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Dec 21, 2012 | 18:13 GMT

The Panama Canal's Expansion

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The Panama Canal's Expansion

The scheduled expansion of the Panama Canal will allow ships 25 percent longer, 50 percent wider and with a 25 percent deeper draft to pass through its locks. This ability to accommodate larger ships will likely increase shipping efficiency by taking advantage of economies of scale. The overall size of the average ship in the global fleet is increasing, whether container ship, bulk carrier or tanker. Post-Panamax vessels — ships that at present are too large to pass through the Panama Canal — already make up 16 percent of the global container fleet and carry 45 percent of the fleet's capacity. They are projected to make up 27 percent of the fleet (and carry 62 percent of the fleet's capacity) by 2030. The addition of new, bigger ships could have a cascade effect on the rest of the fleet; as the new ships are used to traffic the longer routes, older large ships would likely be redeployed to more regional routes, which would effectively increase the average size of the entire fleet as the smallest ships are retired. This could affect both container and bulk shipping. Even after the expansion is completed in 2015, the Panama Canal will not be able to accommodate the largest vessels, including 2 percent of the world's container ships (15 percent of global container shipping capacity) and roughly 17 percent of the current and on-order bulk vessels. However, the larger draft resulting from the canal's expansion will allow some ships that currently use the canal to carry more cargo. Moreover, post-Panamax ships at full capacity would require ports with depths of 15.2 meters (50 feet). Currently, all major U.S. West Coast ports except Portland, Ore., have adequate depth. However, on the East Coast, many ports are not deep enough to accommodate ships of this size, with the exception of Norfolk, Va., Baltimore and New York/New Jersey ports. Additionally, no Gulf Coast ports currently meet the 15.2-meter depth requirement. Therefore, even after the Panama Canal expansion is complete, smaller ships may still be needed to shuttle goods into many important ports.

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