Monday, October 23, 2006

US$5 Billion Project to Expand Panama Canal Gets Go Ahead

Panamanians have voted 2/3 in a referendum to expand the Canal to take larger vessels - current maximum size container ships are around 4,000 TEU - the expanded canal will handle vessel sizes of <12,000 TEU.

This is a major re-build of the original canal which was operational in 1914, under US Government ownership who took it over once the original French backers went bust 10 years earlier.

It will be the end of an era - I can remember when vessels were described as Panamax (the 4,000TEU vessels mentioned above and post-Panamax...vessels too large to traverse the canal. The new Panamax will be a much larger beast.

It will be interesting to see how shipping companies react - just going to larger vessels is not a total solution because it means less frequency as a tradeoff to lower capital and operational costs per container.

If the final go-ahead is given construction will start in 2008 and be completed in 2014.

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