Panama Canal Expansion
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The project will create a new lane of traffic along the Canal by constructing a new set of locks. Details of the project include the following integrated components:

* Construction of two lock complexes — one on the Atlantic side and another on the Pacific side — each with three chambers, which include three water-saving basins; * Excavation of new access channels to the new locks and the widening of existing navigational channels; and, * Deepening of the navigation channels and the elevation of Gatun Lake’s maximum operating level.[1]

As stipulated by the Panamanian Constitution, any project to expand the Canal had to be approved by the Cabinet, the National Assembly and by a referendum[2]. On Friday July 14, the National Assembly unanimously approved the proposal. In addition, the Assembly passed a law mandating a national referendum on the proposal. The referendum was held on October 22, 2006, the first Sunday more than 90 days after National Assembly approval.[3]

Panama Canal
Background

Throughout its history, the Canal has continually transformed its structure and adjusted to trade requirements and international maritime transport technologies. In this manner, the Canal has managed to increase its competitiveness in a sustainable manner.

President Torrijos on his speech on April 24, 2006, announcing the project, said that "…to say it in a graphic manner, [the Canal] is like our 'petroleum'. Just like the petroleum that hasn't been extracted is worthless, and that in order to extract it you have to invest in infrastructure; the Canal requires to expand its capacity to absorb the growing demand of cargo, and generate more wealth for Panamanians".[4]

Panama Canal
Cargo Volume

Historically, the dry and liquid bulk segments have generated most of the Canal’s revenues. Bulk cargo includes dry goods, such as grains (corn, soy and wheat, among others), minerals, fertilizers, coal, and liquid goods, such as chemical products, propane gas, crude oil and oil derivatives. Recently, the containerized cargo segment has replaced the dry bulk segment as the Canal’s main income generator, moving it to second place. On the other hand, the vehicle carriers segment has become the third income generator, replacing the liquid bulk segment. Shipping industry analyses conducted by the ACP and top industry experts indicate that it would be beneficial to both the Canal and its users to expand the Canal due to the demand that will be served by allowing the transit of more tonnage.[1]

The question is, however, whether the trend upon which the Panama Canal Authority makes those projections can continue for a generation. The growth in Panama Canal usage over the past few years has been almost entirely driven by increased U.S. imports from China passing through the canal to ports on the U.S. East and Gulf Coasts. But it is increasingly recognized in both the United States and China that this imbalance in trade is unsustainable and will be reduced in some sort of adjustment in the coming years[5], though it is important to note that any such imbalance need not be made up by physically-shipped goods, but could be made by other trade such as intellectual property as China upgrades its intellectual property protection laws. The ACP, however, presumes that it will not only not be adjusted, but will continue to grow for a generation as it has for the past several years. One of the central points of the canal expansion proposal's critics, most prominently made by former canal administrator Fernando Manfredo, is that it's unrealistic to attempt to predict canal usage trends over a generation, most improbable to expect that U.S. imports from China will continue to grow as they have the past few years over a generation, and irresponsible to bet Panama's financial future on such a projection.

Panama Canal
Competition

According to the ACP, the growing trend to use Post-Panamax container ships in transcontinental routes competing with the canal is irreversible. The main ports and merchandise distribution centers in these routes are investing in capacity, location, and maritime and land infrastructure to serve these vessels and handle their cargo volumes. If this trend continues, by the year 2011, approximately 37% of the capacity of the world’s container ship fleet will consist of vessels that do not fit through the canal, and a great part of this fleet will be placed in routes that compete with Panama, such as the transpacific-intermodal route and the Suez Canal route.[1]

The proposal states that strengthening its competitive position will allow the canal to accommodate demand and serve its customers. If the canal were to have the capacity to serve the growing demand, Panama could be transformed into the most important connectivity hub in the continent by joining together at the isthmus the north-south continental routes with the east-west transcontinental routes. Accordingly, the canal will continue to be viable and competitive in all of its routes and segments, and contribute significantly to Panama’s development and growth while maintaining its position as one of the main world trade routes.[1]

Panama Canal
Predictions

As approved by the Panamanian people, construction for the expansion project is slated to conclude by 2014. All creative means will be employed by the ACP to stretch capacity until the construction is done.

The proposed expansion of the Canal by the construction of a third set of locks will allow it to capture the entire demand projected through 2025 and beyond. Together, the existing and new locks will have approximately double the capacity of the present Canal.[1]

Critics such as former legislator Dr. Keith Holder, co-author of the legislation that created the ACP, point out that canal usage is seasonal and that even during the few months when it is most crowded the bottleneck that slows traffic is not the locks but the narrow Culebra Cut, in which there is a limited capacity for large ships to pass one another[6]

Although the Canal is reaching its maximum capacity, the ACP clarifies that this does not mean that ships will be unable to transit the Canal. However, it does mean that the Canal’s growth capacity will stagnate and that it will not capture additional cargo volumes.[1]

The former head of the Panama Canal's Dredging Division, Thomas Drohan, who is a critic of the expansion plan, discounts allegations that this is a problem in the short term—he argues that if the supply of any good or service becomes short, any business can raise its price for it and this would apply to Panama Canal tolls as much as it does to petroleum[7].

The Panama Canal Project

The new lock chambers will be 427 meters (1,400 feet) long, by 55 meters (180 feet) wide, and 18.3 meters (60 feet) deep. They will use rolling gates instead of miter gates, which are used by the existing locks. Rolling gates are used in almost all existing locks with dimensions similar to those being proposed, and are a well-proven technology. The new locks will use tugboats to position the vessels instead of locomotives. As in the case of the rolling gates, tugs are successfully and widely utilized for these purposes in locks of similar dimensions.[1]

Navigational channels

* The north access channel, which will connect the new Pacific-side lock with the Gaillard Cut, circumventing Miraflores Lake, and which will be 6.2 km long; and,

* The south access channel, which will connect the new lock with the existing sea entrance on the Pacific Ocean, and which will be 1.8 km long (see figure 5). The new channels will be at least 218 meters (715 feet) wide, both on the Atlantic and Pacific sides, which will permit Post-Panamax vessels to navigate in these channels in a single direction at any time.[1]

Gatun Lake raised 1.5 feet

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