$5.4 Billion Panama Canal Upgrade Could Change Everything

Panama Canal expansion
Panamax Container Ship (Photo courtesy Williamborg via Wikimedia Commons)

The nine-year construction project to deepen, widen, and essentially rebuild the Panama Canal finally concluded Sunday.

Dignitaries from the central American country and around the world gathered to watch the first mountain-sized “Panamax” cargo container ships made their way through 50-mile long shortcut between the Atlantic and Pacific oceans.

Supply Chain Changes

A lot rests on the success of the $5.4 billion reconstruction project, which was nine years in the making.

Now ports up and down the East Coast and along the Gulf of Mexico will be able to attract the bigger, heavier cargo ships from Asia and elsewhere that formerly either had to dock at West Coast ports or take the laborious long way around through Egypt’s Suez Canal.

Winners and Losers

Early beneficiaries of the newly expanded Panama Canal are expected to be ports in South Carolina, which already have made the necessary improvements to accommodate the larger ships, including dredging deeper harbors and building improved land-based facilities for offloading cargo.

Losers include the Port Authority of New York and New Jersey, whose efforts to accommodate the new mega-carriers have been thwarted by delays and cost overruns on a controversial project to raise the Bayonne Bridge that connects New Jersey to Staten Island. The existing bridge’s low clearance would have prevented Panamax carriers laden with up to 30,000 cargo containers passing underneath.

Also in the loser’s bracket are the US’s two busiest ports in Long Beach and Los Angeles, along with Seattle, Vancouver and elsewhere along the West Coast who up until now have been the only North American places these mega-carriers could dock.

Last year’s prolonged labor dispute between West Coast port owners and dock workers that threatened to put a stranglehold on the US supply chain only fueled the anticipation for the canal’s benefits for East Coast ports.

‘Domino Effect’

Ultimately, the new Panama Canal’s opening is expected to have a domino effect on the US and global supply chain, changing much about the way goods are moved throughout the US, and indeed around the world.

Already, construction of massive new distribution centers and transportation hubs are booming in places like Charleston, South Carolina, and Atlanta, Georgia, in anticipation of the ports being busier offloading the bigger ships.

Construction of the improved canal was a monumental feat that rivaled the US Army Corps of Engineer’s original building of the Panama Canal, which was completed in 1914.

Workers had to blast a new four-mile long access channel on the canals’ Pacific side, as well as conduct massive dredging operations to expand the existing canal route.