Panama Canal Expansion Poised to Fuel Growing Asian Trade, Say Experts
The Panama Canal expansion project will help pave the way for more U.S. trade with Asia, a trend expected to continue if a Trans-Pacific Partnership is finalized, by offering an alternative shipping route to the Suez Canal, said panelists at the International Chamber of Commerce and U.S. Council for International Business symposium on Feb. 24 in Miami. The expansion will allow ships to pass through with more than 14 ft. in depth, said one expert, as well as 13,000 twenty-foot equivalent units in size (see 14022816).
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The project is set for completion by the end of the year (see 1412100064). The canal is currently only deep enough to allow 5,000 TEU ships to pass, but the expansion will let the waterway stay competitive globally, said the panelists. “Trade facilitation works best when coupled with modernization in infrastructure,” said Judy Lao, who heads trade facilitation programs within the Commerce Department's Office of Western Hemisphere. On top of greater access to Asian markets for U.S. and international companies, the expansion will also fuel more efficient North-South trade, said Lao.
But traders will continue to face Panama Canal challenges in the future, particularly due to the new energy tanker traffic that the expansion is likely to attract, said Lao. That tanker increase could slow flow through the canal for goods shippers, she said, adding that expansion will likely lead the Panama Canal Authority to hike taxes on passage.
The expansion is also making Latin American port development more urgent, said the Development Bank of Latin America’s senior infrastructure specialist Rafael Farromeque. Latin American countries are prioritizing more, but still not enough, resources for port improvements, he added. That will require dredging to 16 feet in depth, and also necessitate sweeping improvements to inter-modal transportation services, Farromeque said. Once completed, the Nicaragua Canal, a project funded by Chinese business, will be able to allow larger ships to pass through than its Panamanian competitor, however, said Farromeque.