Trans-Pacific Partnership

The Huge Impact of the Panama Canal Delay

by Elaine Schwartz    •    Feb 21, 2014    •    1041 Views

The Panama Canal’s renovation was supposed to be done at the end of next year. However, the locks contracting group now is saying that the work is $1.6 billion more expensive than they expected–around 50% more– and they want extra money. With negotiations unfolding, the problems could signal delays as long as 3 years.

Those delays mean that shippers, a vast array of industries and port cities will have to do some tweaking.

Having placed 214 new orders for the super huge container vessels that will be able to cross a deeper, wider canal, customers will now have their shipping schedules disrupted. Called neo-Panamaxes, they are 4 football fields long, 160 feet high, and they can carry 13,200 containers. 14 of the largest ships that had been crossing the Canal with a 4500 container maximum have been retired and 40 will soon follow.

Faced with new completion dates, businesses that can sign long term contracts will find it tougher to plan ahead. The liquified natural gas industry says the delays are affecting the extra business from a Gulf Coast connection that they expect from energy hungry Asia. East Coast citrus growers will also have to wait. They have been looking forward to easier access to South America’s Pacific coast markets.

One city, though, is happy.

Jacksonville, Florida is applauding the delays because they are behind. They say they need more time to develop their port, build distribution centers, construct the facilities that transfer the containers to rail and land transport and even get legislators to create attractive business incentives. 

It is easy just to say that the Panama Canal project is affecting the transportation infrastructure throughout the US. But as we look more closely at port cities down the East Coast, at changes in West Coast maritime traffic, and even at crane orders because the old ones cannot service the new boats, we can see the massive impact that just one waterway can have.

Reminds me of the Erie Canal but that is another story.

Sources and Resources: At econlife we have been following the canal project, here and here, even looking at the impact on the Bayonne Bridge in NJ. The recent news about the delays has been reported in an excellent WSJ (gated) article, in a Jacksonville Business Journal column and in a negotiation update from Reuters.

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