Trade Fact Of The Week
    Panama Canal cargo capacity will double by 2016.
    August 27, 2014

    THE NUMBERS: Panama Canal shipping –

    1915     969 5 million tons
    1965 11,834 71 million tons
    2013 13,660 320 million tons
    2016 15,000? 600 million tons?


    To build the Panama Canal, 56,000 workers cut a trench 41 feet deep across 48 miles, including a mountain ridge 275 high and 8 miles wide at the Culebra Cut. From 1906 until the Gatun Locks opened to the Atlantic on August 15th, 1914, these workers – 12,000 from the United States, 20,000 from Barbados, 16,000 from other Caribbean islands, the remaining 8,000 from Europe and Latin America – moved 177 million cubic meters of earth and rock weighing half a billion tons. A hard sum to visualize, but today’s entire world shipping fleet is thought to have a capacity of 1.7 billion tons of cargo.

    The Canal cut ocean voyages from New York to San Francisco from 13,000 miles to 5,000 miles, or from the 59-day steamship record set in 1900 to 30 days in the 1920s. As a quick table shows, this jump equaled the effect of replacing sailing ships with steam a generation earlier.  It has taken a full century for maritime technology to halve passage time again:

    Clipper ship record, 1854 89 days
    Pre-Canal steamship record, 1900 59 days
    Panama Canal average, 1920s 30 days
    Current 15 days

    On its centennial, with its millionth ship transit now four years into the past, the Canal remains busy. Nearly 14,000 vessels transit each year – one every 45 minutes – and the 320 million tons of cargo they carry make up 3 percent of world maritime cargo and a tenth of the U.S.’ seaborne exports. But the Canal is also showing its age.

    The Gatun Locks, the largest concrete structures ever built until the 1930s, can lift and float ships up to 965 feet long and 106 feet wide. In 1914, this meant nearly all world shipping. Today it is still enough for tankers and bulk carriers up to 60,000 deadweight tons of cargo, all automobile shipping, and container ships carrying up to 5,000 twenty-foot containers. But the largest 1,000 of the world’s 5,100 container ships are now too big for the Canal, and they account for half of all world container capacity. And the Canal can handle only 6 percent of the world’s LNG tankers, which implies a sharp limit on future shipments of natural gas from the American Gulf Coast to China and Japan.

    Hence the Canal is being redug.  Approved by the Panamanian government in 2006 and now estimated “78 percent complete,” the expansion project will have moved another 52 million cubic meters of earth and stone - about a third of the excavating and blasting work of 1906-1914 – by the time the new locks open sometime late in 1915. The results will include (a) digging new access channels to the Atlantic and Pacific; (b) deepening the Culebra Cut, and (c) building a new set of locks able to handle ships 1200 feet long and 161 feet wide. The Canal will then be able to accommodate all container ships up to the 13,000-14,000-container capacity range (in practice, all but about 70 of the currently active container ships), and tankers of up to 120,000 deadweight tons of cargo, including most LNG vessels. By 2016, it will be able to carry 600 million tons of cargo a year – 100 times the traffic of its first year a century ago, nearly 10 times the workload of 1965, and twice its current capacity.


    Today -

    The Panama Canal Authority explains the expansion project: http://pancanal.com/eng/general/canal-faqs/tolls.html

    A live camera at the Gatun Locks: http://www.pancanal.com/eng/photo/camera-java.html

    The U.S. Maritime Administration explains the implications of Canal expansion for American trade and ports. (Growth in container trade to ports on the Gulf and East Coasts; more viable LNG shipping to Asia; no changes likely in automobile trade and only minor adjustments in metals and bulk farm products like coffee and grains.) MARAD’s take, from December 2013:

    A note on budgets –

    The 1906-1914 budget for the Canal was $375 million – equal to half of the $725 million in annual Taft-administration spending – and the Canal builders proudly came in $23 million under cost. An often-used ‘equivalent’ in 21st-century dollars is $8 billion, but because prices are so different today and national economies so much bigger, a different measurement might make more sense.  US GDP in 1910 was about $35 billion, meaning the Canal cost was about 1 percent of GDP.  A modern equivalent might therefore be a $175 billion 8-year project. The budget for the 21st-century expansion was originally $5.25 billion, and will likely end up (depending on litigation) around $7 billion.

    A human perspective -

    A century ago, the Canal Commission’s massive Barbadian labor recruitment is said to have brought 40 percent of the island’s adult men to Panama, and cut its population from 200,000 in 1900 to 172,000 in 1910. A tenth of the Canal workforce died during construction – 5,609 people, including 4,290 of the 36,000 Caribbean workers – of yellow fever, malaria, landslides, explosions, railway accidents, and other illnesses and workplace injuries. The Canal Commission’s annual report for 1910, for example, reports 548 deaths among employees, including 164 from industrial accidents (most frequently railroad), 376 deaths from disease, and 8 deaths from causes unrelated to labor, such as homicide and lightning strike. By country, that year’s death-toll included 167 workers from Barbados, 113 from Jamaica, 49 from Martinique and Guadeloupe, 60 from other Caribbean islands, 48 from Spain, 36 from Colombia and Panama, and 31 from the United States. The unsuccessful French effort to build a Panama Canal in the 1880s (before the discovery of the mosquito vector for malaria and yellow fever) was deadlier still, costing a reported 20,000 lives.

    If the modern Canal expansion’s finances have been a bit less disciplined than those of 1906-1914, its workers appear much safer. ProgressiveEconomy’s search for a systematic labor-safety record of the expansion project hasn’t succeeded. But here are three indicators: (a) the labor health and safety sections of the annual State Department human rights reports suggest that about 15 people per year die in industrial accidents throughout Panama, but mention no Canal fatalities; (b) a current dispute between the Canal Authority and the International Transport Workers Federation includes a claim by the union alleging “lack of proper respect and bargaining on issues surrounding health and safety provision on the job,” but again mentions no fatalities or individual accidents; and c) Google news searches find three reports of fatal accidents on the Canal from 2012 to the present. These presumably miss some information, but do suggest that contemporary fatalities are extremely rare – perhaps 99 percent below the rate of a century ago.

    “We Were Giants” – Barbados remembers its 20,000 Canal-builders at the centennial: http://gisbarbados.gov.bb/index.php?categoryid=8&p2_articleid=12746

    And: http://www.bajanreporter.com/2014/08/plaque-commemorates-caribbean-contribution-to-building-the-panama-canal/

    And next -

    Are the new locks already too small? Bloomberg Newwreports on thinking about a possible fourth set of locks, meant to accommodate the possible 20,000-container ships of the 2020s: http://www.bloomberg.com/news/2014-08-14/panama-weighs-another-canal-expansion-at-centennial-mark.html