The Panama Canal Still Returns Benefit to The US

Yes, the US returned the Canal Zone and the Panama Canal to the people of Panama.  And the US is till the number one customer of the Panama Canal  And, yes, according to the terms of the second Torijjos-Carter Treaty, the US guarantees to protect the neutrality of the Canal, and ipso facto Panama, in perpetuity.  In the ’30s the US realized the necessity of enlarging and expanding the Canal and began work, but WWII came along and focus, priorities and budgets changed.  After WWII there was always something or somewhere else demanding US attention and money, so the project was never resumed.  Now Panama is moving toward completion of enlarging the Canal and increasing the size and number of vessels it can serve.  And the Canal de Panama is already discussing yet another expansion project to serve new super ships.

US port cities who have any sense are rapidly expanding their facilities to be able to handle the new, larger Canal ships.  And the US stands to gain significant economic advantage from the expanded Canal as pointed out in this BUSINESS INSIDER article by Rob Wile.

100 Years After Its Birth, The Panama Canal Is On The Verge Of Creating A Huge New Opportunity For US Exporters
On Aug. 15, 1914, the Panama Canal saw its first cargo ships slice through two continents on their way to Asia, forever transforming global trade flows.

It was the product of almost 15 years of military, diplomatic, and economic maneuvers.

Now, 99 years later, the canal is set to cause a surge in U.S. exports across the commodities sector.

A $5.25 billion expansion is set to wind down in 2015. In its current form, the canal can handle vessels that can carry up to 5,000 TEUs, or 20-foot equivalents — basically, the size of a shipping container. Once the expansion is completed, the canal will be able to handle “Post-Panamax vessels,” which can carry up to 13,000 TEUs.

For reference, according to the FINANCIAL TIMES. carrying a 10,000-size load would require 18 trains, 5,800 trucks or 570 planes.

Any sector where the U.S. is a net exporter is likely to reap some benefit from the expansion. For instance, the U.S. currently enjoys a positive balance of trade in its paper, raw textile, and machinery industries.

But their gains are likely to be modest compared with those of two other major sectors: agriculture and natural gas.

Amber Waves

U.S. agriculture stands to gain the most from the expansion, further entrenching America as the world’s breadbasket, already No. 1 in wheat, corn and soybean exports.  In a 2011 report prepared for the U.S. soybean industry, INFORMA ECONOMICS forcaste that volumes of grain and soybeans transiting the Panama Canal will jump 30% or 426 million bushels (or 11.2 million metric ton s) to 1,840 million bushels (the equivalent of 48.4 million metric tons) by 2020/21 from the projected volumes for 2011/12.

It’s already $6 per metric ton cheaper for farmers in the country’s midsection to ship their goods down the Mississippi River through the Gulf than to ship them out through Seattle. Once the expansion is finished, vessels will be capable of handling an additional 7,000 metric tons on a Panamax or 13,300 metric tons on a small Capesize vessel. As a result, the area of farms who can take advantage of traveling down the Mississippi through to the Gulf instead of using freight trains to the West Coast will be able to expand,

“For bulk shipments, the expansion of the Panama Canal is extremely important,” Informa says. “The possibility of lowering the Center Gulf freight rate by $14 per metric ton will expand the barge competitive draw area. The railroads shuttle train locations in the expanded barge draw area will either lower freight rates or lose modal share.

Of course, the canal is a two-way street, and Informa says any domestic U.S. industry that has to compete could face losses because their competitors will also be seeing transportation gains. Steel, cement, and fertilizer are likely to take the largest hits, Informa says.

But this also means consumers and end users will be seeing price gains and increased economic activity. Informa:

“The ability to unload larger ships on the East Coast makes it more likely a large retailer will build a major distribution center in the the Eastern US That will in turn enable ocean carriers to add a string of ports to call. The new availability of containers, load out times and increased destination ports expand backhaul [trucking] opportunities.”

Ports up and down the East Coast have already invested millions of dollars to prepare for this outcome. Savannah, Georgia, for instance, has spent $662 million expanding its own port to accommodate post Panamax vessels, the benefits of which the Army Corps of Engineers said in 2012 would far outweigh costs.

