Third set of locks will accommodate post-Panamax ships

Panamanian voters in October overwhelmingly approved a referendum for a $5.25 billion project to expand the Panama Canal to double its current capacity.

A third set of locks will be constructed parallel to the existing locks that will accommodate the large post-Panamax vessels that are increasingly servicing the world’s major trade lanes.

The canal has already been operating at nearly maximum capacity this year, forcing some vessels to wait several days to transit the canal during peak usage periods. About 5 percent of the world’s seaborne traffic passed through the canal in 2005, including more than one-third of tonnage moving from Asian manufacturing centers to the East Coast of the U.S.

The expansion project is scheduled to be completed in 2014-one hundred years after the Panama Canal first opened.

It’s interesting to note that of the various vessel types and cargoes that transit the Canal, containerships now comprise the biggest segment. During fiscal year 2005, this segment represented 35 percent of the volume passing through the Canal and generated 40 percent of total revenues, according to the Panama Canal Authority. Furthermore, in the containerized cargo segment, trade between Northeast Asia (Japan, Korea, China, Taiwan, and Hong Kong) and the U.S. East Coast reflects the highest Canal transit growth rate. This route now represents more than 50 percent of the volume of the containerized cargo segment transiting the Canal and is expected to become a key Canal growth driver.

At the same time, the Panama Canal also competes with the Suez Canal in the Asia to U.S. East Coast trade lane. The Suez route is preferred for cargo originating mainly in South and Southeast Asia because it offers shorter sailing times than the Panama Canal route. However, this route still only makes up a small percentage of the total containerized freight originating in Asia and bound for the U.S. East Coast.