Expanded Panama Canal opens for commercial use

The Panama Canal's third lane opened for business, following Sunday's transit of the 9,472-TEU COSCO Shipping Panama.

Expanded Panama Canal opens for commercial use

The Panama Canal's third lane opened for business, following Sunday's transit of the 9,472-TEU COSCO Shipping Panama.

Expanded Panama Canal opens for commercial use

The Panama Canal's third lane opened for business, following Sunday's transit of the 9,472-TEU COSCO Shipping Panama.

 
New larger ships are now able to transit the Panama Canal following Sunday's transit of the COSCO Shipping Panama.
    The 9,472-TEU containership, built this year and renamed specifically for the historic event, entered the new Agua Clara locks from the Atlantic Ocean early Sunday morning, and spent the day traveling through the waterway. It had won the honor to be the first "neopanamax" ship to make a commercial passage through a lottery.
    The vessel arrived in late afternoon at the Cocoli locks at the southern end of the canal, where it paused for a ceremony presided over by Panama's President Juan Carlos Varela Rodríguez, then slipped into the Pacific approach to the canal at sunset.
    COSCO Shipping Panama towered above the tens of thousands of spectators and dignitaries who gathered for the event at the middle of Cocoli's three locks.

COSCO Shipping Panama enters middle Cocoli lock
    Until now, the largest containerships able to pass through the canal have had a carrying capacity of just 5,000-5,100 TEUs, but with the three new locks at either end of the canal, ships carrying 13,500 to 14,000 TEUs will be able to use the waterway.
   Since August 2007, the Panama Canal Authority (ACP) has spent more than $5.4 billion to build a third lane to accommodate larger ships that could not fit through the original waterway, now more than a century old. There are billions of dollars more in disputed charges by the contractors, who won the contract to build new locks by offering a price far below that of other companies that had wanted to build them.
    The expansion of the waterway was a huge project that included building three new locks at either end of the canal, and an accompanying set of water saving basins for each. It also required widening and deepening the existing waterway, building additional channels and ocean approaches to the new locks, and adding water storage capabilities.
    The opening was a huge event for Panama, a small country of about 4 million people. Foreign dignitaries, tens of thousands of workers who labored on the project, and citizens attended ceremonies on either side of the waterway that not only featured oratory, but also huge fireworks displays and music.

The nation's pulse was racing with patriotism from the historic event. Source: Scarbrough, International
    The entire event was broadcast live on Panama television and on the ACP website, and nearly 1,000 journalists from around the country, and the world covered the event. There were celebrations throughout the country.