Gas Boom

Currently, Very Large Gas Carriers, the vessels used to transport American petroleum and natgas products, must sail all the way around South America to reach Asia. But once the expansion is complete, shipping days will be cut to 25 from 41. That means the time it takes to get from the East Coast to Asia will now be comparable to the time it takes to get there from the Middle East, resulting in freight cost savings of up to 50%, according to Alliance Bernstein’s Neil Beveridge.

Beveridge says the coal and petroleum product sectors are unlikely to change much given flagging demand former the former and narrow pricing spreads for the latter.

Not so with natural gas.

Thanks to the shale boom, which has made the U.S. the world’s largest natural gas, natgas prices have plummeted, which has enticed importers, especially in Asia to start sending for U.S. goods. The current cost of transporting natural gas is already relatively high, which means it has more to gain from a canal expansion, Beveridge argues.

Bloomberg’s Isaac Arnsdorf says exports to Japan, which has shut down its nuclear plant fleet in the wake of the Fukushima incident, could surge, and with the canal expansion, it will cost 30% less for carriers to reach a the country from Louisiana.

“There’s a huge market in Asia, a huge resource in the United States, and the Panama Canal is an enabler of this trade, reducing the cost of getting LNG to the market,” Sverre Bjorn Svenning, an analyst at Fearnley group in Oslo who’s studied the canal expansion told Arnsdorf. “We didn’t see this coming.”

Most gas gets exported in the form of liquefied natural gas (LNG) and liquefied petroleum gas (LPG). Beveridge is slightly more bearish on efficiencies for LNG, since Washington may seek to limit LNG exports to maintain cost advantages now enjoyed by U.S. consumers.

Rather, he argues, LPG is likely to be the greatest beneficiary. LPG consists of hydrocarbons like propane and butane that exist as a gas at sea level but liquid at reduced  pressures and temperatures. It’s mostly used for cooking and space heating, as well as an industrial feedstock.

Global LPG demand is about 30% larger than the global LNG market.  Asia-Pacific countries comprise 40% of global consumption and 7% of demand growth.

With the expansion, the cost of shipping LPG from the U.S. to Asia will equal the cost of shipping it from the Middle East, Beveridge says. “As such we expect demand for US LPG to increase sharply which will put downward pressure to Middle East LPG export prices,” he writes.

We’ve come full circle.  [Read more at BUSINESS INSIDER]

Another REALLY fascinating BUSINESS INSIDER article is Twenty Huge Trends That Will Dominate America’s Future [with apologies to all the rest of non-US Americans and the rest of the world.  But rest of the world take note, there’s also a Twenty Huge Trends That Will Define The World for Decades.

Happy 100th Canal de Panama!

We live in a throw-away society. How long does your toaster work? How long do you keep any electronic device? Use it … works a while then quits, and you throw it away. Yet here is this engineering marvel that stunned the world when it opened 100 years ago today, and it is still working 24 hours a day, 365 days a year. It has survived wars, invasions, dictators and still works as designed bringing the world together! Amazing! Happy Anniversary Canal de Panama!

Now …

August 14, 1914

[1913 is the date of construction of the control house – the first transit was 1914]

Panama Canal 100th Anniversary Photo Alblum

Caution with ATMs

Student and teacher 072114I’m actually visiting my daughter in Seattle where I have a new tech guy to assist me, so things should go a lot faster.  I really appreciate your emails and comments on my posts.
Since often folks comment on previous, older posts, many of my regular subscribers and readers miss these comments.  Some time back I posted a story about “Beware the ATM” when in Panama.  Now many people use ATMs in Panama without problem, but sometimes … Well, there have been a lot of comments and most recently one from A&L Ent …

“Amazing to read this! I just returned from a visit to PC and the interior. My first trip and time using an ATM was a pleasant surprise as I was out of money and headed home, worked fine. BUT , this trip was enough to change that real fast. I had checked my statements online just prior to leaving and at midnight there were 2 duplicate charges, one on 11:59, and again 12:01. 2 different dates, at the 99 in Chitre and another from a withdraw at the 99 in Tocumen. My bank straightened it right out and it went uncontested. Hmmmm… Now I know”.

