The imminent expansion of the Panama Canal waterway will reshape local shipping lanes and global economic geography, says researcher at the Brookings Institution Metropolitan Policy Program, Adie Tomer.
Tomer told World Economic Forum that the US$5-billion Panama Canal expansion project would see the creation of a new generation of post-Panamax ships that will boost vessel capacity upwards of 50%.
As current postpanamax ships are rated in the 4 600-6 600 TEU range, that would presumably see the new generation in the 6 900-9 900 TEU range.
With the largest ships now carrying up to 13 000 shipping containers, Tomer says that the expansion project will have an impact on the economics of shipping, highlighting the logistics costs related to the Canal’s new capacity as one of many forces affecting the trade levels between markets.
There are legitimate questions over how much these shipping economies will affect spatial economies, says Tomer. “Combined with other global economic forces like higher labour costs in Asia, a rising middle class across emerging countries and dropping energy prices in North America, logistics costs related to the Canal’s new capacity are only one of many forces affecting the trade levels between markets.”
Latin American commodities will now also be more attractive to fast-growing Asian markets when looking at ships carrying more bulk products at the Canal, says Tomer.
“This is especially true for metals, agriculture and other raw goods that are key initial ingredients in ever-longer global value chains.”
Panama Canal’s new capacity to affect global trade levels
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