The $5.3 billon Panama Canal expansion project is expected to be completed early next year, slated to open in April. Adding a third set of locks will make an enormous impact. After the expansion vessels will be able to transit through the Canal, with up to 13,000 TEUs capacity.
The expansion doubles the Canal’s capacity and is having a direct impact on economies of scale and international maritime trade.
Impact to Canal route: It’s expected this will overnight unlock the canal to 45 percent of the total container ship fleet —1,331 ships representing roughly 10 million twenty-foot equivalent units of capacity that is in service or on order. That includes 980 ships of 5,400-9,999 TEUs and 149 ships of 10,000 TEUs or greater, according to an analysis by IHS Maritime & Trade. Combined with ships currently able to transit the canal, 87 percent of the world fleet in terms of total capacity will be Panama-canal capable while 157 ships totaling 2.7m TEU of fleet capacity (in service and on order) would be too large to transit the new canal. Learn more about the project here.
Impact to future of routes: With many expecting that Asia-to-North America East Coast container cargo will switch to the shorter Panama route from the Suez, there will be no shortage of opportunity for carriers to deploy larger tonnage in this market. At 18 knots, Shanghai to New York is 24 days and 10,600 nautical via the Panama Canal, which is four days and 1,200 nautical miles shorter than via the Suez, according to the website Sea Distances.
Impact to existing U.S. ports: Several U.S. ports are undergoing massive improvement projects due in part to the Panama Canal project. The Ports of New York/New Jersey, Miami, Mobile, Long Beach and Seattle/Tacoma are investing some $12 billion combined to deepening port channels and modernizing container terminals to accommodate larger ships. Read more here.