While more containerships are under construction that are too large to pass through even the new set of locks being built for the Panama Canal, Jorge L. Quijano, chief executive officer of the Panama Canal Authority, said Monday that when the waterway opens the enlarged locks in 2016 it will be able to accommodate 98 percent of all these vessels.
Quijano was a keynote speaker at the 33rd International Navigation Congress of PIANC
, the World Association for Waterborne Transport Infrastructure, held this year in San Francisco.
The canal is expected to open in the first quarter of 2016, perhaps in January of that year, following resolution last month of a two-week strike by the national construction worker union.
That strike followed a three-month work stoppage earlier this year by GUPC, the consortium of companies heading construction of a new set of locks that will allow larger ships to use the waterway, over whom should be responsible for cost overruns in the projects.
In an interview with American Shipper
, Quijano said “I am hoping that because we have so much time between now and the end of the project that some of the time can be picked up.”
He said there are no major unknowns facing the builders of the canal.
“The locks construction, the physical civil works, is already up, about 82 percent of all the concrete work of the locks itself. The rest is buildings. The 16 gates are almost complete and next month they should have the last two gates completed and awaiting shipment only,” he said.
The gigantic sliding gates that separate the locks are being built in Italy and are transported on a semi-submersible ship so they can be rolled on and off using special trailers.
(Quijano said he keeps a close eye on their shipment, displaying to PIANC members during his speech a computer screenshot of a ship-tracking website that he downloaded that morning showing the ship carrying the gates halfway across the Atlantic.)
Asked about the increased number of very large containerships using the Suez Canal to move cargo from Asia to the United States, Quijano said “we always envisioned this would happen, and this is why we are expanding—otherwise we would not have expanded and made the hefty investment we are making to try and keep up with technology.”
Containerships supply about half of the revenue for the Panama Canal, and he said it's important for the canal to accommodate the industry’s move toward bigger vessels. He noted when the canal was designed it was expected that ships carrying 8,000 to 10,000 TEUs would be the common users of the canal, but that it was built to accommodate 12,500-TEU ships. Since then, he said naval architects have created optimized designs that will allow ships carrying 14,000 TEUs to transit the new set of lock.
He said 14,000-TEU ships are very competitive even when compared to the +18,000-TEU Triple E ships that Maersk has built.
“We have been looking at the numbers and we don’t see as many orders for the very, very large container carriers. Most companies are staying within the 12,000-14,000 TEU and even some in the 8,000-9,000 TEU range,” he said. He said the new locks will be able accommodate 99 percent of the existing container fleet and 98 percent of all containerships when both existing vessels and those on order are considered. The largest ships are currently used in the Asia-Europe trade.
According to the information service Alphaliner, at the end of 2013 there were 66 ships with capacities of 13,300 to 19,000 TEUs, with an aggregate container-carrying capacity of 954,826 TEUs. While very small in numbers, those ships represent 5.5 percent of the capacity of the world fleet of 4,976 containerships which have 17.3 million TEUs of capacity.
Alphaliner said the current orderbook would see the +13,300-TEU segment grow to 172 ships with aggregate capacity of 2,611,015 TEUs by the end of 2016. That would be about 12 percent of the world containership capacity.
Quijano said the canal authority believes that with the the new locks it is providing the container industry “with a good option. They will have a better unit price when carrying containers on a large vessel. We will be competitive with the Suez Canal, even with a smaller vessel. Even with an 8,000- or 10,000- or 12,000-TEU vessel, we will be competitive from North Asia to the East Coast of the United States. Of course that is not our only route—we service other routes such as the west coast of South America to the East Coast of the United States and Europe.”
He said the Panama Canal also expects to benefit from exports of liquefied natural gas from the United States to Japan and Korea. By 2020, he said as many as three LNG carriers will transit the canal daily.
Quijano says the current Panamax-size ships, commonly with capacities of 4,500 to 5,000 TEUs, are “fading away” in popularity and some are being scrapped even though they are only 18 to 20 years old. He explained they have become less attractive with the rising price of fuel because their long, slender design means they have to carry large amounts of ballast which is expensive to transport.
A report by Global Arbitration Review
said the dispute between GUPC and the Panama Canal Authority over who will pay for cost overruns is being heard by a tribunal of the International Chamber of Commerce seated in Miami.
Last week, the Panama Canal Authority said it would charter a post-Panamax vessel before the opening of the new locks to train pilots and tugboat captains how to maneuver bigger ships through the locks.
Unlike the current locks, which use locomotives to move ships through the waterway, the new locks will rely on tugboats to move the ships from lock to lock, and ships will be held in place with mooring ropes.
Arcello Hartley, chairman of the board of inspectors for the Panama Canal Authority, noted that Panama's pilots and tug operators already have common extensive experience moving ships too large to transit the canal — both containerships and VLCCs — in and out of Panamanian ports and terminals.
“It’s not going to be a shock for them to be on board the larger vessels,” he noted.