Panama Canal expansion to reduce congestion, boost capacity

By Jeff Berman -- Logistics Management, 11/1/2006

PANAMA CITY, Panama—Nearly 80 percent of voters in a national referendum held in Panama last month voted in favor of expanding the Panama Canal. When completed, the construction project will double the capacity of the increasingly congested waterway to 600 million tons a year and allow it to handle much larger vessels.

The project will include construction of two sets of locks and access channels; a new traffic lane; dredging; and raising the water level in Gatun Lake.

The Panama Canal Authority’s (ACP) board of directors said it viewed the expansion as imperative: The canal is approaching maximum capacity and must be able to meet future demand, particularly the anticipated increase in trade between Asia and North America.

Currently, the maximum allowable dimensions for most vessels transiting the canal are 106 feet in width, 965 feet in length, and 39.5 feet of draft (depth). After the expansion, the canal will accommodate vessels up to 160 feet wide and 1,200 feet long, with a 50-foot draft. The maximum size for container vessels will increase to 12,000 twenty-foot equivalent units (TEUs).

In a conference call, ACP Administrator and CEO Alberto Alemán Zubieta said that he believes the Panama Canal will become the most important logistics operation center in the Americas. Achieving that goal, he said, will require additional port and operating capacity. Panama also intends to construct more port facilities at several sites, he added.

The cost of the expansion will be absorbed by canal users through a graduated series of toll increases. The cost is now pegged at $5.25 billion, but the actual figure is almost certain to be lower, Alemán Zubieta said. The pricing structure for the new tolls is now being formulated, he added.

The ACP plans to begin construction next year, and the new system is slated to open in 2015. Once construction is underway, Alemán Zubieta said, canal traffic and access will remain unaffected.