up to 1,200 feet
long and 160 feet wide, with a draft of up to 50
feet. As it relates to cargo capacity, the expanded
canal will be able to handle ships carrying up
to 14,000 twenty-foot equivalent units (TEUs).
Currently, the canal cannot accommodate vessels
larger than 5,000 TEUs.
As for what this means for shippers, the
expansion will open up new routing options for
so-called post-Panamax vessels, ships that have
been unable to use the canal because of their size.
Up until now, the larger U.S.-bound ships have been limited to
West Coast ports or have used the Suez Canal to reach a few East
Coast destinations. Once the work in Panama is complete, they’ll
be able to call on East and Gulf Coast ports—assuming these ports
can deepen their harbors to accommodate the larger vessels’ drafts.
A major question remains, however, as to just how much the
newly enlarged canal will change international distribution. Some
industry watchers predict a wholesale change in shipping patterns,
with significantly more tonnage moving to East and Gulf Coast
ports. Others foresee substantial growth at South American ports
where larger ships will call and transload to smaller vessels for “last
mile” movements to the U.S. A third, larger group is not sure what
will happen. There are so many possible influencing factors, it is
difficult to formulate a prediction with any degree of confidence.
For example, there will still be very efficient landbridge options utilizing rail intermodal service. Some carriers have become comfortable with using the Suez and will no doubt continue to do so. And
nearshoring from China to Mexico could eliminate some shippers’
need for the canal altogether.
BY CLIFFORD F. LYNCH fastlane
The $5.25 billion question
Further complicating the forecast is the
emergence of the megaship. Last year, Maersk
put the first Triple E containership into service (the carrier has ordered a total of 20 at a
cost of $190 million apiece). With a capacity
of 18,000 TEUs, these ships are the largest
and most efficient in existence. According to
Bloomberg Businessweek, a Triple E can carry
18 million flat-screen TVs, weighs 165,000
tons when fully loaded, and is three feet taller
than the largest cruise ship.
But there’s another thing
about the Triple E: It will
be too large to pass through
the Panama Canal even
after the expansion project is finished. The vessels
measure 1,312 feet long
by 194 feet wide, and the
new Panama Canal lock
chambers will only accommodate ships up to 1,200
feet long and 160 feet wide.
These ships, in fact, are too
big for any port in North America. On top of
that, the Triple E is configured so that it can
carry an extra row of containers, but currently, there is no crane in North America that has
sufficient reach to handle them. For the time
being, these vessels will be used primarily in
the Asia–Europe market.
These complications notwithstanding, there
is no question that the enlarged canal will
alter the dynamics of international shipping
and even affect domestic distribution patterns. The questions are how, and how long it
will take.
Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider of logistics management advisory services, and author of
Logistics Outsourcing – A Management Guide and co-author of The
Role of Transportation in the Supply Chain. He can be reached at
cliff@cflynch.com.
