Panama Canal Expansion Sparks Port Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Sunday's inauguration of the Panama Canal expansion was touted as a game changer for global trade. As the first expansion of the canal since its opening in 1914, the $5.4 billion project will double the waterway's cargo capacity, according to the Panama Canal Authority. The expansion enables much larger vessels to transit the Isthmus of Panama.

The widening of the canal consisted of two new sets of locks, the widening and deepening of existing channels and the digging of a new navigational access channel connecting the Atlantic side and the Pacific side. The expanded locks are 70 feet wider and 18 feet deeper than those in the original canal, enabling larger, post-Panamax/Neo-Panamax vessels to move through the waterway, with up to 13,000/14,000 twenty-foot equivalent units (TEUs). The old locks only allow the passage of vessels that can carry up to 5,000 TEUs.

The canal authority celebrated the expansion with the passage of the Neopanamax vessel COSCO Shipping Panama, which is owned by China COSCO Shipping Corporation Limited (Tianjin, China). Carrying 9,472 TEUs and measuring 299.98 meters in length, the container ship, en route to Asia from Greece, entered the new Agua Clara Locks on the Atlantic side and exited through the Cocoli Locks on the Pacific side. Panama Canal Administrator and Chief Executive Officer Jorge Quijano said in a press statement the canal has 170 reservations for Neo-Panamax ships, commitments of two new liner services to the expanded Canal and a reservation for the first liquefied natural gas (LNG) vessel, which will transit in late July.

While having an impact on containership traffic, the U.S. Energy Information Administration predicts that with the exception of U.S. propane exports, the expansion is not likely to greatly change crude oil and petroleum product flows. "The economics of shipping crude oil and petroleum products improve as the size of the ship increases along with distance traveled," according to a recent EIA "Today in Energy" article. Crude oil typically is loaded on vessels classified as Very Large Crude Carriers (VLCC) [those capable of carrying 160,000-320,000 deadweight metric tons] or Ultra-Large Crude Carriers (ULCC) [those that can carry 320,000-550,000 deadweight metric tons], both of which are too large to transit the Panama Canal fully laden, even through the new locks."

On the other hand, the EIA article said, "Petroleum products are typically loaded on several smaller vessels, some of which can transit the existing and new canal dimensions, depending on a ship's hull design and restrictions on depth in water (draft). This means that most of the petroleum-related traffic through the canal will be petroleum products rather than crude oil." The newer lock systems allow for the transit of larger vessels, with estimated petroleum product capacities of 400,000 to 600,000 barrels, according to the EIA. Also, the canal now is able to provide passage for up to 80% of global shipment of LNG.

According to the New York Times, the opening of the expanded canal does not come at the best of times for international commercial shipping. Cargo between U.S. East Coast ports and northern Asian ports dropped 10.2% in 2015, according to one article.

Even so, ports across the globe are gearing up to take in the bigger boats that will use the canal. Industrial Info is tracking more than $6.6 billion in active projects related to post-Panamax traffic. This includes nearly $1 billion worth of U.S. port projects.

For related information, see June 3, 2016, article--South Carolina Scales Up Ports for Bigger Boats, More Traffic and April 5, 2016, article--Growing Maritime Transportation Demand Boosts U.S. Gulf Port Projects.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.