The expanding Panama Canal is the world’s busiest maritime route, with the ability to handle some of the largest ships ever built. The current expansion project is entering the final stretch, and the Panama Canal Authority is already looking for another $17 billion for the next phase.
The third set of locks, which scale over twenty two stories, are scheduled for completion by April, 2016. The additional investment is for a fourth set of locks on the expanding Panama Canal that will allow the larger 20,000-container ships, ‘Post-Panamax,’ to navigate through the lock system and compete with Egypt’s Suez Canal.
“Looking at our geology and the experience we gained with this current expansion, we estimate it’s a project that could cost between $16 billion and $17 billion… adding it would allow Panama to compete head-to-head with Egypt’s Suez Canal,” said Jorge Quijano of the Panama Canal Authority.
The work is now on to prove the concept and justify the investment. Trade through the expanding Panama Canal has increased recently due to a labor dispute that was disrupting another route, the Trans Pacific, reported Simon Gardner and Elida Moreno of Reuters.
“It has had a positive impact for us, but the Suez Canal has been the big winner because they can handle the Post-Panamax ships,” Quijano said.
The report by Reuters goes on to say that if the Panama Canal Authority goes ahead with the project, Quijano says it could be completed within 15 years and that financing options include issuing bonds and using the Canal’s own revenues.
China Harbour Engineering Company Ltd (CHEC), a subsidiary of state-owned China Communications Construction Co Ltd, has voiced interest in building and financing a fourth set of locks in Panama, and Quijano said company officials met with him this week.
The proof-of-concept must show that the trade exists to fill these giant locks, with enough return to satisfy investors. Companies like the Maesk Line will be the lifeblood of the expanding Panama Canal, previously taking ships through the giant gateway upwards of 350 times a year. It is companies like Maesk that will determine the success of the project.
“The big question for any future expansion of the Panama Canal is will trade growth sustain that extra investment,” said Robbert Jan van Trooijen, Maersk Line’s CEO for Latin America and the Caribbean. “For me, to see any of those (mega) ships coming near Latin America, that’s the very distant future.”
The scale of these giant locks is beyond impressive, pushing engineering to its limit, with giant counterbalanced lock gates that allow the ships to gently cruise up and down huge steps in the landscape. The new plans include monster lock chambers that fill using gravity as opposed to the more traditional pumps.
[Image Credit: IndustryTap]