Beaumont Business Journal, September 2016
Texas State Senator and Chair of the Senate Select Committee on Texas Ports Brandon Creighton visited the newly expanded Panama Canal in late July and early August as part of a Texas-Panama trade mission focused on the enhanced canal as a gateway to global trade for the state.
Completed in June, the Panama Canal expansion project doubled the waterway’s capacity with a new lane of traffic sized to accommodate larger, “New Panamax” ships not only one and a half times the size of their predecessors, but also capable of carrying more than twice the cargo.
The Panama Canal has invested more than $3.3 billion in improvements of the original waterway in the past 17 years alone.
Some of these investments include:
• Upgrades to its locomotive fleet and tracks;
• Installation of new tie-up and mooring stations to allow additional Panamax vessels to transit, adding tens of millions of tons to the canal’s annual capacity;
• Deepening of all of the lake channels, increasing draft reliability;
• Replacement of high mast lights in the locks to provide better illumination and extend daylight-hour transits;
• Investments in the canal’s tugboat fleet that grew from 20 units in year 2000 to 46 new modern units that have been equipped with greater maneuverability, power and technology;
• And more precise aids to the canal’s navigation and vessel tracking system.
“All of these investments were carried out with the purpose of providing greater reliability, safety and improved transit times,” said Panama Canal Administrator and CEO Jorge L. Quijano.
With the recent upgrade to the Panama Canal, Texas must be ready to receive the larger vessels the legendary waterway can accommodate to remain competitive on the global stage, Creighton said.
“Moving products to market is a core tenet of economic success, and moving more to market is how Texas competes and wins,” he said. “I’m confident that my colleagues in the legislature, the leaders of our state’s port cities and the employees who work in them will collaborate on maximizing the opportunity represented in these improvements.”
Led by Ambassador Juan B. Sosa, consul general of Panama, Creighton’s group featured officials for the Panama Canal including Oscar Bazan, executive vice president of business development and planning and Marianela Dengo de de Obaldia, manager of strategic relations for the canal. Together, they had the opportunity to inspect canal improvements, meet with trade representatives and tell the story of Texas’ maritime prowess.
“Less than two months ago, they cut the ribbon on a completely upgraded Panama Canal with significantly expanded capacity and volume,” Creighton said. “We got an up-close look at the canal improvements, met with trade representatives and talked up Texas so much our voices almost gave out. … The Texas-Panama Trade Mission is a collaborative effort between Texas and Panama to ensure beneficial cooperation for maximum economic benefit. … I was honored to spend time with leaders of Texas ports and our Panamanian counterparts.”
The Panama Canal celebrated 102 years of operations and service to the global maritime community, just one day after welcoming its 100th transit through the expanded waterway.
Less than two months following the expanded canal’s historic June 26 inauguration, the Neopanamax vessel Hanjin Xiamen became the 100th vessel to transit the new locks, passing through the canal on the morning of Sunday, Aug. 14. The Panama-flagged containership, which measures 294 meters in length and 40 meters in beam, made its northbound transit from the Pacific to Atlantic Ocean, destined for New York.
To ensure the continued reliability of the canal over the past 102 years, constant maintenance of the original locks has been crucial. These investments have also allowed the Panama Canal to grow the total amount of tonnage it handles each year, from 228 million Panama Canal tons (PC/UMS) in 1999 to a record-breaking 340.8 million PC/UMS last year — a 50 percent increase. It is expected that the Panama Canal will continue to increase its annual tonnage during the next five years to approximately 524 million PC/UMS, according to a release by the Panama Canal Authority.
A large source of this growth will be due to the expansion. Since its inauguration, the expanded Panama Canal has received more than 297 reservations — a figure that continues to grow daily, according to the Panama Canal Authority, reflecting the shipping industry’s confidence in the canal and the impact it will have on the future of world maritime trade.
Upon completing their passage of the expanded canal Aug. 14, three of the four ships that transited the waterway called at Panamanian port terminals on the Atlantic and Pacific coasts to discharge and load cargo on the way to their final destinations, thus making full use of the connectivity offered by the country.
“This is a trend which we expect to continue as the Panama Canal continues to invest in and solidify its position as the shipping and logistics hub of the Americas,” said Quijano.
“In a nutshell, that 100-year-old engineering marvel can now accommodate container ships three times their previous size, including the new generation of LNG carriers. We intend for those larger vessels to fit comfortably in our own upgraded ports to keep the Texas economy competing on the global stage,” Creighton said.
Locally, during the last legislative session, Creighton authored a bill to improve the Sabine-Neches Waterway, a vital economic artery for the state. In the 2017 session, he intends to keep the focus on essential economic infrastructure.
“Fortunately, Southeast Texas is perfectly positioned to take advantage of the emerging LNG export market,” Creighton said. “Prior to the Panama Canal expansion, its locks would only service 8 percent of the world’s LNG vessels. The new locks will allow 88 percent of the world’s LNG vessels to utilize the canal. This opens huge LNG export opportunity for the United States and, specifically, Texas. With an economy ranked 12th in the world and a robust port system, we are better equipped than just about any other state to handle waterborne commerce, and we’ll be working to ensure Texans benefit from our status as a gateway to the world.”
About Panama Canal expansion
The Panama Canal Expansion is the largest enhancement project since the canal’s opening in 1914. According to economist Dr. Ray Perryman, the canal originally cost more than $350 million to complete.
The expansion included a new set of locks on the Atlantic and Pacific sides, creating a third lane of traffic and doubling the canal’s cargo capacity. While the expanded locks are 70 feet wider and 18 feet deeper, they use less water due to water-savings basins that recycle 60 percent of the water used per transit, according to the Panama Canal Authority.
In 2015, 340 million tons of goods passed through the canal, representing about 6 percent of global trade in terms of capacity, Perryman reports in his column, “A Man, a Plan, a Canal, Panama.”
The Panama Canal expansion took nine years and cost $5.4 billion, according to Perryman.
Previously the canal could only accommodate ships that carried a maximum of 5,000 containers; the new locks can accommodate ships carrying up to 14,000 containers, Perryman reports. The new locks use reinforced steel, which did not exist at the time of the original construction, and a staggering 4.4 million cubic meters of concrete (significantly more than is in Hoover Dam and the accompanying power plant facilities).
Perryman said the project has created an estimated 30,000 jobs in Panama and is expected to spur further investment from the private sector in support services located along the canal, including a new container terminal outside Panama City.
“Not only will the expansion increase the level of traffic and size of ships, but also generate higher toll revenues for the country,” Perryman writes. “The toll is roughly $90 per shipping container, and the canal’s executives anticipate a 16 percent to 17 percent revenue increase within the first year.”
Perryman said Texas is poised to benefit from the shifting trade routes caused by the canal expansion.
“About 20 percent of all U.S. port tonnage moves through the state’s ports, and three Texas ports (Houston, Beaumont and Corpus Christi) are among the 10 busiest in the country,” he said.
According to the Texas Department of Transportation, Texas ports invested over $300 million from 2010 to 2014 in improvements as Texas hopes to become even more competitive in global trade.