There have been other interesting comments on this same piece.

“Great article, i own a hostel in David that caters to an international backpackers crowd [] and we and our guests have all had the same story till we discourage folks from using the machines at all, panama is a great country but they need to fix the ARM situation for the tourists! Mike”

“The same happened to me with [a bank on] Via Espania in Panama City. The ATM did not give me any money and withdrew 500 bucks from my account. The bank was closed. I went to my ambassador who was very helpful in escorting me to the bank manager the next day. They admitted the mistake, but I think they did only because my ambassador was there. I had to fill out forms for my bank and got the money back from my bank. I have traveled more than 90 countries all over the world and it has never happened anywhere bug in Panama. i believe it is an organised scam, organised by the banks directly. Have you noticed: recently they set up another scam charging 3 bucks for every ATM transaction-every bank in Panama. Fred”

“This happened to me using an ATM located in the Venetto Casino. It gave me $90 in fives and charged me $203 The Casino, hotel or tourist police would not help. I went to the bank office a few blocks away on Via Espana and they would not talk with me about it. I am now waiting to see if my North American bank is going to credit me my $110. The worst part is the Panama bank gets to keep its $3 fee for causing a problem. If you have any problem in panama no will give a rats ass or try to help you. Please understand this upfront. Mike”

“A couple of weeks ago we tried to take $500 out from the ATM in Alto Boquete. It said it was unable to provide that service at the time. We then tried the another bank ATM which said we had reached our daily limit. When we got home and checked the account online the first bank had taken the money. The bank back home said they would release the funds but often the foreign bank would then resubmit the claim. This has now happened so basically the Panama bank who owned the original ATM we went to has stolen $500 from us and we now have to go through the lengthy process of trying to claim it back. Even though I know it will make no difference I am going into the banks local branch to see the manager tomorrow and am going to threaten with the police and let them know in no uncertain terms that it is NOT okay to steal people’s hard earned money. This kind of behavior makes me sick to the stomach. Simon”

“It is happening all over again in Panama RIGHT NOW! The banking system nor it’s government regulators have not learned ANYTHING. ATM says you have a problem with your account and to contact your USA bank.’Thank you for your business.’. You check your account (from the same machine) and find that your account has been debited! You get no money!  You contact the bank that sponsored the machine and they parrot the same message: ‘There must be something wrong with your card or your account. It is possible that the machine is not accustomed to dispensing the large amount that you asked for ($200.00). We can do nothing. We cannot give you cash from your debit card. You must contact your bank in the US to resolve the issue. Good by!’ ‘Click’ (if by phone) or ‘Please leave, NOW’ if you are at the bank. GREAT SERVICE, PANAMA! DickG”

“Here it is, years since this blog article was written, and the Panama ATM ‘nightmare’ is alive and still kicking a$$. I have not been so robbed yet, but I do have many cruising friends who have been. So, in being regularly paranoid I did a little digging. It seems that many of the early ATM machines were originally produced with an easily hacked interface, where as the hacker can empty the machine of its treasure in under a few minutes. He (or she) does this with software, which is probably why everyone reports different error messages. I am assuming the banks don’t want to re-imburse anyone because they have already taken a large hit and your money helps defray the loss. I think most of the vulnerable ATMs were replaced in the states, but I don’t think the Panamanian banks are ready to start changing out machines on their dime… The losses may be much smaller that the cost of new machines?

