A GAME CHANGER IN INTERNATIONAL COMMERCE

On June 26, after several construction delays and cost overruns, the new lane of the Panama Canal will be opened, introducing a new era in international shipping. The canal has a colorful history dating back to 1882, when a Frenchman, Ferdinand de Lesseps, began work on a sea level canal across Panama. At that time ships were the only form of international transport, and the new canal was touted as a development that would shrink the world.

From the beginning however, the project was plagued with problems – yellow fever, malaria, and financial difficulties to name a few. The volcanic ground was too much for the steam shovels and dredges; and finally, de Lesseps gave up his idea of a sea level canal. In 1885, the plan was changed to a lock canal, but in 1889, de Lessep’s company was forced into liquidation. In 1894, a new company was formed in France to complete the canal, but it too gave up five years later and began a search for a buyer. (Its lease on the land was not up until 1903.)

In 1889, the United States had begun construction of a canal in Nicaragua, but in 1893, a stock panic halted the construction. At that point, many wanted to continue the Panama Canal instead, and after a long series of arguments, negotiations, and personal fortunes lost, in 1902, Congress surprisingly voted to build in Panama instead of Nicaragua. President Theodore Roosevelt was given $40 million for the canal and the authority to negotiate with Columbia, of which Panama was then a part. The latter became impossible, and Panama planned a revolution which was quietly supported by the U.S. Navy. After that, the rest was easy.

Construction was not easy however, and disease was a major problem. (Between 10,000 and 20,000 had died between 1882 and 1888.) U.S. doctors however, were able to conquer the mosquitoes and their yellow fever and malaria, with insecticides and screened tents; and after nine years of seemingly insurmountable construction obstacles, in 1914, the canal was completed. The final cost, in 2015 dollars was $15 billion. Until this day, it remains a marvel of engineering and construction expertise.

For several years however, it has been too small for the new, post-panamax ships, and often vessels that can pass through it, must wait for days to traverse the canal. In 1999, in accordance with an advance agreement, the canal was turned over to Panama. The Panamanians quickly realized however, that even larger ships were being constructed; and in 2006, decided to expand the canal at a projected cost of $5.25 billion. A third lane was added, with new locks at either end. Each lock has three chambers, each of which is 1400 feet by 180 feet, and 60 feet deep. They will accommodate ships of up to 1200 feet long, and 160 feet wide, with a draft of 50 feet.

East coast and Gulf ports have spent the past several years modifying infrastructure and deepening harbors to accommodate the larger ships, and it is expected that the flow of international traffic will change significantly.

But, that is not the end of the story. The newest generation of ships will not fit through the enlarged canal. For example, the CMA CGM Benjamin Franklin called at Long Beach several weeks ago. It is 1306 feet long, 197 feet wide, and has a capacity of 18,000 TEU’s. The containers were stacked eight containers high, two layers short of capacity because the cranes at Long Beach weren’t high enough. So while the East Coast even larger ones.

Three years ago, there was a flurry of publicity about a new canal across Nicaragua, funded by the Chinese at a cost of $50 billion. So far however, this seems to be somewhere close to the impossible dream, a challenge that even Don Quixote wouldn’t take on.

Written By: Clifford F. Lynch