On June 26, 2016, Panama, a COSCO (Chinese Ocean Shipping Company) vessel, was the first commercial ship to transit the expanded Panama Canal. I was privileged, with my wife, Phoebe, to attend the Expansion Ceremonies and get a special tour of the new Cocoli locks on the Pacific side of the canal.
The special tour took us, first, to the entry point for the larger vessels before coming to the original Pedro Miguel and Mira Flores locks. Then, we visited the Cocoli locks and were able to get a close-up view of the entire system.
Before getting to the ceremonies with the COSCO vessel right in front of us, I would like to take you to the importance of the expanded Canal to the United States, and in particular to New York.
Prior to the expansion, a car carrier transiting the Panama Canal could carry around 5,000 cars, depending on the size of the automobile. With the expansion, the carriers will be able to carry some 8,000 cars.
And take a look at container ships. Before the expansion, those vessels could carry around 4,000 containers. Now, with the expanded Canal, the container ships will be able to handle around 14,000 containers on each vessel.
One of the challenges facing the Port of New York-New Jersey is the Bayonne Bridge, which is too low to handle the larger vessels which will be transiting the Panama Canal. While channels are at the necessary depth, the work under way to raise the Bayonne Bridge, is behind schedule and will not be completed until early in 2017. But, let’s take a look at the positive side of when the Port will be ready.
In New York and New Jersey, there are currently millions employed in wholesale trade, transportation, and warehousing companies. It can be expected that these areas of New York-New Jersey’s economy will greatly expand, and there will be new manufacturing jobs created. And shipping goods further to west, will be amplified once the Port is ready for the larger ships,because of the economics of container traffic.
Now, take a look at other positives flowing from the expanded Panama Canal. First, shipping costs will be much cheaper due to the size of loads to be carried. That means
East Coast ports, including Miami, will definitely get more volume, because it will be 10 percent cheaper to shift containers from West Coast ports to East Coast ports. In other words, the shipping line will move further west because of the lower costs to the companies receiving the goods.
Two other positives relate to LNG (Liquid Natural Gas) and grain from the mid-west. The largest reserves of LNG are in the United States. And United States grain represents around 20 percent of all current traffic through the Panama Canal. Both LNG and grain are in high demands from Asian countries. For grain, it will mean lower costs for shipping the grain. As for LNG, before the expansion, very few LNG vessels could transit the Canal, because they were too large. Now, that has changed, and there has already been a tremendous number of LNG ships booking transit dates.
Now, to the interesting ceremonies leading up to the transit of COSCO’s Panama through the Cocoli locks—the first commercial vessel to transit from the Atlantic side to the Pacific. The event was scheduled for 4 p.m. and the ship’s arrival was just about on-time. The interesting side note is that on a very large screen, we were able to see the ship as it crossed under the Centennial Bridge and on to the new passage to the Cocoli locks. As it arrived in the first stage of the locks, the event started with President Juan Carlos Varela speaking to the thousands present for the event, followed by Jorge Luis Quijano, the Panama Canal Administrator.
The expanded Canal will be a game changer for the world economy and will even offer real competition for the Suez Canal.
It is really all about the costs to get from point “A” to Point “B,” and the expanded Panama Canal will cause significant shifts in world trade.
Robert R. McMillan was a former chairman of the Panama Canal Commission.
