In the midst of shipping industry woes, is a Panama Canal expansion a good thing?
On June 26, the colossal Panama Canal expansion—a.k.a. The Third Set of Locks Project—opens after nine years of work on the $5.4 billion project.
The global shipping industry is plummeting, cheap gas prices make the journey through the canal less of a financial advantage than it once was, and major shipping companies are forming collective efforts to save resources and share massive ships—the ones that often can’t fit through pre-expansion Panama Canal.
Western trade will be critically updated, especially since the canal handles will be more expansive. With 50 more feet of space, larger and higher volumes of traffic can flow through.
The global impacts also boosted jobs worldwide, according to Ilya de Marotta, Executive Vice President for engineering at the Panama Canal Authority. “Gates were fabricated in Italy, valves were fabricated in Korea, the design was done all over the world from Chicago, Denver, Argentina, Mexico, Netherlands,” de Marotta said.
“The most significant part is not the amount of the vessels, but the size of the vessels.”
[Explore our infographic on impacts from the Panama Canal’s expansion on the global shipping industry.]
An additional bonus: with all of the fracking happening in the U.S., Asia has become enamored with American liquefied natural gas, but before the expansion ships carrying the resource from the U.S. Gulf didn’t fit through the old canal.
With the expansion, the new and improved lane will be a “game changer”, according to Panama’s Vice Minister of Economy, Ivan Zarak. “We do believe it’s going to change some of the world routes for commerce,” he said.
In general, trade is still in recovery from the great financial crisis. If a sluggish shipping industry is more than temporary, what opportunity will the new canal bring to the globalized world?
