July 26, 2016 The Panama Canal

Volume 10 | Issue 3

Etching its Mark in World Trade and Maritime Commerce.

The Panama Canal has been at the forefront of innovation in world maritime commerce for the past few decades. At the turn of the century, the Panama Canal Authority (ACP) took charge of managing, operating and maintaining the Canal, and has proved that it is worthy and highly capable of this stewardship. By shifting the Canal’s operations from a profit-neutral utility to a market-oriented business model – one that focuses on customer service and reliability – the ACP has succeeded in raising demand for the waterway. It has demonstrated its ability to capitalize on the Canal’s strategic location that connects the shipping lanes of the Atlantic and Pacific oceans. Today, in its most important project to date, the ACP is managing the expansion of the Canal, which when completed will enhance the waterway’s ability to serve the international maritime community.

Post-Panamax ships, which cannot fit through the existing Canal, have been unable to utilize the waterway, forcing them into long and costly detours. To meet the growing demands of international trade, the ACP is embarking on an exciting new project of expanding the Canal – the largest undertaking at the waterway since the original construction. Expansion will build a new lane of traffic along the Panama Canal through the construction of a new set of locks, which will double capacity and allow for more traffic and wider ships.

Making of a modern marvel
In a national referendum on Oct. 22, 2006, the Panamanian people overwhelmingly signaled their approval for the modernization of the Canal. This high degree of support demonstrates the willingness of Panamanian citizens to meet the needs of a changing world and an evolving maritime marketplace. Such an ambitious endeavor will contribute to Panama’s sustainable economic development over the long-term.

As the world becomes increasingly interconnected, this project takes on even greater significance. The Panama Canal currently serves more than 144 different transportation routes from around the world, connects major trading arteries, and provides extremely cost-effective and safe transoceanic services, accounting for nearly 5 percent of today’s world trade.

Furthermore, as trade between Asia and the United States is projected to steadily increase, it will be essential for the ACP to maximize the efficiency of the “All-Water Route” (the route from Asia to the U.S. East Coast via the Panama Canal). The current leading clients of the Canal are U.S.-based shipping lines, followed by those from China. The United States is also the point of origin and destination for 68 percent of Canal traffic, and analysts project that U.S. container imports will double by 2020. Containerized cargo already accounts for half of the cargo that transits the Canal, and this quantity is expected to rise.

Since trade is increasing at an exceptional rate, and shipping companies are responding by using larger vessels to transport its cargo, the ACP is meeting this growing demand by expanding its capacity through initiatives contained under its Permanent Modernization Program. A more than $1.5 billion investment program, it includes capital improvements and operational measures to increase capacity. Current short-and-medium-term improvements include: modifying the ACP’s booking system to increase the number of daily booking slots; straightening and widening the Gaillard Cut; improving equipment and operation systems, such as updating its tugboat fleet; and, improving reliability and navigational safety.

After diligent study and extensive research to assess the viability of the expansion, the ACP carefully evaluated market demand, engineering, environmental and financial issues necessary for success. Studies focused on topics such as traffic and transit models, projected transits and revenues through 2025, global macroeconomic and trade scenarios, and ways in which the Panama Canal expansion can service increasing traffic from Asia and the United States.

Expansion: the Plan
Through such diligent analyses, the ACP has been able to weigh multiple options and potential scenarios, which currently allow for moving forward with a justifiable degree of confidence in choosing the best course of action – one which will suit the long-term interests of both the Panamanian people and the worldwide maritime community.

The ACP is fully committed to sustainable development principles and environmental management best practices. The expansion project therefore will be environmentally sound. The expansion project will employ the technology of water-saving basins. Each basin will be approximately 70 meters wide by 5.50 meters deep and will reuse 60 percent of the water from each transit.

Each lock complex will have three levels of chambers. The configuration will be similar to the existing Gatun Locks. The project will create a new lane with one new lock on both the Pacific and Atlantic sides, providing a capacity to handle vessels up to 49 meters (160 feet) wide, 366 meters (1,200 feet) long and 15 meters (50 feet) deep, or with a cargo volume of up to 170,000 deadweight tons (DWT) and 12,000 twenty-foot equivalent units (TEU). Lock chambers will be 427 meters (1,400 feet) long by 55 meters (180 feet) wide, and 18.3 meters (60 feet) deep.

The ACP studied all gate types that could potentially be utilized for the project and concluded that rolling gates, instead of the presently used miter gates, would be the best option. Because rolling gates work from a niche that is attached and perpendicular to the lock chamber, it will be possible to turn that niche into a dry dock. The rolling gates will allow for routine maintenance work to be conducted without having to remove them, thus eliminating significant interruptions in the daily lock operations. This will, in turn, increase capacity and flexibility of lockage operations, offer shorter maintenance times and incur lower costs for the Canal.

Instead of locomotives, which are currently in use, tugboats will assist in vessel positioning for the new set of locks. If locomotives were to be used in the expanded Canal, at least 12 to 16 locomotives – larger than the existing ones – would be necessary to handle these bigger ships, while on average, just one to two tugs would be needed to help get vessels in and out of the locks.

The contracting process for the project is well underway, and the ACP recently issued its first construction-related tender (request for proposal) for expansion. This newly released tender represents the first of five dry excavation projects that will help link the new Post-Panamax locks on the Pacific end of the Canal to the existing Gaillard Cut. Moreover, as it embarks on the beginning stages of the expansion, the ACP seeks to reassure its clients that the Canal will continue to operate with the same efficiency and excellence.

With visionary leadership at the helm and more than 9,000 dedicated ACP employees, the expansion of the Panama Canal is as timely as it is vital. It will double the Canal’s current capacity to more than 600 million Panama Canal tons, as well as enable the most modern and advanced vessels to operate through its locks. With the completion of the proposed expansion, the ACP will upgrade one of the world’s most critical trading routes, increasing capacity and efficiency, and will reaffirm the economic and strategic value of the Canal and its status in the international maritime community and world trade.

Alberto Alemán Zubieta is Administrator/CEO of the Panama Canal Authority. The ACP is the autonomous agency of the Government of Panama in charge of managing, operating and maintaining the Panama Canal. The operation of the ACP is based on its organic law and regulations approved by its Board of Directors. For more information, please refer to the ACP’s Web site: www.pancanal.com

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