The seven-decade journey to an expanded Panama Canal is coming to a close, despite one last obstacle.
(by David Z. Morris / April 17, 2015)
The Panama Canal is getting a major
overhaul, and despite an unresolved lawsuit that
has delayed the project, it’s poised to transform
global trade dramatically.
The original Panama Canal remains of the
most ambitious public works projects of all time.
But it wasn’t quite ambitious enough: within a few
years of its opening ∈1914, it was too small for
many military and cargo ships. The U.S. authorities
then ∈ control began excavation for larger locks ∈
1939—but that work came to a standstill as
America entered World War II, and no effective
progress was made on the project for the remainder
of the 20th century.
That changed swiftly when the canal
transitioned to full Panamanian control ∈1999. By
2006, a detailed expansion plan had been drafted
and approved by Panamanian voters ∈a77%
landslide. With a total budget of $5.2 billion,
completion was initially projected for 2014. Last
year, the canal netted $2.6 billion, roughly half of
Panama’s national revenue. The Panama Canal
Authority has projected that the expansion will
increase that revenue eightfold by 2025.
There’s been a hitch ∈ the expansion effort,
however. A group of mostly European contractors
known as the Grupo Unidos por el Canal has filed
claims totaling more than a half billion dollars
against the Panama Canal Authority, alleging that
misinformation led to cost overruns.
But according to Dr. J. David Rogers, a
professor of geological engineering at Missouri
University of Science and Technology, who has
worked closely with the Panamanians for more
than a quarter-century, the real problem is that
contractors knowingly underbid the job.
The canal expansion is about more than
money to the Panamanians, according to Dr.
Rogers. “It’s a national pride project for them. It’s
their lifeblood,” he says of the Panamanians’
feelings about the canal. “It’s what makes them
go.”
The same seriousness didn’t characterize
Americans’ approach to canal expansion. Of a
series of false starts and fizzled plans, the most
amazing came as part of Operation Plowshare, the
“Atoms for Peace” program of the U.S. Atomic
Energy Agency (now the Department of Energy).
Intended to highlight the peacetime usefulness of
atomic warheads, Plowshare spent more than a
decade exploring the possibility of widening the
canal by detonating a string of nuclear warheads.
Rising awareness of environmental risks ∈ the
1960s scuttled the idea.
Under the current, nuke-free plan, new
approach channels and locks are being excavated
alongside the existing entrances, allowing
operations to continue normally during
construction. The new locks and channels will be
about three times bigger, allowing the passage of
more of today’s huge container ships. The
maximum load will increase from about 5,000
containers to 12,000—though the very largest
ships, which currently balloon up to 19,000
containers and primarily work routes between
Europe and Asia through the Suez Canal, still
won’t fit.
The expansion will provide cheaper shipping
between Asia and the American Gulf Coast. Traffic
that currently flows through West Coast ports such
as Los Angeles and Long Beach—including huge
amounts of Midwestern grain and coal—will soon
move more directly through ports including
Houston and Savannah. Ports along the U.S. Gulf
and East coasts have been expanding to
accommodate increased ship size and traffic.
The ongoing court battle means that even the
Panama Canal Authority’s recently-updated 2016
target for completion may be missed. But a bigger
canal is finally coming—and with it, a host of new
possibilities.
(fortune.com/2015/04/17/panama-canal/)
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