I started trying to find info so I could continue avoiding the losses and the hassles, so I figure (maybe wrongly) that the ATM’s that are inside major businesses, like big box stores, would be safer, as it might be harder to unplug the machine and plug in their smart phone in such high profile places and they are locked up at night. Has anyone been robbed at those places? Lauri”

“In all of those places, including one attached to, and just outside Caja de Arrohos WHILE THE BRANCH MANAGER WATCHED!! Sistima Clave is run by Banco National de Panama, the government owned bank as I understand it.l So if you really want to pursue a problem in the “courts” in Panama, you may end up with the Government of Panama as your opponent. Good luck with that! DickG”

“In principle it is simple. The ATM controllers who open te machines and fill it up have to make a statement of the exact cash balance stating time and day. electronic control will show what has been charged and to whom. Consequently the scam can be with the ATM people who open the machines or manipulate them in some way. Robert & Helen”

Is every ATM transaction a problem? No, but there are enough reports of hassles and problems that it would seem to make more sense for tourists just to plan on using cash. You can bring up to $10,000 cash into Panama without declaring it.

If you are going to live in Panama, get a Panamanian bank account. If you have a Panama account and use the ATM at your local bank, you shouldn’t have a problem.

Credit cards are widely accepted in Panama as long as they have the “Clave” symbol. I use Capital One which does not charge a “foreign transaction fee” for charges. [And credit cards that charge a “foreign transaction fee” for charges in US $ in Panama to credit card holders from the US who pay in US $ are really ripping you off! A US $ is a US $ in Panama, Ecuador or the US!]

The Flip Side of Paradise, Part II

Can the Panama Canal expansion help Panama’s poor? NPR reports


Panama’s Canal Divides A Country Into Haves And Have-Nots
by Tim Padgett, WLRN Miami, National Public Radio


Jorge Quijano has one of the coolest office views in the Americas: the Pacific port entrance to the Panama Canal. The panoramic vista seems to help Quijano, who heads the Panama Canal Authority, see the bigger picture.

On the one hand, Quijano understands why Panama has run the canal so effectively since the United States handed it over in 2000.

“When the United States built the canal, it was treated like a noncommercial utility, like a water filtration plant,” Quijano said in an interview at his Panama City headquarters. “We’re running it as a business.”

One that’s expected to rack up revenues of more than $2.5 billion in 2014, and which moves 330 million tons of cargo in and out of the Western Hemisphere each year.

But Quijano, while stressing that he’s an engineer and not a politician, also concedes that more Panamanians need to see more of that wealth.

For starters, he says, “Panama has to strengthen its education,” which is rated among the world’s worst. “There’s so much investment coming into Panama now, but if we don’t have [trained] people, those investments will go elsewhere.”

This year marks the Panama Canal’s 100th anniversary. Panama is nearing completion of a more than $5 billion expansion of the waterway, and it recently elected a new president, Juan Carlos Varela. There has never been a more critical moment for the country to see the bigger picture Quijano warns about.

Glaring Inequality

If Panama doesn’t start addressing the inequality that keeps almost 40 percent of its population in poverty it may well threaten to turn the boom into bust.

To Panamanians, what the U.S. did in handing ownership of the Panama Canal to Panama is as important as the maritime marvel the U.S. built in 1914.

And Panama has made the most of it. In the past five years, its economy has grown faster than any in Latin America. Panama City has a new subway. Its waterfront skyline now sports the region’s tallest skyscraper, the Trump Ocean Club.

In fact, Panama today rivals South Florida as a prime shopping destination for many in Latin America.

“When you go to Miami, you will see a lot of people with luggage in the malls buying things,” says Carlos Urriola, executive vice president of the Manzanillo International Terminal (MIT) next to the canal’s Caribbean entrance. “Today you see this in Panama.”

The MIT, now one of Latin America’s largest ports, handles 20 times more freight than it did in 2000.

“It’s amazing,” says Urriola, “that a small country of 3.5 million people has so much influence in what happens to world commerce.”


Many Haven’t Seen The Benefits

Yet it’s just as astonishing that so few of those 3.5 million seem to feel the benefits — especially Panama’s youth. More than half the country’s children are poor, and almost a fifth suffer malnutrition.

That weighs heavily on Panamanians like Eladia Córdoba, a widowed, unemployed mother in Panama City’s El Chorrillo slum. Given Panama’s prodigious new resources, she says she can’t understand its glaring lack of a social safety net, although the government has recently begun more serious social welfare programs.

