Increased Ship Sizes in the Panama Canal Boost Intermodal Transport in the US

Since the Panama Canal opened to traffic in 1914 it has been a focal point of world trade. One hundred years later it remains a vital part of the sea lanes and sees 5% of the world’s total shipping pass through its locks every year. The US is especially reliant on the flow of traffic through the Panama Canal with 70% of all cargo into and out of the country passing through the canal1. Since the canal was first designed in 1903 the shape of the freight transport industry has changed considerably. The widespread introduction of intermodal shipping systems after the 1950s saw ship sizes increase in an effort to be a more cost effective mode of cargo transport. As the size of these ships increased fewer of them were able to use the Panama Canal and it became clear that there was a need for its redevelopment. The influence of the Panama Canal on the shipping industry has been profound and vessels are even rated by whether they are able to use the canal or not. Ships that are oversize for the short passage are referred to as post-panamax ships. As the world’s container fleet grew in size and the vessels became bigger these post-panamax vessels became the dominant form of transport. In order to become relevant in the modern world of freight transport the government of Panama embarked on a scheme2 to widen the canal to allow many of these larger vessels to use it. The project is due for completion in 2015, after which time the movement of freight through seaports on the US eastern seaboard and along the Gulf Coast is expected to see a boom as greater volumes of containers can take advantage of the short cut through Central America. At the same time the support infrastructure for this influx of cargo has also been ramped up to cope with the expected increases. The CEO of the Association of American Railroads, Edward Hamberger, recently made a statement to the Senate Committee on Commerce in which he said; “The fact is, whether the freight is coming into … any major port, our nation’s freight railroads are in a good position now, and are working diligently to be in an even better position in the future.”3 He went on to say that the intermodal network had seen huge development that had been funded by the private sector in anticipation of the boom times to come. References: 1. http://www.pbs.org/wgbh/americanexperience/features/then-and-now/panama/ 2. http://www.npr.org/2012/04/04/149923363/an-upgrade-and-bigger-ships-for-the-panama-canal 3. http://www.bdpinternational.com/news-advisories-events/trend-watch/railroads-said-to-be-prepared-for-increased-business-brought-on-by-panama-canal-expansion/