US Ports May Have Unrealistic Expectations for Panama Canal Development Boom

The Panama Canal is currently undergoing a major expansion plan which began back in 2007. The purpose of this expansion plan is to make it possible for larger ships to pass through the canal. The expansion involves the placement of two new set oflocks. One set each will be placed on the Atlantic and Pacific sides of the canal. The basins in Gatun Lake and Culebra Cut will also be widened and deepenedto allow for the passage of larger ships. The plan is being financed by the port taxes collected which is current estimated at $32,000 per ship. As a result port cities such as Baltimore, Miami, Jacksonville, Fl., and Charleston, S.C. have initiated projects to expand their ports and related infrastructure however experts are warning that the demand may not be as highas these cities are anticipating when the Panama Canal expansion plan is completed. Experts are saying that the cities are likely not to benefit because they do not have the distribution channels that these large ships need in order to dealwith their cargo loads. The expansion plan was originally anticipated to be completed in 2014, however due to some issues with the current plans involving the delivery of concrete for the new locks, the expansion is now slated to be completed in 2015. The current estimate of the cost of the expansion in total is 5.25 billion dollars. When the expansion plan is finally complete, the canal will be able to accommodate ships with capacities of up to 12,000-13,000 TEUs. Currently exports fromChina are unloaded at West Coast ports including those located in Los Angeles and do not pass through the Panama Canal. Inaddition, the larger ships will likely dock at West Coast ports because they are already deep enough to accommodate the larger ships unlike the East Coast ports which require modification. Therefore shipping to the East Coast ports is likely cost prohibitive for companies looking to ship goods from Asia to the United States. On the other hand, some arguments are stating that the ships will have more cargo which will make transporting the goods to the East Coastmore expensive. Therefore these larger ships may save money if they travel through the Panama Canal and unload goods on the East Coast. The debate is likely to continue until after the expansion is complete in 2015.