The Real Story of the Expanded Canal

In January of this year, the Expanded Canal contributed to a record 36.1 million Panama Canal tons transiting the new and original locks. This number may seem remarkable, but perhaps what’s even more so is how far back one must only look to find the last time the monthly record was set: December 2016.

Just seven months in, this month-on-month achievement speaks not only to the industry’s growing adoption of our enhanced route, but to their continued faith in the Canal’s ability to provide safe, reliable and efficient service, as it has the past 102 years. While like with most things, success doesn’t come overnight; but what we’re witnessing today is the culmination of nine years’ worth of determination and hard work, tireless innovation, and unrelenting commitment to progress in the face of great challenges.

This the real story of the Panama Canal. This is the story of its Expansion.

From the moment the original Canal began operations, Panama approached its service to the maritime community with one eye on the future, and the other focused on the learnings that would guide it there. And so, when the United States handed the Canal back to the people of Panama, we set out to make our own mark and build our future. We took our cues from the corporate world and began running the Canal more like a business than a public utility, constantly looking for ways to create efficiencies and augment value, improve transit times and safety, and re-invest back into the Canal to position it for future success.

It only made sense that as the industry began to evolve, and build new ships too large for the existing locks, we too had to adapt. We explored the idea of creating a larger lane to accommodate the larger ships, and after hundreds of studies, years of analysis, and the passage of a national referendum, we broke ground on what would become the Expanded Canal today. The nearly decade-long, multi-billion dollar project was a massive undertaking. But much like when Panamanians assumed control of the Canal, we would not be deterred, and so we applied the same level of diligence and commitment to ensure the project was done right and that our people were fully trained and prepared.

The Canal’s design was developed per industry best practice and followed dozens of studies and feasibility assessments. Panama also joined other waterways around the world in using tugboats to maneuver ships through its locks, and we provided hands-on training to ensure our pilots and tugboat masters were sufficiently prepared years in advance. We updated the full bridge simulator technology at our SIDMAR facility, practiced transiting vessels with tugs in the original Canal Locks, designed and built a Scale Model Manned Maneuvering Training Center, chartered Neopanamax vessels for personnel to conduct trial transits through the new locks, and added the most precise navigation instrumentation available in the market to assist in the guiding of vessels.

Already, investments in the project and our people have paid off. In its first complete month of operation, the Expansion transited nearly 60 Neopanamax vessels, and just seven months in, we’ve transited 800 Neopanamax and 151 Panamax vessels through the Expanded Canal Locks and channels. We’ve also welcomed a number of new services through the Panama Canal, as lines reroute their services to take advantage of the economies of scale offered by the Expanded Canal.

Examples of this growth is apparent along the U.S. East Coast. Since the Port of Virginia began its fiscal year 2017 (July 1, 2016 - June 30, 2017), container volumes grew by 8 percent in comparison with the same period in fiscal year 2016. A portion of this growth is attributed to the Expanded Panama Canal, which has and will continue to play a growing role, as the Port of Virginia undergoes its three-year capacity expansion plan. Port of Baltimore has also felt the effects as well, having a record-breaking performance in 2016.

This January, less than a year after The Wall Street Journal projected the Expansion would be a boon for South Carolina, the Port of Charleston set a monthly record for containerized cargo. South Carolina Governor Henry McMaster is now planning to invest $5 billion in new infrastructure projects to accommodate the growing demand. Meanwhile, the Georgia Ports Authority reported a 16 percent growth in volumes for January 2017. And in Florida, PortMiami is ‘Big Ship Ready’ with more than $1 billion of infrastructure improvements completed, including the Deep Dredge Project, which increased the channel depth to 50 - 52 feet.

The Expansion has also led to a host of new opportunities. For example, its wider, deeper and longer lanes now open the Canal to 90 percent of the global LNG fleet, meaning that now, for the first time ever, LNG producers in the United States can ship natural gas to Asia at competitive prices. Beyond simply cutting distances, times and costs for the carriers, the new lane is allowing shippers to cut emissions - in its first decade of operation, the Expansion is expected to reduce carbon emissions across the shipping industry by an estimated 160 million tons.

The Panama Canal makes every effort to be more accessible to our customer and to better understand their needs. I just returned from a recent visit with our main customers in Europe where they expressed the positive impact that the opening of the Expanded Canal has had on the industry. We heard their valuable input and will strive to further enrich the service we offer so that we can grow together. With the quality and commitment of our workforce and the additional capital investment projects that the Canal has pursued beyond the Expansion effort, we will be able to create more capacity and ensure reliability to attract even more tonnage through our waterway.

While the Panama Canal has undergone a major evolution during the past several months on account of the Expansion, this is merely the beginning of an exciting new chapter for us. In the years ahead, we will continue to focus on enhancing our logistics infrastructure, which will add to the waterway’s already robust set of offerings, thus positioning the Canal as the preferred route and regional destination for carriers.

Innovation is a process that needs concentrated effort to produce valuable results. As such, it is only by listening to our customers and peers that we have been able incorporate major changes that have led us to successfully operate the Canal during the past 102 years, serving all market segments. As we move forward, we will continue to help reshape global maritime trade and reaffirm Panama as the logistics hub of the Americas.

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