A century after it transformed global markets, the Panama Canal is about to redraw world trade again.
Nine years of construction work, at a cost of $5bn (€4.5bn), have equipped the canal with a third set of locks and deeper navigation channels, crucial improvements that will double the isthmus’s capacity for carrying cargo between the Atlantic and Pacific oceans.
When the new locks slide open to receive traffic for the first time, in late June, the reverberations will be felt from Asian gas terminals to Great Plains farms, and at ports from Miami to Long Beach to Santiago.
The debut coincides, fortuitously, with a surge in US natural-gas production, which has shale outfits seeking out new export markets.
The deeper channels will be able to accommodate the massive tankers that transport liquefied natural gas, shaving eleven days, and a third of the cost, off the round trip to the Far East.
Markets, from Chile to China, will become more accessible for oil drillers across the Americas, while millions of tonnes of container shipments, originating from Asia, could start bypassing western US ports and opt to dock, instead, along the Gulf Coast or Eastern seaboard.
The anticipated growth has triggered a multi-billion-dollar dredging and building binge at ports in the US, Caribbean, and South America, all seeking to win a share of the traffic boom.
Panama is also bidding to become a distribution hub for global manufacturers, with plans to add space for five million additional cargo containers.
“There are going to be a lot of feeder services that develop around it,” Moses Kopmar, a Moody’s Investors Service analyst in New York, said.
“What it will do is, basically, unlock a huge amount of the global fleet, in terms of being able to transit the canal.”
The expansion won’t solve all the canal’s challenges. While tripling the size of cargo vessels that it can receive, Panama still won’t be able to take the biggest container ships or crude tankers.
What’s more, its traffic will depend on the health of the global economy more than on its dimensions, according to Mr Kopmar.
But expansion was critical, industry experts say, for a country that risked seeing its shipping route lose relevance, if it didn’t grow to handle the increasingly large vessels favoured nowadays.
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