New questions surface about success of Panama Canal expansion

Despite the huge advantages offered by the Panama Canal’s expansion, there have been growing concerns over safety issues associated with the introduction of neo-panamax vessels along the waterway.

According to London-based PGI intelligence, a London-based consultancy specializing in corporate investigations and geopolitical risk, shipping stakeholders have been warned that at 427 miles long and 55 miles wide, the new locks are too small for neo-panamax vessels.

“A joint study by the International Transport Workers’ Federation (ITF) and Brazil’s Fundação Homem de Mar (FHM) found that under windy conditions the movement of vessels would be compromised, making accidents likely due to the lock’s narrow dimensions,” said PGI analysts.

Meanwhile, the insurance agency Allianz Global Corporate & Specialty released a report last month estimating that the expansion will see an additional $1.25 billion worth of insured goods pass through the canal in a single day, based on the average value of $20,000 per twenty-foot equivalent units (TEUs).

The report called on shippers and insurers to take active risk mitigation measures to assess and spread the impact of an accident involving a neo-panamax vessel, as a single event could result in much larger losses than typically seen in the shipping industry.

Andrew Lubin, a professor of international business and logistics at Rosemont College and Ashford University’s Forbes School of Business, told LM that the impact of the expanded Canal has yet to be felt.

“Currently, it’s only giving vessels a one day transit advantage to destined markets,” he said. “By that measure, it’s not a ‘game changer.’”