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The New Panama Canal Locks: Open for Business


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Rob Harrison's presentation at the 2017 CTR Symposium

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The New Panama Canal Locks: Open for Business

  1. 1. COLLABORATE. INNOVATE. EDUCATE. The New Panama Canal Locks: Open for Business Robert Harrison and Leigh Boske TxDOT Project 5-6690 RTI Manager: Joe Adams TxDOT Manager: Arielle Carchidi - Maritime Division
  2. 2. COLLABORATE. INNOVATE. EDUCATE. RTI 0-6690 • 0-6690-1:PRP US-Asian-South American Waterborne Trade and Panama Canal Expansion • 0-6690-2: Trade Flows, Texas Ports, and Panama Canal Expansion • 5-6690: Implementation Project and Technical Briefs on Impacts of the New Locks
  3. 3. COLLABORATE. INNOVATE. EDUCATE. Maritime Shipping 2017 • Global trade is low – strong US dollar • Carrier new ship orders since 2000 created a gap between supply and demand • Huge losses – global containership revenue has dropped 21% since 2010 and net earnings down 68% to $10 billion • Bankruptcy of Hanjin, formation of Alliances • Bulk shipping in poor shape – early scrapping
  4. 4. COLLABORATE. INNOVATE. EDUCATE. Panama Canal Background • Canal Built 1904-1914 • US Isthmian Canal Commission (ICC) oversaw construction, controlled the Zone over which US had sovereignty • Limited strategic role in WW2 • Canal neglected and outdated after 1950 • Tolls based on maintenance, not markets • Lock limits too small for post-1970 ships
  5. 5. COLLABORATE. INNOVATE. EDUCATE. Battleship Deployment 1919
  6. 6. COLLABORATE. INNOVATE. EDUCATE. 1980 IOWA Class Battleship
  7. 7. COLLABORATE. INNOVATE. EDUCATE. Panama Assumes ICC Responsibilities • Carter- Torrijos Treaty 1977 • Strong Objections • Senator Hayakawa • December 1999 Panama took Responsibility • Panama Canal Authority (PCA) runs the waterway
  8. 8. COLLABORATE. INNOVATE. EDUCATE. Panama Canal Authority 2000 • Panama Canal (PC) seen as the major economic engine – like Suez Canal • Panama Canal Authority (PCA) strategies – short, medium, and long term • Panamax designs inefficient • New locks critical to accommodate larger ships
  9. 9. COLLABORATE. INNOVATE. EDUCATE. Panamax Auto Carrier
  10. 10. COLLABORATE. INNOVATE. EDUCATE. Cruise Ship Squeeze
  11. 11. COLLABORATE. INNOVATE. EDUCATE. Container Ship
  12. 12. COLLABORATE. INNOVATE. EDUCATE. Third Set of Locks
  13. 13. COLLABORATE. INNOVATE. EDUCATE. Ships and Boxes • Dry bulk; tankers; vehicle carriers; LNG; breakbulk; cruise ships; refrigerated; containers; others • Trade is not simply containers (boxes) • Transportation investments, however, sharply focus on boxes • Maritime and domestic containers differ significantly in design and weight
  14. 14. COLLABORATE. INNOVATE. EDUCATE. Emma Maersk Class
  15. 15. COLLABORATE. INNOVATE. EDUCATE. Panama Strategies to Grow Maritime Services • Short Term – Dredge channels, upgrade existing locks, plan and finance new locks – Market-based prices – tracking Suez Canal • Medium Term – Build and operate new locks and associated equipment – Build out associated marine services • Long Term – Make Panama a logistics platform for global trade – Supporting national employment and income
  16. 16. COLLABORATE. INNOVATE. EDUCATE. Transisthmian Pipeline Colon Free Zone Fiber Optic Duct Banking Center Panama-Pacific Special Economic Zone Real EstateTechnology and Innovation Center Value-Added Components of Panama’s Transportation and Logistics Cluster
  17. 17. COLLABORATE. INNOVATE. EDUCATE. As of 2016, Suez Canal fully bi-directional Wall Street Journal
  18. 18. COLLABORATE. INNOVATE. EDUCATE. Maersk Triple E Class
  19. 19. COLLABORATE. INNOVATE. EDUCATE. Importance to Texas and Global Trade • Gulf energy, chemicals, plastics, and agricultural product volumes are growing • Houston (population), Mobile (retail and CN), and New Orleans ports increasing imports • Exports – already Texas #1 – will grow by both ship and rail • Box shortage at TX coast but not at Alliance • Transloading vs. direct service
  20. 20. COLLABORATE. INNOVATE. EDUCATE. Impact on Texas Ports and TxDOT Infrastructure • Texas ports will need to balance growth in the terminal and channel investments with highway and rail access • Rail preferred for agricultural exports • Rail will strive to hold the B/E line at IH-35 for West Coast services • Ports will hold delivery limits at distribution centers near port and within Texas Triangle • Maritime shipping faces a slow recovery
  21. 21. COLLABORATE. INNOVATE. EDUCATE. Tridem Trailers for Houston?