“All that canal wealth isn’t getting to poor people or the barrios,” Córdoba says inside her tiny walk-up apartment while feeding her four young children a lunch of pasta and ketchup. “It’s not coming to anyone’s rescue here.”

The canal expansion will accommodate more massive vessels known as Post-Panamax ships, and it should almost double the canal’s revenues over the next decade.

Panama hopes the project will also propel its bid to become the Hong Kong of the Americas, a global maritime and financial hub. Quijano believes Panama is already “the gateway for Latin America and even the United States.”

Panama City’s Prosperity Vs. Colon’s Struggles

But can that stature really last long and meaningfully if Panama doesn’t also narrow the chasm between rich and poor? Between, especially, a Panama City-based white elite known as los rabiblancos and black Panamanians in communities like Colón.

That port city, Panama’s second-largest, sits next to the canal’s Caribbean entrance. But it has been largely left out of Panama’s prosperity. Unemployment there is about 50 percent, and in recent years the frustrations have boiled over into deadly street protests.

Roberto Darkins has taken part in some of those demonstrations. He sells clothing — some of it he proudly shows off as his own brand, Que Jeans — on Colón’s main street. But he laughs when someone mentions Panama as a banking center, given how hard he says it is for small businesses to get even microloans.

Darkins also scoffs at Panama’s celebrated building boom, which he says has made housing less affordable for families like him, his wife and four children, who share a one-bedroom apartment on the eighth floor (no elevator) of a decaying 19th century building.

New apartment complexes, he says, “charge $500 or $700 a month, and the salary here is like $200 or $300 a month. Who do you expect to go and live in those buildings?”

He also says he fears Panama’s notoriously corrupt political system will devour the fruits of the canal expansion: “The more money you make, the more corruption they’re gonna do.”

Consider a legal case that played out recently in Panama:

The dispute involved a deceased U.S. millionaire who’d left $50 million in his will to a trust for impoverished Panamanian children.

His rabiblanca [RD: “rabiblanca” literally means “white tails” and refers to the old, mostly white, Spanish families that have historically controlled wealth and power in Panama] Panamanian widow and her children fought to annul the will so the money would go to them instead. Panama’s lower courts ruled the will valid — but the widow and her kids got the Supreme Court, whose corruption has been a target of U.S. State Department complaints, to overturn them.

That’s a big part of Panama’s bigger picture. And it will still be right outside everyone’s window when the bigger canal locks open next year.

Panama saves whales and protects world trade

Did you know that Panama is one of the only places in the world blessed with Humpback whale migrations from both the Southern and Northern hemispheres? During the Southern hemisphere Humpback whale migration, July-October each year, we have several thousand humpbacks who come to Panama to breed and give birth. Anne Gordon, the same Anne who conducts Embera Village Tours, also offers whale watching tours out of Panama City. If you are embarking or disembarking in Panama and want a truly unique experience, you might consider going whale watching with Anne.

To protect these wonderful creatures the Panama Canal has implemented new procedures to prevent ships using the Panama Canal from colliding with these fantastic creatures.

