By Beatrice E. Rangel
On June 26th the Panamanian Government celebrated the expansion of the Transoceanic Canal.
Also called the Third Set of Locks Project, the $5.8 billion investment doubled the capacity of the Panama Canal by adding a new lane of traffic allowing for a larger number of ships, and by increasing the width and depth of the lanes and locks to also allow larger ships.
The immediate impact of this engineering feat will be to lower trade costs between the U.S. and Pacific nations. Indeed, by allowing larger container ships with a capacity of up to 12,500 TEUs, the Canal will now reduce unit costs of goods traveling from Asia to the Caribbean and the U.S. East Coast. It will also reduce costs for U.S. exports.
The Panama Canal opened for business in 1914. Ever since any vessel intended for regular use in both the Atlantic and Pacific oceans, whether warship, cargo ship, or passenger liner, was built to fit its locks. Ship size was to be 965 feet in length, 106 feet in beam and 39 feet in draft. Carrying capacity was 4,000 TEU.
As world trade grew and container shipments became the norm, Post Panama Ships (those that were too big to fit the locks) began to take over transoceanic transportation with a carrying capacity of 8,000 TEUs. These ships traveled to Europe and the U.S. East Coast through the Suez Canal which could easily adjust to growing world exchanges given that it does not have any locks.
Traveling to the U.S. East Coast through Suez takes about 21 days. The Suez Canal can handle container ships carrying up to 14,700 TEUs which exceed even the size of the Panama Canal expanded locks. Maritime experts forecast that by 2030 these ships could represent about 35% of the world stock of container ships while Panamax Ships will gradually exit the global commercial float.
It thus seems clear that the much heralded expansion of the Panama Canal will need to be revisited in a decade so as to be able to secure passage to the new generation of container ships dubbed Post Panamax III.
And while a decade gives enough time for any government to launch an infrastructure development of this magnitude, the Latin American record does not seem to bode well for such an exercise.
The current mismatch between the expansion and developing trends in the container ship industry already underlines our major cultural drawback: lack of long term vision.
Should we add to this flaw the fact that none of Panama's neighbors designed any plans to develop a logistics system that complements the expansion and one will soon arrive at the conclusion that -- except for the U.S. and Mexico -- the Panama Canal Expansion will take over a decade to truly impact the economies of other Caribbean basin nations except the U.S. and Mexico.
Certainly, with Mexico planning to develop a major trade hub in Manzanillo which is a Pacific port and the US focused on rail projects to connect Los Angeles/Long Beach with the South East, most Pacific trade will probably coalesce around this facility.
To be sure, lettuce sent from China to New York through the LA/Long Beach port and rail takes 16 days to arrive. From the Panama Canal it would take 21.6 days. And should the size of the ship allow for greater economies of scale, the competitive allure of Panama dims out.
The whole experience shows how trapped the region South of the Rio Grande is in the paralytic vision inherited from Phillip II of Spain which does not allow its leaders to see the world as an evolving situation full of complex variables that need to be brought together in order to build progress.
Add to this mix the degree of corruption prevailing in every public works projects and you get a wider Canal but not better trade logistics for the Caribbean Basin which desperately needs to create employment and to widen opportunities for the citizens of the so called "Land of Grace" by Christopher Columbus.Beatrice Rangel is President & CEO of the AMLA Consulting Group, which provides growth and partnership opportunities in US and Hispanic markets. AMLA identifies the best potential partner for businesses which are eager to exploit the growing buying power of the US Hispanic market and for US Corporations seeking to find investment partners in Latin America. Previously, she was Chief of Staff for Venezuela President Carlos Andres Perez as well as Chief Strategist for the Cisneros Group of Companies.
For her work throughout Latin America, Rangel has been honored with the Order of Merit of May from Argentina, the Condor of the Andes Order from Bolivia, the Bernardo O'Higgins Order by Chile, the Order of Boyaca from Colombia, and the National Order of Jose Matías Delgado from El Salvador.
You can follow her on twitter @BEPA2009 or contact her directly at BRangel@amlaconsulting.com.
Also by Beatrice Rangel in her Latin America from 35,000 Feet seriesBeatrice Rangel: On Dialogue and the Rules of Geopolitics in Latin America
Beatrice Rangel: The Ides of Wisdom in Venezuela
Beatrice Rangel: On the Discreet Charm of Populism
Beatrice Rangel: Three Ladies in Distress
Beatrice Rangel: Trump, Lula, Kirchner and the Last Tupi-Guaranis
Beatrice Rangel: Time for Departures in the Americas
Beatrice Rangel: A Contrarian View on the Panama Papers
Beatrice Rangel: Brazil's Lady in Her Labyrinth
Beatrice Rangel: Back to a Divided Home!!!
Beatrice Rangel: A Historical Take-Off in the Americas??
Beatrice Rangel: A Skipped Journey, a Reaffirmation and a Clearing of Path in the Americas
Beatrice Rangel: The Demise of Civility in the Americas!!
