Panama Canal Problems

A well-reported piece in the New York Times on June 23 cites a long list of concerns from technical and operations experts involved with the expansion of the Panama Canal, who call into question the Canal’s ability long-term to transit the giant ships that promoters say will transform American trade.

The opening of the Canal expansion project on June 22, two years late and with huge claims, comes amid great turmoil in the shipping industry. Operators have invested in larger vessels but are being hurt by freight rates at record lows and sluggish growth in trade. The Shanghai Containerised Freight Index — which tracks what lines are charging to ship a container — recently reached its lowest level since 1998.

The purchasing of these huge ships now looks ill-timed, given that global trade growth has been mainly sluggish since the 2008-09 financial crisis—2016 could be the fifth straight year of subpar expansion in trade. The same goes for the many billions spent on East Coast seaports, dredging and bridge raising projects that will be largely wasted if the Canal falters or global growth and trade fail to pick up.




About Bill Reinhardt

Editor of Public Works Financing newsletter
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