June 26 or Bust

The $5.3-billion expansion of the Panama Canal, originally scheduled for completion in time for the Canal’s 100th anniversary in 2014, now is expected to be open for business before the end of next month.

Panama CanalThe mega-project, plagued by cost overruns, contractor disputes and the belated discovery of “seepage” during testing of new locks, will open on June 26. So says Canal Authority Administrator Jorge Quijano. However, Quijano noted in a recent interview with Bloomberg.com (at the opening of a new canal training center) “there is still a lot of work to do,” adding “we can’t lose face.”

A lot more than egg on some faces in Panama is riding on the opening of the expanded Canal.

The widening of the 50-mile waterway that connects the Atlantic with the Pacific through the Isthmus of Panama will bring tons of new shipping from Asia directly to East and Gulf Coast ports in the U.S. that have been upgraded to service huge Post-Panamax container ships. The 1,000-foot-long Post-Panamax vessels require clearance to a depth of at least 50 feet in harbors and special cranes on docks to handle supersized containers.

Ports from Halifax in Canada to Brownsville, TX (and everywhere in between) have been upgrading for several years to be ready to greet the Post-Panamax ships. The Port of Virginia and the Port of Baltimore met the requirements well over a year ago; several other ports are racing to be ready by the middle of next year, when shipping through the Canal is expected to surge to an annual rate of more than 360 million tons. The Port Authority of NY and NJ, which operates one of the nation’s busiest ports, is working non-stop to complete a project to raise the Bayonne Bridge to a height that will permit Post-Panamax vessels to travel under it.

The Panama Canal expansion is expected to impact trade routes throughout the world, allowing ships to reach Asia from the U.S. Gulf Coast more than two weeks faster than they would going east through the Suez Canal. The expanded Canal also may eliminate the need for ships from Asia to offload their cargo on the U.S. West Coast and send goods overland to destinations throughout the U.S. [Ports on the West Coast are disputing this, saying they have upgraded rail lines and will speed up overland delivery so they can match or even beat the arrival times of goods delivered by Asian vessels sailing directly to East and Gulf Coast ports through the expanded Canal].

The Post-Panamax vessels can carry 12,600 containers, nearly three times the tonnage that could flow through the existing locks at the Canal before the expansion. The expanded Canal also will open the waterway to huge tankers carrying liquefied natural gas.

The Canal Authority is testing the new locks this month by sending a tanker through them to determine if the seepage problem has been resolved. Let’s hope everything is ship-shape, permitting the greatest engineering feat of the 20th century to launch a larger and much more lucrative version of itself in the 21st.