Beatrice Rangel: The Americas from Boutros Boutros-Ghali to Ban Ki Moon
Beatrice Rangel: The Pope's Difficult Stopover in the Americas
Beatrice Rangel: Farewell to The “Diplomacy of Reason”
Beatrice Rangel: 2 Diseases in Latin America -- Different Prescriptions, Very Different Outcomes
Beatrice Rangel: On Health Alerts and the Long Arm of Justice in the Americas
Beatrice Rangel: When Crime Meets Glory
Beatrice Rangel: Playing Hansel and Gretel in the Americas
Beatrice Rangel: Good News/Bad News Starts The Monkey Leap Year
Beatrice Rangel: The Gifts of Christmas!!!!!!
Beatrice Rangel: Crying Wolf in Venezuela
Beatrice Rangel: A 21st Century Tale of Two Cities
Beatrice Rangel: Are the Americas Ready for President Trump?
Beatrice Rangel: On Predictions of War & Global Confusion
Beatrice Rangel: Paris and the Return of Fear
Beatrice Rangel: Marijuana & Latin America's Next Trade Corridor
Beatrice Rangel: Of Burning Airplanes & Argentinean Tsunamis
Beatrice Rangel: The Good, the Bad, and the Ugly in the Americas!!
Beatrice Rangel: Buena Vista's Magic Covers the Americas
Beatrice Rangel: Pride and Perjury in the Americas
Beatrice Rangel: Trompe L’oeils Proliferate in the Americas
Beatrice Rangel: The Economic Consequences of Peace in Latin America
Beatrice Rangel: Colombia, the FARC & the Makings of Gangland in Latin America
Beatrice Rangel: When Extreme Weather Meets Extreme Politics Calamities are Bound to Happen
Beatrice Rangel: When Ladies Hit 70
Beatrice Rangel: About Uninformed Elites and Gullible Leaders
Beatrice Rangel: On US-Engineered Soft Landings in Cuba and Venezuela
Beatrice Rangel: On the Many Ways Cecil Matters
Beatrice Rangel: Blue Moons Lead to Extraordinary Happenings in the Americas
Beatrice Rangel: On Why Embassy Openings Do Not Necessarily Herald Different Policies
Beatrice Rangel: When Jupiter meets Venus
Beatrice Rangel: When Markets and Manners Crash
Beatrice Rangel: From Grexit to Exit, Contagion is in the Air
Beatrice Rangel: An Infuriated God & An Environmental Crusader Mark the Summer Solstice
Beatrice Rangel: Between Ionesco & the Falklands Syndrome
Beatrice Rangel: The Ugly Americas
Beatrice Rangel: How FIFA Corrupted the Beautiful Game in the Americas and World
Beatrice Rangel: Could the US RICO Act Be Applied to Latin America?
Beatrice Rangel: On the Discreet Charm of Commodities for Latin America
Beatrice Rangel: The End of the Chinese Free Lunch in the Americas!!
Beatrice Rangel: The Crooked Twig of Democracy in the Americas
Beatrice Rangel: Of a White Knight for Three Latin American Ladies in Distress
Beatrice Rangel: Withdrawal Symptoms?
Beatrice Rangel: The Un-Mannered Summit
Beatrice Rangel: Easter Miracles in Latin America and the World
Beatrice Rangel: Two Islands, Two Legacies & One Challenge - Modernity
Beatrice Rangel: Killing Me Softly -- the Obama Administration’s Legacy in Latin America
Beatrice Rangel: Of Upcoming Dynasties and Exhausted Ideas in Latin America
Beatrice Rangel: Of Thunderous Silences, Quiet Noises and Flash Backs in Latin America
Beatrice Rangel: Latin America's Dangerous Exports to Europe & the Demise of an Old Fox
Beatrice Rangel: Of Sweet Deals, Sugar Daddies, Direct Mail & Obama’s Care
Beatrice Rangel: Of Latin American Singing Birds, Femme Fatales & Empty Shelves
Beatrice Rangel: When Flying Dragons & Rage Infusions Turn Against Their Latin American Masters
Beatrice Rangel: Holy Haberdashery!!! Is Fire Building Under the Surface in the Americas??
Beatrice Rangel: 2015 -- A Year for Balance in the Americas???
Beatrice Rangel: Pope Francis Looks at the Americas In His Christmas Remarks
Beatrice Rangel: The Paint Brush Hanging from the Wall in Latin America
Beatrice Rangel: A Future for the Americas??
Beatrice Rangel: Going Forward, Going Backward -- It's the Americas!!
Beatrice Rangel: An Eerily Familiar Week in the Americas
Beatrice Rangel: Tale of Two Walls
Beatrice Rangel: Across the Americas, We the PEOPLE
Beatrice Rangel: Across Latin America, The Populist Beat Goes On!!
Beatrice Rangel: Oh My, The Patron of the Eternal Feminine Has Left Us!!!
Beatrice Rangel: Communism from China to Cuba Finds Corruption!!!
Beatrice Rangel: From Rio to Hong Kong Discontent Taps the East to Find a New Way
Beatrice Rangel: Will Latin America Miss the Broadband Development Target?
Beatrice Rangel: Kissinger’s World Order and Latin America
Beatrice Rangel: The Third Attempt -- Will Modernity Prevail in Latin America?
Rangel: While US is Away, Latin America Rethinks Development Paths
Rangel: In the Midst of Riots, a Star is Born in Brazil
Rangel: In Mexico Cinderella Gets to the Ball while Colombia Gets a Chance at Peace