PANAMA CANAL EXPANSION

How are you everyone? I hope you are all doing well. Today we have an interesting news from Panama and Egypt. Yes, these 2 countries have world’s most important canal for logistics world: The Panama Canal and Suez Canal. A writer wrote that indeed, both of them are competing with each other, but don’t worry! Their competition is in a good term and all of us actually will get the benefit from it.

Currently, Panama and Suez are confronting one another for a supremacy of the container shipping market for imports into the U.S. East Coast from the Far East.

Panama has been long planning about its expansion that will connect the Atlantic and Pacific oceans. This expansion is scheduled to be done in April 2016 (see the Suez Canal Expansion article here). Also, at that time, a new set of locks will allow some of the biggest ships in the world better access to U.S. ports. There is another plan that considers the construction of another set of locks that can handle even larger vessels, those that can handle in excess of 20,000 twenty-foot equivalents (TEUs).

Current Panama Canal

The Expansion of Panama Canal

On the other hand, the expansion of Suez Canal at Egypt had been done. In addition to widening the canal, construction is underway for an industrial and logistics hub.

As the expansion at Panama gets closer to being finished, Suez is feeling the heat to retain its superiority in handling the biggest ships in the world. Moreover, Panama recently announced a new customer-loyalty program for the container segment that will see shippers receive “premium prices” once a particular volume is reached.

Suez Canal

In addition, the energy revolution might play amore significant role in determining how the two canals interact with one another. While no one predicted it a few years ago, the U.S. is now the largest carbon producer in the world.

With the U.S. equipping the export of its liquefied natural gas (LNG), both, Panama and Suez Canal will be battling for that traffic from America.

Currently only 23 ships in the global fleet of 421 LNG carriers can pass through the Panama Canal. Once the expanded canal in Panama is operational, it will become the shortest route for moving gas commodities from the Gulf of Mexico to North Asia.

Whereas, Suez Canal also gives another incentive. The Egyptians government announced an increased discount for LNG carriers, lowering rates for the first time since 1994.

It is clear both locations are doing things that will enhance global trade and supply chain facilitation for decades to come.