The Republic of Panama’s proposal to implement four Traffic Separation Schemes for commercial vessels entering and exiting the Panama Canal and ports was approved unanimously by the International Maritime Organization in London, May 23. Based on studies by Smithsonian marine ecologist Hector Guzman, the new shipping lanes are positioned to minimize overlap between shipping routes and humpback whale migration routes and reduce vessel speed four months a year at the peak of the whale overwintering season.
Several cetacean species move through the tropical waters near the Pacific entrance to the Panama Canal in the Gulf of Panama. With Smithsonian ecologist Richard Condit, intern Betzi Perez-Ortega and colleagues from Whalesound Ltda. in Chile and the College of the Atlantic in Maine, Guzman recently published results from six seasons in Panama’s Las Perlas Archipelago. Based on photo-identifications of nearly 300 individual humpback whales, including 58 calves, they estimated the total population at more than 1000 animals that visit year-round and matched them to individuals sighted from the Antarctic Peninsula, Chile and Colombia. They concluded that the Archipelago, only 60 kilometers (40 miles) from the Pacific entrance to the Canal, is an important breeding area for humpback whales from the Southern Hemisphere.
Panama is a leader in global commerce and a steward of this exceptional marine biodiversity. Nearly 17,000 commercial vessels cross the Gulf of Panama each year. This number is expected to increase significantly when new locks now under construction permit larger, “post Panamax” vessels to transit the Canal and enter its ports.
Based on his analysis of whales tagged with satellite transmitters, Guzman estimates the new policy will reduce potential areas of collision between ships and whales by 93 percent and reduce the interactions between ships and whales by 95 percent in the Gulf of Panama.
In the Pacific, an array of three schemes is also expected to significantly diminish the potential of ship collisions with coastal fishing vessels and pollution-causing accidents affecting seven marine protected areas including Wildlife Sanctuaries, a UNESCO World Heritage site and wetlands protected under the international Ramsar Convention.
The Panama Maritime Authority took the lead, based on the input from the Panama Canal Authority’s Captain Fernando Jaen and the Maritime Chamber’s Jocelyne Anchor to define the policy and shepherd it through the approval process.
“This is a clear example of Smithsonian research that makes a difference,” said William Wcislo, acting director of STRI. “We are a research organization, not a conservation organization, but our research feeds conservationists’ efforts to protect biologically rich and vulnerable ecosystems.”
“Scientific results impact conservation, but putting policy into effect takes a great deal of time,” said Guzman. “We have to be patient and consistent. It took two years of teamwork to design the policies and obtain a consensus for the traffic separation schemes for whale protection. Now Panama has six months to implement the TSS’s, and the maritime industry has six months to comply.”
Guzman is currently working with scientists and policy makers from Ecuador and Chile to safeguard passage for whales along the entire coast of South America and plans to expand the project to other countries in South and Central America.


IT’S ALL HERE … Everything You Need to Know

It’s 4:30 a.m. – When I am on the bridge giving commentary as we make a passage through the Canal this is when and how the day begins. You’ll get inside information on what’s happening on the bridge of a ship passing through the Canal and pictures on the bridge showing perspectives that guests never get to see.

The Bridge of Life – Millions of years ago there was no Panama! The waters of the oceans flowed freely between the continents before the “bridge of life” liking the continents was created.

New Granada – Eventually the Spanish arrived and conquered, and then as the Spanish Empire dissolved, Panama struggled to find it’s place in the New Word.

The Dream – Columbus, King Charles V of Spain, Benjamin Franklin, Thomas Jefferson, and Simon Bolivar all shared the same dream.

At work: bridge commentary during Canal passage.

At work: bridge commentary during Canal passage.

A Century of Expansion – Voyages and expeditions of discovery opened up new areas of the world, and the fledgling United States of America began expanding to the west.

The Panama Railroad – Although many cruise passengers will take the excursion on today’s Panama Railroad, few realize how important the original Panama Railroad was not only to Panama but also to the United States. This was the “little railroad that could” and carried billions of dollars of gold across the Isthmus.

The French Effort – Riding high on the success of the Suez Canal, Ferdinand de Lesseps came declaring that a canal across Panama would be easier than building the Suez Canal.

Banana Republic – The term “Banana Republic” was coined to describe the Republic of Panama created with the assistance of the United States, who in return got a path cross the Isthmus dividing the new country in two.

Let The Dirt Fly – Theodore Roosevelt, like Caesar, came, saw and conquered. The United States undertook the greatest project the modern world had ever seen and finished the Panama Canal ahead of schedule and under budget.

Dr Richard DetrichaHow It Works – In theory quite simple: up, over, and down, but achieving that was and is quite a marvel! Here’s what you need to know about how and why the Canal functions.

A Complicated Marriage – Panama’s relationship with the United States was complicated from the start. Many people read David Mc Cullough’s wonderful history, The Path Between The Seas: The Creation of the Panama Canal 1870-1914, failing to realize that it covers only PART of the history. A lot has happened since 1914, in the world, in Panama, with the Canal, and with Panama’s relationship with the United States.

