Four ways the new Panama Canal will change the world

The expanded Panama Canal has opened, and it’s being hailed as an historic moment for global trade. It can handle bigger ships and increased traffic. But what does this mean the world? Here are four ways the canal’s improvements will change our world for the better.

From the cost of living to jobs and the environment, global trade impacts your life every day. As trade flows increase through the Panama Canal, global markets will flourish.

 Video Canal

Being able to accommodate bigger vessels and handle more traffic not only benefits the global economy but also impacts our daily lives.

Here’s how:

1. Lifting people out of poverty

In Panama alone, more than a quarter of the population live in poverty. The government’s five-year plan aims to improve the lives of Panamanians, and it’s counting on the largest sector of its economy – logistics, an important sector in trade – to help it reach its goal of creating 120,000 jobs and lifting 150,000 people out of extreme poverty.

Beyond Panama, ports in neighbouring Latin American countries and along the east coast of the US are modernising their infrastructure to accommodate the expected increase in trade. With investment in infrastructure comes jobs and new opportunities to improve the economy, as we’ve seen in other regions such as West Africa.

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2. Making your money go further

Bigger ships carry more containers. The freight costs per unit of shipping come down, and with these the price of goods. When Panama gave the canal expansion the go-ahead in 2006, the US ambassador at the time, William Eaton, was quick to see the benefits for consumers, anticipating “an impact on pocketbooks”.

The knock-on effect of the expansion doesn’t stop there. US energy markets are also set to gain, as the drop in natural gas, propane and petroleum shipment costs will make it more attractive to export.

To put the scale of commercial savings – and the benefits for the consumer – into perspective, the alternative journey via the west coast of the US and over land to the east coast costs roughly $600 per container more than going down the Panama Canal, depending on a ship's operating costs, which are around $60,000 a day.

THE OLD LOCKS in the Panama canal are 33.5m wide, 12.8m deep and 304.8m long. THE NEW LOCKS in the Panama canal are 55m wide, 18.3m deep and 427m 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)

Maximum ship size, new locks

49m wide, 366m long, 15m draft, 13,000/14,000 containers (TEU)

3. Thinking global, acting local

Of the 100-plus countries that ship through the canal, just 10 account for more than three-quarters of its traffic, from Asia to South America to the US. These flows are likely to increase in the coming years.

In the US in particular, there’s much anticipation about trade flows shifting from the west coast to the east coast. Ports and terminals on the east and Gulf coasts of the US have been gearing up to handle this trade. Around 16% of small-to-medium-sized businesses are looking to expand their Latin American and Asian operations, with new bases already being set up in Florida.

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4. Helping the planet

Shipping as an industry has been under pressure to reduce its carbon emissions. Maersk Line has already implemented a successful programme that has seen carbon emissions drop by 42% per container by the end of 2015. And now we’re seeking to lower that even further to a 60% cut in emissions per container by 2020. With bigger, more modern vessels the canal will be able to further reduce the carbon footprint of its operation, as will the companies that operate within it.

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Green shipping has become a big part of doing green business today 3:51

Shipping emissions are estimated to be cut by 16% per tonne-mile. In fact, it’s expected that during the first 10 years of operations on the newly expanded canal, CO2emissions will drop by an estimated 160 million tonnes.