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Panama Canal Project


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the panama canal, its past, present, and the expansion project

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Panama Canal Project

  1. 1. Panama<br />Canal<br />Travis Cleveland Linda Garder Mehdi Najah Thomas Rona<br />
  2. 2. The beginning…<br /><ul><li>The history of the canal can be traced back to the early 16th century.
  3. 3. Vasco Nuñes de Balboa- first to discover the narrow piece of land separating</li></ul> Atlantic and Pacific Oceans<br /><ul><li> Charles V (also known as Charles I of Spain) was the first one to take </li></ul> leadership to build the canal.<br /><ul><li> 1529- the initial plan for the canal was designed.
  4. 4. The project was postponed because of numerous wars that broke out in </li></ul> Europe.<br />
  5. 5. Restarting the project…<br /><ul><li>The project was restarted in 19th century.
  6. 6. German scientist Alexander von Humboldt showed interest in the project.
  7. 7. 1819- the Spanish government gave authorization for the project.
  8. 8. International company was hired to build the Canal
  9. 9. The International Company failed.</li></li></ul><li>The French company…<br /><ul><li> 1880- a French company was formed to take over the project.
  10. 10. Ferdinand Marie de Lesseps was leading the company.
  11. 11. De Lesseps had previously constructed the Suez Canal.
  12. 12. American started showing interest in building the Canal; the main reason for</li></ul> that was the discovery of gold in California in 1848.<br />* 1879- De Lesseps came up with the proposal for the Canal.<br />
  13. 13. Roosevelt and the Canal…<br /><ul><li> Offered de Lesseps $40 million for the rights to build the canal.
  14. 14. Offered the Colombian government $10 million in order to gain control over the</li></ul> fifty-mile strip over the isthmus.<br /><ul><li> Colombian government declined his offer.
  15. 15. After refusal, decided to no longer negotiate and started supporting Panama’s</li></ul> independence movement.<br /><ul><li> With the help of U.S. military power, Panama gained independence.
  16. 16. The newly independent Panama accepted his offer and was compensated by</li></ul> an initial payment of $10 million and an annuity of $250,000.<br />
  17. 17. Building of the Canal by the U.S…<br /><ul><li>May 4, 1904- the beginning of the U.S. canal building efforts.
  18. 18. The workers had to put up with the heat and mosquitoes that carried malaria.
  19. 19. Methods that had to be undertaken to fight the mosquitoes carrying malaria </li></ul> included “clearing 200-yard-wide areas around where people lived and worked, <br /> draining more than 100 square miles of swamp, building nearly a thousand miles<br /> of earthen ditching, about 300 miles of concrete ditch, 200 miles of rock-filled<br /> trench, almost 200 miles of tile drain, cutting hundreds of acres of wild vege-<br /> tation, spraying standing water with thousands of gallons of oil, and breeding<br /> spiders, ants, lizards to feed on adult insects” etc.<br /><ul><li> The efforts paid off and the number of deaths from malaria reduced </li></ul> dramatically.<br /><ul><li> Some of the other problems that were encountered included moving the native</li></ul> villages from the area, the fact that Panama was insufficiently developed or <br /> equipped to support the additional population created by the growing Canal labor<br /> force, providing satisfactory housing and food for the workers <br />
  20. 20. John Frank Stevens…<br /><ul><li> 1906- the decision which type of canal to build was made.
  21. 21. It was the Chief Engineer of the project, John Frank Stevens, who convinced</li></ul> Roosevelt to build a lock canal as opposed to a sea level canal.<br /><ul><li> According to Stevens, a lock canal could be completed by 1914, whereas </li></ul> building a sea level canal would take at least until 1914.<br /><ul><li> 1907- the peak of excavations in the Culebra cut; during the first three </li></ul> months of that year more than 512,500 cubic meters of material was <br /> excavated and the total workforce exceeded 39,000 men.<br /><ul><li> Landslides increased the amount of excavation; however, the project did not</li></ul> fall behind schedule.<br />
  22. 22. Locks and Dams…<br /><ul><li>Three sets of locks: Gatun, Pedro Miguel, Miraflores.
  23. 23. Gatun- two parallel sets of locks and each one consists of three flights.
  24. 24. At Gatun the locks are 33 meters wide.
  25. 25. Pedro Miguel- the locks only have one flight; can raise or lower ships 10 meters.