Moving Forward – Time moves on, and so has the Canal and Panama. What about the future role of the Canal? Nicaragua? The Northwest Passage? The Canal expansion project?

Panama 101 – What is in Panama and why are people so excited about visiting the country itself?

Booking Passage – The questions everyone ask … What is the best time? How to find the best price? Which side of the ship is best? What about shots, passports, etc.?

I do change my shirts!  This is just my traditional Panama Canal day shirt!  It's more fun if there is another ship in the locks next to you.

I do change my shirts! This is just my traditional Panama Canal day shirt! It’s more fun if there is another ship in the locks next to you.

Seeing Panama – If you are lucky enough to actually stop in Panama and not just barrel through the Canal, what are the shore excursion options? Which one is best? How do you choose? Should you book through the cruise line or go independently? What are the independent options? Included are actual photos from most of the tours.

Your Voyage – Mile by mile guide of your cruise through the Panama Canal. What to expect and what to look for? Facts that you should know along the way.

Questions & Answers – Probably half of these are the same questions that you’ve been asking?

Our Ship & Our Bill – Everybody’s question: how much? A hypothetical ship and how the toll and fees are charged.

Key Dates in Panama History

U. S. Military Installations in Panama 1904 to 1999

99 Years Old And Going Strong!

It should happen to me!  This month the Panama Canal celebrates 99 years of service to over a million vessels!  The giant new rolling gates have arrived and the expansion program is over 60% complete and scheduled to open sometime next year, or as we say in Panama, “Manana!”

If you are one of my many faithful subscribers, to watch this video you may need to actually visit the Internet site.

In a FINANCIAL TIMES article, “Panama Canal: Out of The Narrows”,  Andres Schipani and Robert Wright wrote . . .

After a visit to Panama almost four decades ago, the novelist Graham Greene saw the canal as becoming “less and less” important every year, with “a smaller tonnage passing, a smaller revenue, a channel too shallow and locks too narrow for the great tankers”.

That fear of irrelevance has only intensified as the world’s ships have grown too big to pass through the canal. Today, about half of the container ships afloat or on order worldwide are too large to travel through its locks. The “Panamax” vessels historically designed to transit the canal are now relative minnows.

If that were not enough of a challenge, melting Arctic ice could also open a rival route to the north.

Eager to defend its status as one of the world’s great trade conduits, Panamanians decided to expand the canal in a national referendum almost seven years ago. That $5.25bn project is running about six months behind schedule but, when the work is finished in mid-2015, the expanded waterway is expected to transform some of the most critical trade routes between the Atlantic and the Pacific. Logistics companies such as railways are trying to gauge whether the expansion will ultimately greatly increase direct shipments to the eastern US . . .

The deeper, wider channel will allow the passage of enormous vessels with up to three times the capacity of the biggest ships currently using the route. Panamanian officials predict that the canal, which celebrates its centenary next year, will increase the annual tonnage it carries to more than 600m tons in 2025 from 333.7m tons last year.

However, while Panama is making its bullish projections, regional infrastructure is not yet ready for the bigger vessels. Many US ports are unable to accommodate larger ships travelling via Panama. Several tropical ports are also vying with each other to become the deepwater hubs for the decades ahead but observers say port expansions are struggling to keep pace with the potential shift in shipping patterns.

In Panama, the expansion is 60 per cent complete. Dredging of the navigational channels along the narrowest section, the Culebra Cut, is finished. In a colossal ditch, 8,000 workers wearing yellow helmets and fluorescent vests are building compartments for the sets of locks.

Somewhat cruelly for Panama, ship sizes have once again outgrown the canal while this work has been going on. Maersk Line, operator of the world’s biggest container fleet, has 20 new ships on order that are so vast that they cannot pass through even the enlarged waterway.

