Over the years, there’s been a long drawn battle between Suez Canal and Panama. Of the two, Panama has emerged as a clear winner in this big canal battle. A ship headed to New York from Shanghai can take either of the 2 routes. One takes it through the Suez Canal across the Atlantic to New York while the other takes an eastward turn across the Pacific through the Panama Canal.
When millions of dollars are at stake, the first returns are the ones which count. Panama Canal with its new and improved features has become more suitable for modern vessels than the Suez Canal.
The tussle between these 2 famous waterways have been going on for over a century but it is only in the last decade when it has become more apparent. Both the canals (the original panama canal was 110 ft) with their limited passageways have become choking points for modern day mammoth sized containers and cruise ships. Even the US Naval ships had an issue with it.
Last year the Panama Canal went through an intense construction process which had widened its locks to a 1400ft long, 180ft wide and 60 ft deep passage ways. These new set of locks has made movements easier for modern vessels like “neopanamax” and other luxurious ships. Similarly the Suez Canal has been upgraded to a 2 lane passageway in order keep up with the new global trade.
With this 5 million dollar Panama Canal enlargement project, the global shipping market has went through a sea change. Now shipment carrying 14000 containers can easily make a transit through the canals in place of the mere 3000 containers that went through the old locks. This will lead to a steep increase in the toll revenue collected from the canal which is slated to increase by $280 million dollar by end of the current fiscal year, from a staggering $1.9 billion of last year. Compared to this, the $8 billion dollar Suez Canal expansion hasn’t bore the expected result. Though the double laned channel has fastened trade through the route but revenue hasn’t increased that much.
This has solved the age old problem by giving an upper hand to the Panama Canal. The world relies on it rather than the Suez Canal as it takes far lesser time (less than a week’s time). This has huge implications on global shipping trade.
The cruise ship industry with large vessels at stake, naturally favours the Panama locks. Cruise ships like the Royal Caribbean, Disney Cruise have booked their slots for the upcoming season. Not only them, even the Asia bound liquefied gas tankers from Houston have chosen Panama over Suez canal, as it shortens their journey by 7-9days (approx 5000 miles). Global Trade predictions portray an increase in tanker passage through the Panama from a staggering 7% to a whopping 80% in the coming years.
A large portion of container cargoes has already made a shift from West coast to East coast in order to avoid long train shipments across the country which has lead to further construction work along the East Coast especially in New York and Charleston.
With metro lines and bridges in the making Panama has garnered an investment of 2 billion dollars to improve its infrastructure which will further enhance its annual revenue by 6% as per the estimation of IMF. Already it has tripled its foreign investment, since 2009.
When President Jimmy Carter signed the Panama Canal deal in 1977 and handed it over to the Panamanians, many people, including the conservatives like Ronald Reagan doubted its viability. 40 years later, Carter’s decision holds ground. Panama has become the most trusted friend of the US with no in-built movements and demands on Washington.
Thus bringing us a loud cheer!
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Source: Telegram
