The Panama Canal, which opened in 1914 and which today handles about one-third of the trade between Asia and the Americas, has expanded to cope with the demands of the modern shipping trade.
In 2006 a national referendum approved a proposal to double the Canal’s capacity. A new third lane with locks 1,400 feet long, 180 feet wide and 60 feet deep has now been constructed by an international consortium. The advantage of the new lane is
that it can accommodate “New Panamax” container ships up to 13,000 TEUs, compared to a previous maximum of 5,000 TEUs previously, as well as the larger bulk carriers, tankers and cruise ships.
There were many hitches along the way, but this year on June 26th the Costco Shipping Panama (previously Andronikos) became the first vessel to pass through the new third lane.
A recent analysis by the Boston Consulting Group and C.H. Robinson Worldwide predicted that about 10% of the Asia-to-US container traffic would shift from the US west coast to the Atlantic Coast by 2020. A larger Panama Canal also offers an attractive alternative for shipping agricultural products to Asia via the Mississippi.
The Panama Canal Authority also thinks that LNG could soon be one of the leading products to pass through the Canal.
One likely result of the increased capacity is that it the importance of Panama’s three ports – Balboa, Colón, and Manzanillo – will rise.
On the insurance side, bigger ships mean greater accumulation risks. If the value of the additional cargo moving through the Canal each day will be worth about $1.25bn, the total “at risk” will be considerably greater, because there will be vessels queuing at both ends of the Canal.
Operational risks are also potentially greater. In the new third lane, ships are escorted through the locks by tugs positioned fore and aft, a different system from the original lanes. Canal pilots and tugboat captains have undergone extensive training, but concerns have been expressed that a tug could lose control of the tow, resulting in damage to the lock as well as the ship.