Channeling trade in Panama

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The calm waters of the Panama Canal belie the frenzy of activity that is unfolding across this small country. As the gateway for more than 13,000 ships, carrying roughly three per cent of all world sea trade, the canal is one of Panama’s most important assets. The expansion of the canal will benefit not only shipping companies, but also customers and world trade in general.
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Watch Maersk Edinburgh sail through the Panama Canal 00:39

The Panama Canal

  • The Panama Canal serves 13,000 vessels per year, 144 maritime routes, connecting 160 countries
  • The 48-mile long canal allows ships to pass between the Pacific Ocean and the Caribbean Sea, saving more than 2,000 miles in a journey from Shanghai to the US East Coast via Panama vs Suez and up to 5,000 miles from Ecuador to Europe via Panama vs the southern tip of South America, Cape Horn
  • Today, it takes approximately 10–12 hours to traverse the canal, about half the time is spent waiting due to traffic

Bigger, better Panama Canal opens for business

Heads of state, regional business and community leaders gathered at the Panama Canal to celebrate the completion of the $5 billion expansion project that will improve the competitiveness of one of the world’s two most important short-cuts for trade.

Latin America has made great progress in the last decade, and Panama is no exception. The country has invested in a four-year, USD 13.6 billion government investment programme, intended to remake the country as a shipping and logistics hub.

The results have been telling; Panama’s economic growth rate is one of the highest in Latin America, and one of the highest in the world, with gross domestic product rising an average of 8% annually for the past five years, to USD 51,7 billion in 2015 (Source: World Bank).

Serving world trade

The expansion of the Panama Canal represents the largest project at the Canal since its construction 102 years ago and shows the Panama Canal Authority’s commitment to enhancing global trade by accommodating larger vessels.

The Panama Canal expansion

THE OLD LOCKS in the Panama canal are 33.5m wide, 12.8m deep and 304.8m long.

Early container ship: 17m wide, 137m long, 9m draft, 800 containers (TEU)

Maximum ship size, existing locks

32.3m wide, 294.1m long, 12m draft, 5,000 containers (TEU)

THE NEW LOCKS in the Panama canal are 55m wide, 18.3m deep and 427m long.

Maximum ship size, new locks: 49m wide, 366m long, 15m draft, 13,000/14,000 containers (TEU)

Changing trade patterns

The new Panama Canal locks reshape world shipping – accommodating ships which can take almost three times the load of current vessels. It promises to lower the costs of North-South trade.

A game changer for modern trade

Before the construction of the Panama Canal in 1914, cargo ships had to take the treacherous path around Cape Horn, the southern tip of South America, adding thousands of miles and considerable cost to their journey.

Hubs and spokes

Investing in future capacity | When it opens in 2019, the new terminal in Tangier, Morocco will take on more than just cargo. It will be responsible for upholding the region’s importance as a distribution centre for global trade.

The expansion will mean an estimated 3% increase of the cargo volume and will have a direct notable impact on the trade lane between Asia and the US East Coast since 70% of the Panama Canal traffic either starts or ends in US ports.

Enabling growth in the Americas

With modern infrastructure and improved access to international trade, Latin America´s economic growth (projected by IMF to be 1.5% by for 2017) can be significantly improved.

Central and South America remain under-represented in global shipping, in part due to inadequate infrastructure. APM Terminals is directly addressing this deficiency with multi-billion dollar investments in deep-water terminals in Lázaro Cárdenas, Mexico and Moin, Costa Rica as well as Cartagena, Colombia. All three terminals will be able to accommodate the larger vessels entering into Latin America trade lanes with the widening of the Panama Canal, providing significant opportunities for these countries to grow their exports.

Panama Canal expansion

Similarly, investments to secure access for larger vessels in US East Coast ports are underway and required to make them viable for e.g. the New Panamax vessels to be deployed on Maersk Line’s Asia–US East Coast services.

An example is the Port of New York and New Jersey that most likely will play a role in the tipping point towards 14000 TEU vessels from Asia–US East Coast with the heightening of the Bayonne Bridge, expected to be completed by the end 2017. In addition, larger cranes and dredging will be necessary for this to happen.