How Panama Canal Expansion Rewrites Shipping Layout

After ten years’ expansion, Panama Canal, the artery connecting the Pacific and Atlantic Ocean is to be reopened at the end of June.How much shipping capability will be increased after Panama Canal expansion? And what are the major influences to the global route layout and shipping market?

The transport volume of Panama Canal after expansion is expected to increase to 360m tons in 2017. There will be more ships especially large ships getting through the Canal, the total capacity of new and existing lock will be two times that of the current time, greatly enhancing the canal's attraction. The expansion enables port infrastructure upgrade, and the terminals in Caribbean and the east coast of the United States can provide more space to deal with larger ships. According to Zhang Yongfeng, the Director of Shipping Department of Shanghai International Shipping Center, with the completion of Panama Canal expansion, the largest ship which can get through the canal will upgrade to 13200TEU from original 5300TEU, breaking the ship delivery bottleneck. The container ship of 14000TEU will enter the eastern American route, and in order to improve the loading rate, ships need more supply of goods. With the completion of the Panama Canal, Atlantic routes,which is relatively small in trade amount is likely to be incorporated into the eastern American route, forming the new around-the-world route.

The canal expansion will not only enhance navigation capability, but also bring benefit for the countries which use canal frequently. Of course, the biggest beneficiary is Panama. Expansion project not only brings considerable revenue for Panama government, more to promoteeconomic development in Panama. The canal expansion will increase 40000 employment opportunities; after the project completion, the existing capacity will increase 2 times and can take the largest existing container vessel and meet the shipping demand in the next 20 years; the Panamanian government’s income for each year will increase to more than 4 billion dollars in 2025.

As the largest user of Panama Canal, Eastern American port of USA will share the biggest bonus from the canal expansion. Peter J.Zantal, strategic analyst and Industry Relations Research Manager of New Jersey Port Authority in New York believes that, the long-term economic benefits as well as the benefits for employment due to canal expansion can be predictable. With the expansion of the Panama Canal, the water transport between Asia and the east coast of United States will be the most economically affordable choice for cargo ships to navigate in and out of the middle-west of the United States, and the east coast ports of United States will be the main beneficiary.

China (mainland, Hong Kong and Taiwan) is the second largest user of Panama Canal, the canal expansion will be conducive to Sino-US trade expansion, and will promote trade and shipping activities between China,Latin American and Caribbean countries. In the long run, the canal expansion will bring more opportunities and greater economic benefits to Chinese shipbuilding enterprises. It can be expected that with the expansion project of Panama Canal nearing completion, the trade and shipping expansion between China and the new land will also be expected in the future.

The Panama Canal after expansion not only brings dividends to the states and related routes, but also has a profound impact on the world's major ship types.According to the relevant technical personnel of the Structure Department of China Classification Society plan approval center, the increase of container ship size and the great market demand for container transport is the main cause of the canal expansion. After the expansion,the design size of the new lock will be able to meet the needs of container ships of no more than 12000TEU, and the original 4000-5000TEU ship operating on this route will lose competitive advantage.

Judging from the influence on bulk carrier transportation of the canal expansion, 170,000 tons of bulk cargo ship will be able to get through the Panama Canal after the expansion, which greatly shortens the transportation distance, and provides greater opportunities for bulk cargo ship owners operating on this line.

Judging from the influence on tanker transport, with the expansion of the canal, 70% of the existing oil tankers including the Suez oil tanker can get through the canal without any difficulties, especially all product oil tankers can smoothly get through the canal, including the product oil tanker of greater tonnage and dimensions which can be designed and constructed in the future.

Overall, the expansion of the Panama canal can not only give birth to the construction of large ships, further accelerate the trend of large ships, and produce epochmaking change to the criteria for ship type classification,but also at the same time have a profound impact on the pattern of shipping industry such as the route network,regional port development etc., and play an important role to improve scale economies of super large ships.