28-06-2016

An expanded Panama Canal opens for giant ships

Pcanal

A mammoth ship bearing 9,472 containers and the unwieldy name Cosco Shipping Panama completed on Sunday the first official voyage through the new expanded Panama Canal, a $5.25 billion project designed to modernize a 102-year-old landmark of human ambition, determination and engineering prowess.

The Chinese vessel, which set sail from the Greek port of Piraeus on June 11, began its crossing of the isthmus from the northern Atlantic Ocean end of the 48-mile canal. On Sunday morning, it entered one of the new locks, on its way to the man-made Gatun Lake, the widened Culebra Cut through a verdant mountain ridge, and then the Pacific Ocean.

Like the channel that opened in 1914, the enlarged Panama Canal is a feat of engineering, albeit one that ran over budget and two years behind schedule. The contractors dredged enough material to fill the Egyptian Great Pyramid at Giza, one of the seven wonders of the ancient world, 25 times over. The amount of steel used could have erected 29 new Eiffel Towers. The Empire State Building could lie down and fit into just one of the three chambers in each of the new channel’s locks.

Although cargo tonnage through the canal has risen 60 percent since 2009, Panama needed to expand the canal to accommodate a new generation of container ships, known as neo-Panamax, which are too big for the old canal locks. The new locks are wider than the old ones, 180 feet vs. 110 feet, and are deeper, too, at 60 feet vs. 42 feet. Officials say the larger locks and new lane will double the waterway’s cargo capacity. More than 170 neo-Panamax ships have already booked reservations in the expanded locks.

“We knew that if we did not embark on this project, the quality and span of our services ran the risk of deteriorating, impacting shippers, customers and our country alike,” the Panama Canal Authority’s chief executive, Jorge Quijano, said in a speech to customers Saturday night. “The expansion will open new trade routes.”

A tugboat leads a Neopanamax cargo ship as it approaches the new Agua Clara locks near the port city of Colon, Panama. (Moises Castillo/AP)

Export facilities are being built to send abundant U.S. shale gas to foreign markets, many of them in Asia, where China’s fast growth and Japan’s idle nuclear plants have created demand.

A tanker of liquefied natural gas loaded on the U.S. Gulf Coast and bound for Asian markets could shorten its travel distance by about 5,000 nautical miles and seven to nine days, according to Martin Houston, co-founder of Tellurian, a developer of liquefied natural gas projects. He estimated that the expanded canal could accommodate about 80 percent of the current world liquefied natural gas tanker fleet, compared with the 7 percent that could pass through the old facilities.

“All this adds up to additional commercial flexibility and lower cost, which is what our customers want,” he said.

The Boston Consulting Group and C.H. Robinson, a transportation logistics company, estimated last year that as much as 10 percent of the container traffic from East Asia to the United States could shift to East Coast ports instead of landing on the West Coast and finishing the journey by truck or rail. That, they said, would be rerouting volume “equivalent to building a new port roughly double the size of the ports in Savannah and Charleston.”

This prospect has triggered activity up and down the East Coast. After delays, the Port Authority of New York and New Jersey now says that a $1.3 billion project to raise the 85-year-old Bayonne Bridge will enable ships to pass under by late 2017.

The South Carolina Ports Authority (SCPA) is planning to dredge Charleston’s 45-foot-deep harbor to a depth of 52 feet by the end of the decade. “The old Panama Canal was an impediment to deploying ships to the East Coast of the United States from Asia,” said SCPA chief executive James I. Newsome III.

Newsome gave the example of cargo bound for Charlotte from Asia. If it landed in Los Angeles, it would cost $2,000 to send it across the country by rail. If it landed in Charleston, it would cost only $600 to send it the rest of the way by truck. Even if it took a little more time, he said, “supply chain is more about reliability than transit time.”

For Panama, the new canal is giving a boost to the economy by attracting new investment and jobs in the service sector. The government, as owner of the canal authority, receives dividends equal to 2.1 percent of gross domestic product.

The International Monetary Fund forecasts that Panama will continue to grow at its current rate of nearly 6 percent a year. Iván Zarak, deputy vice minister of the economy, said foreign direct investment has nearly tripled since 2009. And he boasted that Panama has done that without oil and without any single sector accounting for more than 20 percent of the economy.

The canal is just part of a formidable infrastructure spending program here.

Panama is adding a second metro line at a cost of $2 billion and is planning a third. It built a new bridge over the canal that will have six lanes for cars and two for a metro monorail. It is doubling the size of its airport. It is exploring a port for its Pacific coast. It is adding a third electric transmission line. And it is sinking $450 million into urban renewal of poor sections of Colon on the north side of the canal.

Nevertheless, the canal project did not go off without hitches. The European consortium expanding the waterway demanded more money as costs soared, but arbitration went largely in favor of Panama’s canal authority. Visible leaks in the cement walls at the locks also prompted major repairs.

“We knew from the beginning that it was going to be a difficult project,” Zarak said. “When you build a house, you have problems.”

Others worry about the ability of the nearly 300 canal pilots to safely guide the new giant ships through the snug locks and channels. The height of the bigger container ships — capable of carrying 14,000 containers, more than double previous maximums — could leave them susceptible to wind gusts. Underwater currents can vary with the size of a ship.

Since there is no other canal like it, safety experts recreated the canal at a scale of 1 to 25, with miniature ships. In a small pond and channel dug at a cost of $8 million, pilots ride in motorboat-size barges fabricated in France, nudged by tugboats small enough to fit into a shopping cart.

“To handle a small ship is more of a challenge,” said Capt. Fernando Jaen, a Panama Canal pilot trainer.

Even so, the canal authority did a practice run before the official opening. On June 11, the bulk carrier Baroque eased through the new lock on the Atlantic side.

The expansion of the canal has also strained supplies of fresh water, which the canal needs to run the locks. Gatun Lake provides water to the canal and drinking water to much of the country.

The canal builders came up with an elegant, though partial, solution. They built three water basins that exchange water with the locks, thus reusing up to 60 percent of the water in the new locks. But the locks are still an added load.

Then there is the matter of the Chinese. A Chinese billionaire, Wang Jing, who made money in financial consulting and telecommunications, has proposed carving a canal through Nicaragua. He’s hardly the first. People have been toying with similar plans for at least 200 years. The cost of that project has been estimated as high as $50 billion. And while that might not be a wise investment, it would create stiff and nearby competition for Panama.

The Panama Canal occupies a special place in the American imagination. President Ulysses S. Grant sent a 100-person scouting party, which recommended against it. A 20-year French effort, led by the engineer Ferdinand de Lesseps, was abandoned after thousands of workers were stricken with yellow fever, malaria and dysentery.

President Theodore Roosevelt launched construction again, and the canal opened Aug. 15, 1914. The United States took control of the canal zone, 10 miles wide. In a 1977 treaty signed by President Carter, the United States turned over sovereignty to Panama under a long-term lease that ended in 1999.

Panama is now hoping to give the canal another lease on life.

Source: Washington Post

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