Security was tight as the world's eyes focused on the country for the historic event. Source: Scarbrough, International
    "This is a historic moment in the global economy that our world lives in," Port Tampa Bay CEO Paul Anderson said in a statement. In addition, Anderson said the expansion "will have multigenerational impact on the world. Whether you are a customer, a consumer, ocean carrier, port authority or shipper, this will impact you in some way. It is about time the world recognizes what Panama and the Panamanian people have accomplished."
   The ceremony on Sunday capped a weekend of events - Panama President Juan Carlos Varela Rodríguez, ACP CEO Jorge Luis Quijano and ACP Chairman Roberto Roy spoke to thousands of executives from the shipping industry at a reception Saturday night.
    Quijano said Saturday that "During the last nine years we felt your support, not only in words, but also in actions as we witnessed the increased number of larger vessels being built to fit the new locks’ dimensions immediately after we announced our expansion.”
    The new locks are 180 feet wide and 1,400 feet long compared to the locks that were built more than a century ago, which are 110 feet wide and 1,000 feet long. For the container shipping industry, this means the maximum size vessels able to pass through the waterway will increase from about 5,000 TEUs to 13,500-14,000 TEUs.
    The water saving basins mean they can do that even while using 7 percent less water than the existing locks at the canal, even while handling much larger vessels.
    Quijano also noted that ports along the U.S. East Coast have deepened their channels and upgraded facilities, and some shippers have even shifted distribution centers, in anticipation of the expansion's opening.
   "We expect to see much higher frequency of larger vessels and we expect to see more cargo coming on those ships," said Port of Jacksonville CEO Brian Taylor, one of many shipping executives attending the reception.
    U.S. Federal Maritime Commission Chairman Mario Cordero reflected on the enormity of the accomplishment of the Panamanian government, completing the waterway in just nine years. He noted the new Gerald Desmond Bridge in the Port of Long Beach, where he was once a commissioner, was given the green light in 2000 and is not expected to be completed until 2018.
    "Panama should be so proud that they built the 21st century project of the Western Hemisphere, Cordero said. "It's going to do a lot for the new dynamic of trade and commodities."
    Fellow commissioners William Doyle and Richard Lidinsky were also in attendence. Doyle said the project should be a boost for LNG and other exports, and Lidinsky said the new route should help shippers by increasing competition with railroads.
    Over 170 ships that previously could not have fit through the waterway in the past, mostly large containerships, have made reservations to pass through the expanded waterway, Quijano said.
   Quijano announced that a ship carrying LNG had made a reservation to use the canal. It was not immediately clear if the LNG would be loaded in Trinidad and Tobago or the United States, but ACP officials said that shippers of LNG and LPG, both of which are now being produced in large quantity in the United States because of fracking, were expected to be a big source of cargo in the years ahead. Several LPG carriers have also made reservations to use the larger locks at the canal.
    LNG exports will provide "clean energy sources for the people of Japan and South Korea," he said.
    The initial reservations being made by liner companies are for containerships carrying 8,000-9,000 TEUs, but Quijano said he expects ships with 13,000-14,000 TEUs of capacity to be using the expanded waterway in a year or more.
    However, Anders Boenaes, head of network at Maersk Line, said many East Coast ports would have difficulty handling the largest Panamax vessels because of problems related to ship draft or length, crane height, landsided capacity, or in the case of New York, air draft, because of the ongoing project to raise the Bayonne Bridge. Raising the Bayonne Bridge is seen as particularly critical if 13,500-TEU vessels are to use the Panama Canal and call U.S. East Coast ports because it is such a large gateway.
    On Sunday, Maersk Line said it was likely to make increased use of the expanded Panama Canal and reroute more services through the waterway.
    Maersk Line had abandoned the Panama route for Far East to U.S. services in favor of Suez services several years ago in order to take advantage of the economies of scale larger ships could afford.
    However, the Danish carrier began to reverse course last summer, adding the TP10 service from China and Korea to the U.S. East Coast Suez route. In addition, earlier this year, the carrier started a new string called the TP18, which connects China and Korea with Houston, Mobile and Miami. The company also uses the Panama Canal for its Oceania service from Australia and New Zealand to Philadelphia; and its Ecubex and Ecumed services from the West Coast of South America to Europe.
    Soren Toft, the chief operating officer of Maersk Line, said Saturday that Maersk will likely reroute one of its existing trans-Suez services, the TP11 or the TP12, from a trans-Suez to a trans-Panama routing.
    The switch may be accompanied by a change in port calls so the remaining Asia-East Coast Suez service would call southeast Asian ports, while the one through the Panama Canal would call ports in northeast Asia. In that way, the company would be able to offer the best transit times. It is also undecided if the service would return through the Panama Canal or the Suez Canal, or return to Asia via the Cape of Good Hope.
    ACP Deputy Administrator Manuel Benitez said the canal hopes to attract about 10 percent of the cargo that currently is moved by intermodal rail through West Coast ports to the eastern part of the U.S.
    He noted that the canal has broad benefit to the country. The canal employs about 10,000 people and has contributed $1 billion of revenue to a country that had a GDP in 2014 of $46.2 billion according to the World Bank. Benitez said there are projections that in the first year, the money the canal contributes to the country's economy will be $400 million.
    Quijano also noted that ports along the U.S. East Coast have deepened their channels and upgraded facilities, and some shippers have even shifted distribution centers, in anticipation of the expansion's opening.
    “All this is proof of the trust that the shipping industry has on the project’s impact on global trade. You were here with us. Tonight I can proudly say that we did it and we did it together," he told industry executives.
      Ships passing through the canal last year handled a record amount of cargo at 340.8 million tons, and Quijano expects the third lane will allow that quantity to double.
    The U.S. will benefit not only from LPG and LNG exports, but from lower costs of transporting exports such as grains and chemicals, and importing everything from building materials, household goods, electronic appliances, clothes and toys. Larger roll-on/roll-off ships able to pass through the canal will lower the cost of imported automobiles from Japan and Korea.
    South American exporters of bananas from Ecuador, along with wine, apples, grapes, salt and copper from Chile, will also benefit from the economies of scale resulting from the use of larger vessels.

We've become so commoditized that we have to find a way to differentiate. I think technology is one of those things.

Spot container rates from China/East Asia to the U.S. West Coast stood at $1,531 per FEU as of May 10, up 10.6% year-over-year, while rates from China/East Asia to the U.S. East Coast totaled $2,926 per FEU as of May 10, up 22.2% year-over-year, according to the Freightos Baltic Index.

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Expanded Panama Canal opens for commercial use

The Panama Canal's third lane opened for business, following Sunday's transit of the 9,472-TEU COSCO Shipping Panama.

Jun 27, 2016 on Dec 27, 2018AmericanShipper.com

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Expanded Panama Canal opens for commercial use

The Panama Canal's third lane opened for business, following Sunday's transit of the 9,472-TEU COSCO Shipping Panama.

Jun 27, 2016 on Dec 27, 2018AmericanShipper.com