A year and five months ago, large seafaring vessels started to sail through the Panama Canal after a break lasting several years. However, the Canal that links the two largest oceans on the globe – the Atlantic and the Pacific – has a much longer history dating back to 1914 when it was opened. Since then, ships are able to overcome the obstacle that the American continent constitutes for navigating between the two oceans. Nevertheless, ravages of time had been damaging the Canal for many years after the first opening and this waterway also gradually ceased its ability to accept even larger and larger ships. For the rapidly expanding transport and logistics demanded the growth of newly built vessels in recent decades.
What has the expansion of the Panama Canal brought for maritime business? Primarily, the overall capacity of this inter-ocean waterway has significantly increased. “In the first year after reopening, the cargo transit through the Panama Canal reached 330 million tons. These were mainly containers, and then bulk cargo, tankers and Ro-Ro vessels,” said Martin Hubeňák, Representative of the Port of Antwerp for Central and Eastern Europe. “Most of the cargo that passes through the Canal either comes from the United States or goes to that country.”
The Canal’s importance is so high, that a ship classification was created according to its parameters. The basic class is Panamax, medium-sized cargo ships, which should not exceed 294.13 meters in length, 32.31 meters in width and 12.04 meters in the draught. The usability of these ships does not exceed 5000 TEU. These vessels could pass through the original canal after its opening in 1914. However, after enlargement in 2016, even larger ships can sail through from the Atlantic to the Pacific Ocean. A new classification of Neopanamax was created with a maximum dimension of 366 meters in length, 49 meters in width, with a draught 15.2 meters and usability of 13.000 TEU. Shipbuilders must abide by these maximum dimensions; otherwise, the ships are not able to sail through the Panama Canal.
The Panama Canal creates new opportunities
The extended Panama Canal creates new opportunities for commodities that would be less economical for transporting between the continents. Exports of liquefied gasses (LNG and LPG), crude oil and petroleum products from the USA to Asia have increased considerably. The flow of shipping containers between Asia and the industrial centres on the East Coast of the US has changed, for these containers would otherwise have to be unloaded in ports on the West Coast and transported on roads. Container shipments of synthetic resin have increased too.
“The maritime trade in the whole Gulf of Mexico and of course the ports on the east coast of North and Latin America get profit on the Canal. It has become an attractive gateway for supplies to Texas and Central American East and has relieved the overflowing port of Long Beach. Supply chains decreased both their transport costs and delivery times using Panama Canal,” Martin Hubeňák explained.
Port of Antwerp benefits from the expanded Canal
The newly expanded Panama Canal increased its significance also for maritime routes connecting America and Europe. Large ships for South America can thanks to the Canal more easily and fast arrive in Europe. For example, the Port of Antwerp – one of the largest ports in Europe – has gained through the growing ship tonnage more volume of cargo. “We achieve greater productivity and efficiency when handling containers in the port. First of all our customers benefit from this,” stressed Martin Hubeňák.
As far as the connection between Europe and the west coast of North America and the west coast of Latin America is concerned, transports both in regular container services between the two continents and in bulk transport have accelerated. For example, there are several regular lines between Antwerp and Europe and these regions. The most important kinds of cargo include, besides container goods, also fertilizers, petrochemicals, iron and steel products, and ores.
Panama is important also for Central Europe
The reopening of the Panama Canal significantly enhanced also the conditions for transporting goods from the American continent to Central Europe. In this context, Port of Antwerp according to Martin Hubeňák seeks to extend the connection between the Port and the Central European inland. “In the last years, we made every effort to improve the rail connection between Antwerp, Slovakia, the Czech Republic and Poland and we expand our connections to Austria even more. Because of the distances and the increasing volume of transported goods, the rail link is much more cost-effective than road transport. Last year we launched new lines to Lovosice and Bratislava, also in Poland (Warszawa / Pruszkow, Katy Wroclawskie, Gadki and Slawkow) and to Austrian Linz. This year we have expanded our links to Austria, Wels and Graz,” said Martin Hubeňák.
High Canal tolls are an issue
For the whole time of the Canal existence, amount of the passage fees is controversial. The Canal shortens transport times for days and the transit fees correspond to it. The Canal prices went up already in the years before the renovation started, which caused general resistance, and some carriers tried to sail around the Horn Cape, which is, of course, problematic from the view of economy.
After the expansion in 2016, the Canal changed the way to calculate the toll for passing ships. Nevertheless, according to the ship owners, it meant a further increase. However, the use of the Canal is so advantageous that there is no danger of cargo amount decreasing. The route around Cape Horn is several thousand kilometres longer, and even with contemporary modern ships, it is not a quite safe route due to the frequent bad weather.
The importance of the Panama Canal for the development of maritime transport cannot be fully appreciated. The Canal is one of the main transport hubs that made possible globalization of the economy and trade over the last decades. Also Central Europe uses the Panama Canal for easier connection with the world for both importing and exporting goods and raw materials.
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