First Vessel Passes Through Expanded Panama Canal

A Chinese ship carrying more than 9,000 containers passed through the newly expanded Panama Canal in late June, officially launching what NBC News describes as a multibillion-dollar bet on a bright future for international shipping.

Nearly two years late due to construction delays and labor strife, leaders of the $5.25 billion project celebrated its completion with fireworks, flags, foreign heads of state, 30,000 spectators, and the transit of Cosco Shipping Panama, a 158-foot-wide, 984-foot-long, Chinese-owned container ship—the sort of mega-vessel that will now be able to use the canal.

The new locks can accommodate ships that carry up to three times the cargo of those previously able to use the canal.

“There is evidence that the Panama Canal, with this expansion, is an important player not only for regional maritime commerce but worldwide,” said Oscar Bazan, the Panama Canal Authority’s executive vice president for planning and commercial development. “The canal is a winning bet. (Clients) will benefit from saving not only time but also money, because the canal is a route that shortens distance.”

The project comes to completion, however, amid a lull in global shipping due to the drop in oil prices, an economic slowdown in China, the canal’s second-largest customer, and other factors that have hit the waterway’s traffic and income.

While authorities anticipate increasing commerce between Asia and ports on the U.S. East Coast, doubts remain that not all those ports are ready to handle the huge New Panamex-class cargo ships. Net cargo volume through the canal from the U.S. East Coast toward Asia fell 10.2 percent in 2015, according to official statistics. Meanwhile the Suez Canal in Egypt recently lowered tariffs by up to 65 percent on large container carriers in an attempt to keep its traffic.

“It’s important to remember that the canal does not create demand,” said Antonio Dominguez, a general manager for global shipping leader Maersk Line, which moves about 14.2 percent of world commerce. “The canal opens the route.”

Mark Seib, who represents the United Soybean Board and the Soy Transportation Coalition, said the expansion can be good for U.S. soybeans, but the U.S. needs to strengthen its domestic transportation infrastructure, particularly its inland waterways required to get products into export position. 

Sources: NBC News, YouTube and Southeast Farm Press