Teacher: MSc Max Galarza
Panama Canal is a 77.1-kilometre ship
canal in Panama that connects the Atlantic Ocean to
the Pacific Ocean.
Is a key conduit for international maritime trade.
The current locks are 33.5 metres (110 ft) wide.
A third, wider lane of locks is currently under construction
and is due to open in 2015.
The canal is currently handling
more vessel traffic than had
ever been envisioned by its
In 1934 it was estimated that
the maximum capacity of the
canal would be around 80
million tons per year
Canal traffic in 2009 reached
299.1 million tons of shipping.
To improve capacity, a number of improvements have been
imposed on the current canal system. These improvements
aim to maximize the possible use of current locking system:
Improvements to the tugboat fleet
Deepening of Gatun Lake navigational channels from 10.4
to 11.3 metres (34 to 37 ft) PLD;
Modification of all locks structures to allow an additional
draft of about 0.30 metres (0.98 ft);
Deepening of the Pacific and Atlantic entrances;
Construction of a new spillway in Gatun, for flood control.
Panama Canal Expansion
The Panama Canal expansion project (also called the Third
Set of Locks Project) is intended to double the capacity of the
Panama Canal by 2015 by creating a new lane of traffic and
allowing more and larger ships to transit.
The Panama Project
The project will:
Build two new locks, one each on the Atlantic and Pacific
sides. Each will have three chambers with water-saving basins.
Excavate new channels to the new locks.
Widen and deepen existing channels.
Raise the maximum operating level of Gatun Lake
In 2006, ACP ( Canal Panama Authority) estimated the cost of
the third set of locks project at US$5.25 billion.This figure
includes design, administrative, construction, testing,
environmental mitigation, and commissioning costs, as well as
contingencies to cover risks and unforeseen events, such as
accidents, design changes, price increases, and possible delays.
Then-Panamanian President Martín Torrijos formally
proposed the project on 24 April 2006.
A national referendum approved the proposal by 76.8
percent of the vote on 22 October.
The project formally began on 3 September 2007.
The project is expected to create demand for ports to
handle post-Panamax ships.
An initial attempt by the
Panama Canal Authority to
continue expansion works
on the canal has been
rejected by contractors
asking for payment of $1.6
billion of cost overruns.
According to the Financial
Times , the Panama Canal
Authority (ACP) offered
Sacyr broke down the negotiation
with Panama for how to finance a
$1.6 billion cost overrun and
warning that 10.000 jobs are at risk
as a result.
Spanish Minister for Development
Ana Pastor said the stoppage of
the work was the worst possible
outcome in the dispute.
The Panama Canal Authority, or ACP, said Wednesday 5th
Febraury, it will not yield to "blackmail" and is looking for
ways to restart work on a third set of locks for the interoceanic waterway, accusing the consortium tasked with the
expansion of breaching its contract by making a unilateral
decision to halt construction.
The GUPC has agreed to contribute $100 million, but asked
the ACP to increase their contribution to $400 million in a
Up to Friday 9th, they try to revive conversations, but it did
DELAY AND ITS CONSEQUENCES
The breakdown in negotiations between GUPC and the
Panama Canal Authority (ACP) over cost overruns has
threatened the project and raised the possibility of years of
One hundred years after its inauguration, the Canal, which
handles 5 percent of world trade, is faced with delays in
the construction of the third set of locks.
"The breakdown in negotiations put the expansion of
the Canal of Panama and up to 10,000 jobs in
imminent risk," said consortium member Sacyr,
whose shares fell 5.73 percent in trading today.
The consortium estimates that the work will be delayed
three to five years if there is no agreement.
Canal still open
Expansion of the canal is important, but the construction has not
stopped operation of the canal as noted by the U.S. Grains Council with
its export destinations of U.S. grain, including soybeans, corn,
sorghum, wheat, rice and other products transited through the Panama
Canal following the 2013 U.S. harvest season.
According to the Panama Canal Authority, this is a record year for U.S.
grain cargoes passing through the canal, with more than 20.4 million
metric tons shipped October through January. That's a 36 percent
increase over the same time period last year.
U.S. corn cargoes shipped through the canal have increased more than
78 percent compared to 2012 volumes. This is partly reflective of the
higher corn production in 2013.