Analyzing the Impact of the Panama Canal Expansion

(Image Credit: noam / 123RF Stock Photo)

Martin Torrios, the president of Panama, announced an ambitious expansion plan way back in 2006. The project got underway the following year and continued for the next nine years. The newly-expanded Panama Canal opened in June of 2016. The upgrade to the Panama Canal means that it can now accommodate more ships each day as well as a greater cargo load on each ship that passes through it. The Baroque Valletta was the first to do so at the end of the nine-year expansion project.

By the end of 2017, 403.8 million tons of cargo passed through the expanded Panama Canal. This set a record for the most tonnage to travel over its waters in the 103 years since its original opening. The new lane added to the canal is 1,400 feet long, 180 feet wide, and 60 feet deep. This allows for the passage of ships nearly three times as large as could previously fit through the canal. Currently, it can handle ships up to 14,000 twenty-foot equivalent units (TEUs).

How the Expansion of the Panama Canal Has Impacted the Gulf Coast

Among the biggest impacts of the Panama Canal expansion, ports located in Gulf Coast states have emerged as a significant logistics and key distribution point for companies that export plastic resins and natural gas. In response to this growing activity, many new transfer facilities as well as those that focus on production and energy processing have sprung up along the Gulf Coast.

Engineering and construction firms in the area now have the confidence to send bigger ships with more goods to their customers. The increased business and revenue has created many new opportunities for public bidding as well as large facility upgrades. Some prime examples of the latter include transportation links between freight lines and highways to ports, energy processing plants, and expanded terminals.

East and West Coast Ports

New ports on the East Coast have cropped up in New Jersey, New York, and Virginia, but it’s too soon to tell if goods shipped through these ports will increase significantly with the expansion. Many port managers in these regions have prepared themselves to receive mega-vessels. However, the volatile political climate near East Coast ports means that companies will continue to consider other ports, such as those on the Gulf Coast, to ship their goods.

Shipping industry analysts predict that the environmental legislation that oversees truck emissions will have little effect on the ports of Los Angeles and Long Beach. Southern California ports are established in such a way that intermodal connections and the concentrated population will continue to draw new business despite the laws on truck emissions.

Both the East Coast and the West Coast saw higher than average growth during the first six months of 2017. Imports typically showed an even distribution, with the East Coast coming out slightly ahead due to its ports at Houston and South Carolina.

The Panama Canal Expansion has meant that everyone gets to share in the increased business and profits. This can naturally lead to intense competition between port sites, a factor that only benefits consumers in the end.

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