  26. 26. Miraflores- two flights, they can raise or lower ships 16.5 meters.
  27. 27. The excess oil was used to construct the Gatun dam.
  28. 28. The Gatun dam is 1.5 miles long and almost 0.5 miles wide.
  29. 29. There are also small dams at Pedro Miguel and Miraflores.</li></li></ul><li>Completion…<br /><ul><li> January 7, 1914- the first complete Panama Canal Passage by a self-propelled, </li></ul> oceangoing vessel.<br /><ul><li> August 15, 1914- the scheduled day for an opening ceremony.
  30. 30. Celebration was cancelled due to World War I.
  31. 31. Total cost of the Canal: $375,000,000 (including the $10 million paid to Panama</li></ul> and $40 million paid to de Lesseps).<br /><ul><li> Fortification cost an extra $12,000,000.
  32. 32. Total cost of the project was about $23,000,000 less than the 1907 estimate.
  33. 33. 5,609 total lives lost.
  34. 34. Besides the loss of human lives, no relevant scandal or corruption.</li></li></ul><li>Trade Lanes<br />US accounts for 95% in the total relevant trade flow <br />Cargo moving through the canal is dispersed along 12 lanes, mainly NE Asia - US East Coast, which captures 40% of canal volume.<br />Oceanic and WC South America - US East Coast lane represents the next largest volume.<br />US West Coast and South America WC - Europe account for smallest volume<br />
  35. 35.
  36. 36.
  37. 37. Traffic Volume by Month<br />
  38. 38.
  39. 39.
  40. 40. Factors Affecting Trade Flow<br />Economic and Trade growth<br />Shipper Logistics requirements<br />Carriers Strategies<br />
  41. 41. 2007 Fiscal Year Stats<br />14,721 vessels transited. 3.7% increase from 2006.<br />Canal Water Time decreased from 30.5 to 27.8 hours.<br />25 Panamax vessels transited in 09/2007 breaking previous record of 24 in 07/2003.<br />300 million gross tons transited in 2007.<br />
  42. 42. Investments<br />Acquire 18 locomotive<br />Tow Track rehab<br />Replace miter gates w/ hydraulic system<br />Acquire and replace tugboats<br />Expand Canal<br />Deepen Gatun lake and acquire more dredging technology<br />
  43. 43. The Expansion project<br />construction of lock complexes at each end of the Canal. <br />One lock complex will be located on the Pacific <br />east of the existing Gatun Locks<br />Each lock complexe will have three consecutive chambers<br />Each chamber will have three lateral water-saving basins<br />
  44. 44. Numbers<br />427 meters (1,400 ft) long<br />55 meters (180 ft) wide<br />18.3 meters (60 ft) deep <br />
  45. 45.
  46. 46. Estimated Costs<br />$5.25 billion to construct<br />Atlantic side Lock: USD $1.110 billion <br />Pacific Side Lock: USD $1.03 billion<br />New Locks Access channels USD $ 820 million<br />cost includes contingencies to cover risks and unforeseen events<br />
  47. 47. Estimated Profit<br />12% internal rate of return<br />Tolls increasing at an annual average rate of 3.5% for 20 years<br />USD $2.3 billion temporary external financing <br />financing could be repaid in approximately eight years.<br />investment costs will be recovered in less than 10 years<br />
  48. 48. Stopford’s 10 Variables in the Shipping Market<br />Demand<br />The World Economy-W<br />Seaborne Commodity Trade-S<br />Average Haul-S<br />Political Events-S<br />Transport Costs-S<br />Supply<br />World Fleet-S<br />Fleet Productivity-S<br />Shipbuilding Production-S<br />Scrapping and <br />Losses-S/W<br />Freight Rates-W/S<br />
  49. 49. Current Situation<br />Current backlog is high due to Peak Season congestion<br />Both arrivals and transits relatively steady <br />(Giraud)<br />
  50. 50. Current System<br />Ranking is based 40% on # of transits, 60% toll revenue<br />Updated monthly, based on last 12 months<br />Rankings determine scheduling preference, competitions to bump/bid<br />(Giraud)<br />
  51. 51. Opportunities<br />Panama Canal Authority<br />Increase in Toll Freight.<br />Current Tariff fixed Rate + $63/TEU, $3.37/ton. Annual 3% increase.<br />Terminal operations, FTZ, tourism<br />
  52. 52. Opportunities<br />Oil- BP/ Petroterminal de Panama<br />Rail- KCS/ Panama Railroad<br />US East Coast Ports<br /><br />
  53. 53. Savannah<br />Savannah Harbor Expansion Program-$1.3 billion for 48’ depth<br />Infrastructure- 7,500 truck moves/day<br />Lease Incentive for customers<br />Terminal Capacity: 2.7- 6.5 m/TEU<br />Savannah River<br />
  54. 54. Navigable?<br /><br />
  55. 55. Threats<br />World Trade/Affected Trade Routes<br />Freight Rates<br />Partners/Customers<br />Alternate Routes<br />…Northwest Passage<br />
  56. 56. 1985 vs 2008<br /><br /><br />