Originally, it was envisioned that the expansion programme would chiefly make it easier to ship manufactured goods from Asia to the eastern US. But ships travelling the other way have become far more significant than anyone imagined seven years ago. “In the future, we foresee trade growing between Asia and Latin America,” says Jorge Luis Quijano, the Panama Canal administrator, “with east Asia sourcing more and more raw materials out of Latin America.”

Despite a downturn in the commodity supercycle, many businesses remain hungry for lower transport costs to ship commodities such as iron ore, coal, soya and natural gas to Asia. Additionally, the flow of containerised Asian goods to Latin America is still strong, thanks to a robust growth in wages and domestic credit, which has been fuelling a consumer boom in the region.

Nevertheless, Panama is not going to be able to tap these shifting trade flows unchallenged. Nicaragua’s national assembly – dominated by the leftist Sandinista front – has backed a $40bn proposal for a little-known Chinese company HKND to dig a rival to the Panama Canal. Many already doubt the economic feasibility of a project three times longer than Panama’s 80km waterway.

Not to be left behind, Guatemala and Honduras have announced “land bridge” projects between the Atlantic and Pacific. There is also speculation in Mexico about Chinese investment in a connection across the Tehuantepec isthmus.

Container shipping lines such as Maersk, which has about 15 per cent market share in Latin America, are open-minded about such projects. “For me, any infrastructure investment that is going to facilitate trade between customers is welcomed,” says Robbert van Trooijen, Maersk Line chief executive for Latin America and the Caribbean. “I see myself as a user of those projects.”

Since Panama took control of the Canal in 1999, about 5 per cent of world trade has been passing through its locks. It earned $1.6bn in pre-tax profits last year on revenues of $2.4bn, and accounts for up to 10 per cent of the country’s economic output.

Panamanians are confident that regional rivals will not eat too deeply into their profits. “We don’t consider there will be any competition,” Fernando Núñez Fábrega, Panama’s foreign minister, told the Financial Times last month when asked about the Nicaraguan rival. For him, if everyone who wanted to build a canal did so, “Central America would end up like a Swiss cheese”.

. . .

The expansion of the canal is set to shake up the way shipping lines operate for reasons well beyond the size of vessels that they can use. Because bigger ships take longer to load and unload in port, container lines may send the new, bigger ships to fewer ports in the US or South America once they emerge from the canal. That will spark greater demand at both ends of the canal for new “feeder” services ferrying containers between smaller ports and larger “hubs” where the bigger vessels dock . . .

However, Alberto Alemán, who stepped down as Panama’s canal administrator in December 2012 after 16 years at the helm, hopes that much of the new business will come to Panama’s own ports, on both coasts. Panama offers logistical advantages. It is not only a regional airport hub but also has a large free trade zone, like Singapore and Hong Kong. The country is also Latin America’s fastest growing economy, with annual growth rates of about 10 per cent . . . Read the entire article

Meanwhile ports in the US, where development of infrastructure has lagged behind almost everywhere, are scrambling to find funds to play catch up. The ports who aren’t planning to expand to accommodate the larger vessels are going to be left in their wake.

If you are planning a cruise through the Canal or are just interested in its fantastic history, you’ll want to get a copy of my book Cruising The Panama Canal: Centennial Edition.

Commercial Boquete

New Lock Gates Arrive for Panama Canal Expansion

A major milestone in the expansion of the Panama Canal took place when the first of the new rolling lock gates arrived from Italy. This is a good shot because of the workers in the photo giving you a sense of the size of these gigantic gates.

It took some two hours to unload each of the four lock gates that will become part of the biggest locks in the world when the expansion of the Panama Canal is completed.

The gates, which arrived Tuesday, August 20, took 30 days to travel from Trieste in Italy. The ship that carryiied them is on its way back to Italy to continue ferrying the remaining 12 gates. Each one is 30 meters high and 10 meters wide.

To unload each one, at a specially constructed dock. took four flatbeds each with 120 wheels.
The 16 gates that will allow the passage of post panamax ships that currently have to make the long voyage around the Horn, will be in place by April 2014. [NEWSROOM PANAMA]

And here’s the video complete with the dramatic music the ACP likes for this kind of thing.