Panama Canal Expansion Will Contribute to Increased Warehouse Investment in American Ports

Posted : 03/25/13 6:43 AM

The Panama Canal is one of the world’s busiest waterways, handling an estimated 5% of the world’s freight every year1. Since its completion in 1915 there have been some minor efforts to improve the 48 mile long canal. These have been restricted to efforts prior to WWII of building a few new locks to allow the canal to handle larger warships and the construction of the Madden Dam to increase the water supply to the canal2. Currently the Panama Canal is having the largest overhaul that it has seen since it was opened, with the widening of the canal to accommodate many of the larger ships traveling the seaways now. The entrances to the canal are being improved as well with the construction of several new locks at both the Atlantic and Pacific ends. The most important aspect of these improvements is that it will open a new lane and double the capacity of the canal by 20253. One of the major impacts that this increased capacity is expected to have is that it will create an increased demand for warehousing of cargo that has passed through the Panama Canal along the Gulf Coast and the eastern seaboard of the US. This expected increase in traffic has seen capital investment being poured into gearing up the intermodal freight infrastructure from Texas to New York where the Bayonne Bridge is being raised to allow larger ships to pass beneath it4. Another benefit of the widening of the Panama Canal will be the oil refiners who are currently the third largest users of the canal behind grain and container transports5. While a great deal of cargo will still be transported across inland United States by rail or road, less time sensitive cargoes like crude oil can benefit from the more cost effective transportation offered by ships. Since the decline of the supertankers in the past decade and the widening of the canal, the size restrictions that once kept the oil tankers out of the canal will have been overcome and they will now be able to take the shortest route between the Atlantic and the Pacific. This more direct transit is expected to have a positive impact on oil prices in the US generally. At the same time the increased capacity of the canal will also increase the volume of freight that will be shippedto the east coast ports, stimulating economies across the country and further stimulating the development of our seaports. References: