The Canal
From The Report: Panama 2014
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At $5.25bn, the Panama Canal expansion project is the largest single investment in the country’s history. The annual contribution of canal tolls to the national treasury has more than quadrupled from $201m in 2000 to $981.8m in 2013. The new set of locks will accommodate post-Panama ships, which can carry up to 13,000 twenty-foot equivalent units (TEUs), compared to the current maximum of 5000 TEUs. Just as the nationalisation of the Panama Canal changed the country’s long-term economic competitiveness, so too will the completion of its expansion project. Not only are revenues from the canal expected to double by 2020, fuelling continued public sector spending on infrastructure and social programmes, the expansion will secure what is now one of Panama’s primary economic resources for the long term.

This chapter includes an interview with Jorge Quijano, Administrator, Panama Canal Authority; and a viewpoint from Søren Skou, CEO, Maersk Line.

Articles from this Chapter

Overview

Setting a new course: A look at the profound effects of expanding a key component of economic growth
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The Isthmus of Panama has been used to transport goods from the Atlantic to the Pacific and vice versa for centuries. In modern times its role in facilitating international trade has been taken to new heights thanks to one of mankind’s greatest engineering feats: the Panama Canal. The canal handles around 3% of global maritime trade, including about 10% of US international sea trade, according to the Panama Canal Authority (Autoridad del Canal de Panamá, ACP). In 2014 the canal celebrates two…

Interview

Global ramifications: OBG talks to Jorge Quijano, Administrator, Panama Canal Authority (ACP)
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Interview:Jorge Quijano To what extent will the global economic recovery and shifting trade patterns aid revenue forecasts? JORGE QUIJANO: World maritime trade is expected to strengthen in the long term through the transportation of raw materials and hydrocarbons such as liquefied natural gas (LNG) and coal, originating from the Atlantic coast of North and South America, and headed to Asia and the west coast of South America. The canal expansion will consolidate most of these commercial routes…

Analysis

Global impact: Analysing the far-reaching effects of the expansion
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The completion of the Panama Canal’s new locks will have broad effects on global commerce as new economies of scale will impact both the bulk commodity and container shipping industries. Latin American producers of coal, copper, liquefied natural gas, soybeans and other commodities, Asian manufacturers, US farmers, and many more all stand to benefit from the completion of the canal’s expansion. In terms of infrastructure development, though the Panamanian government continues to invest heavily…

Viewpoint

A knock-on effect: Søren Skou, CEO, Maersk Line, on expansion and new opportunities
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Efficient infrastructure is a key component to the creation of long-term growth and prosperity. When transport costs and time are reduced, goods and food can be produced where quality is high and labour costs low. Competitive local businesses can grow and consumers around the world can enjoy fresher foods and varied goods at lower prices. Last but not least, the amount of fresh food wasted due to inefficient transport can be significantly reduced. The Panama Canal has played a key role in saving…

Analysis

Paying the toll: A new toll system will accompany the completion of a third set of locks
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Since the country took over administration of the Panama Canal in 1999, the canal has been an important source of revenue for the government, as Panama’s more business-like model has ensured a steadier stream of profits and revenues over the years. As a result, the government has increased tolls on several occasions and has worked to improve client satisfaction and profitability, according to the Panama Canal Authority (Autoridad del Canal de Panamá, ACP). Consequently, the impact caused by steadily…