Panama Canal to expand next by going deeper

Panama Canal chief, Jorge Quijano, says deepening to precede another set of locks.

The Panama Canal Authority is ready to explore whether to build a fourth set of locks for ultra-large cargo vessels, but the next expansion will come in the form of dredging the existing waterway five-feet deeper, Administrator Jorge Quijano said recently.

His comments came as construction continues on a much-anticipated third traffic lane capable of handling 13,000-TEU container vessels, as well as large bulk carriers, tankers and cruise ships. The project consists of adding new locks on the Atlantic and Pacific sides of the canal, excavating the ocean approaches to allow passage of deeper-draft vessels, dredging navigation channels along the waterway, and raising Gatun Lake to improve its water storage capacity. Some analysts now believe the project will cost at least $7 billion instead of $5.2 billion because of construction glitches, labor issues and a contract dispute that delayed work earlier this year.

Panamanian officials say the wider section will now open to commercial traffic in the first quarter of 2016, about a year and a half after the planned completion date.

On Aug. 8, Quijano met with a delegation from a large Chinese construction company that is interested in designing, constructing and financing a fourth set of locks.

Speaking at an international trade conference outside Charleston, S.C., Quijano said, in response to an audience question, that the PCA next month will launch a demand analysis to determine if further expansion is justified.

“Any investment in infrastructure has to be driven by demand. At this point in time, our short and mid-term projections do not show the need for a fourth set of locks. But it is something that we need to look at,” he said, adding afterwards that the new locks will take almost nine years to finish and officials can’t wait until the last moment to start such a large undertaking.

But the canal authority could wring extra capacity from the existing waterway by deepening certain sections of the channel in Gatun Lake before it needs to widen again, the agency’s chief executive officer said.

The new locks will have a depth of 60 feet. Parts of the channel are only at 55 feet, allowing vessels with a 50-foot draft to pass with a five-foot clearance under the keel.

Quijano said the PCA in a few years will consider dredging those stretches another five feet.

That step will mostly benefit Capesize vessels, which are commonly used to transport raw materials such as iron ore and coal, the administrator told American Shipper.

Capesize are currently too large to pass through the canal’s legacy locks and transit around Cape Horn to get from the Atlantic Ocean to the Pacific. Further deepening of the canal would allow them to load to their full capacity of 150,000 to 160,000 deadweight tons, compared to 130,000 to 135,000 tons when they are able to transit through the expanded Panama Canal, Quijano said.

Another alternative for maximizing vessel utilization for shipments to Asia or the west coast of South America, he said in the interview, is to station an extra vessel full of coal or iron ore on the Pacific side of the Canal and top off bulkers after they exit the canal. A top-off vessel, equipped with onboard cranes, could load about four vessels before needing to be replenished.

Iron ore shippers from northern Brazil currently use smaller vessels to get through shallower coastal waters and then transload into Capesize ships in calm waters off Trinidad & Tobago, Quijano explained.

And Panamax-size liquefied petroleum gas tankers carrying fuel from Houston to Japan, which depends on non-nuclear energy sources for heating and cooling following the Fukushima disaster, have been going through the canal for the past 18 months and filling up the remainder of their holds from a sister vessel before crossing the Pacific Ocean, he said.

LPG is an extremely light fuel produced from distilling crude oil and is compressed for transport.

Source: American Shipper