The Panama Canal Continues To Be Panama’s Predominant Benefactor
By: Larke Newell
Everyone not having lived in a cave for the past two hundred years knows that the famous Panama Canal contributes immeasurably to the world of shipping, importing and exporting, and, most of all, Panama’s economy.
Reigning over this monolithic entity is the Panama Canal Authority or ACP by acronym. It is an autonomous legal organization of the Republic of Panama and every facet of the operation, maintenance, administration, preservation, and management of the monolithic canal is under its bailiwick.
The history of the canal is well known, as is its importance to Panama and the world. Perhaps lesser known are the details of the recently completed expansion and the ecological benefits for which the ACP continues to strive.
Construction on the expansion was intense and extensive and lasted from 2009 – 2016, adding a third lane to the canal in order to provide passage for Neopanamax (bigger) vessels. This expanded canal exceeded the expected amount of traffic passing through, but also highlighted its environmental endeavors.
Aside from more and bigger container ships LNG (liquid natural gas) ships began utilizing the waterway after the expansion, producing steady growth. More than 90% of the LNG fleet can now transit the canal. This allows LNG producers to send natural gas to Asia at competitive prices.
Notably, and with fanfare, December 10, 2018 marked the five thousandth neopanamax vessel through the canal, highlighting the huge value the route has had on global maritime trade. On that momentous day this 366 meters long and 48.2 meters in beam vessel transited from the Atlantic to the Pacific.
To break down the 5000 vessels that have passed through to date, 51% are container ships, 26% are carriers, and LNG carriers make up 10%. Dry and big bulk carriers, car vessels, and cruise ships add the remainder.
An additional Canal Authority accolade has been received in the form of the Green Connection Environmental Recognition Program. This promotes and encourages the reduction in emissions of gases causing the greenhouse effect and recognizes vessels that comply with the highest environmental standards.
The expanded canal boasts water saving basins which recycle 60% of the water used per lock, saving 70% more than did the original locks. It will also reduce CO2 emissions substantially.
The scope of this canal continues to expand its benefits to Panama and the rest of the world. On December 10 of this year the Canal Authority signed a Memorandum of Understanding with the Port of Itaqui, located in northeastern Brazil. This will promote the shipment of grain and other cargoes between Brazil, through the canal, to destinations in the Pacific. This port has the infrastructure to move the grain exports to Asian markets.
Accordig to Moody’s rating agency “the expanded canal has captured more transits and tonnage, allowing it to develop new businesses and investments.”
To say that the Panama Canal is the lifeblood of Panama is an understatement of the first order. All of the things of which the isthmus can be proud such as excellent and ongoing infrastructure improvements, the best highways in Central America, the increasing quality of life for Panamanians, as well as business and investment opportunities for locals and ex-pats alike, mostly originate from canal revenue.
On December 13, this year, a record $1,703 billion was approved to be given to the republic by the ACP. This contribution is derived from $1,199 billion of surplus for 2018, plus $502 million of transit tonnage, and more than $2 million for services rendered to the canal. This figure represents an increase of $44 million as opposed to budget figures and provided an increase of $53 million over previous contributions.
It is huge. It is an engineering wonder. Its benefits to world shipping is astronomical. But most importantly to current Panamanians and future ones, it assures us that our country will continue to grow and prosper for years to come.
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