Logistics of the Panama Canal Expansion - Essay Example

Logistics of the Panama Canal Expansion 11-7-2007 This paper considers the various logistical factors involved in the current expansion of the Panama Canal. The challenges faced by this project include acquiring the necessary workers and designing the locks to accommodate trends in larger vessel designs. Other challenges include staying within the projected budget, impact on the environment and the gap between the rich and poor in Panama, and the challenge to the Panama Canal Authority (ACP) to manage the project. This paper will focus on the challenges of managing these complicated logistics, and how well the canal expansion plans are posed to take on these challenges. The project to widen Panama Canal was begun with an explosion on September 3, 2007, and is expected to cost 5.25 billion dollars, although it could very well go much above this. The project is expected to be completed in 2014, the 100th anniversary of the canal. The project is under the authority of the Panama Canal Authority (ACP), which is an autonomous government agency that currently runs the canal. The project will require excavating about 135 cubic meters of earth; the supplies required include "1 million tonnes of cement, 5,200 tonnes of explosives, 85 million gallons of diesel, and 250,000 tonnes of steel using 10 dredgers and hundreds of excavating machines" (Nelson "A Great Day"), making this the largest project Panama has probably undertaken since it gained independence from Colombia. The Panama Canal expansion project is supposed to double the canals capacity and increase traffic by creating a third set of locks, including lock complexes on the Pacific and Atlantic sides of the canal, a new third lane of traffic, excavation of new access channels to the new locks, and widening and deepening of the existing canal. In addition, Gatun Lake will be raised by 1.5 feet in order to store more water for canal operations and the drinking supply. New locks will be built on both the Pacific and Atlantic sides of the canal. The construction group Constructora Urbana has the first contract to remove earth to create a widened access channel to the new Pacific side locks. Other contracts are still to be decided, and it will be up to the ACP to efficiently manage them all and keep them working towards the completion date. A lot of the work that is being planned is similar to the expansion project begun by the U.S. in 1939 in order to allow passage for larger U.S. military vessels, an expansion project that the U.S. abandoned at the start of World War II and never returned to. Some of the excavations begun by the U.S., including the sites of the new locks, will be used in the current expansion. The goal of the expansion remains the same as it was in 1939, to allow passage for larger vessels, but many aspects of the new canal expansion plans also entail utilizing more modern technologies, such as water recycling in the locks and new modern miter gates that will circumvent the need to shut down canal traffic during gate repairs. Challenges to the Panama Canal project include finding enough construction personnel, when the real estate sector is booming and using many construction workers. It is estimated that 7,000 workers will be needed during the first phase under Constructora Urbana alone, totaling about 40,000 for the whole project. By 2025, it is estimated that a quarter million canal expansion- related jobs will be created (Kim “Panama Canal”). It is speculated that a large foreign labor force may be required to enable the canal expansion to be completed, and as of now, it is unknown where it would come from. The population of Panama may be too small to meet the demand for labor. Whether this labor force can come from outside the region is unknown. Another challenge to the Panama Canal project will be to accommodate the new super post-panamax vessels, such as the Emma Maersk, that are three times larger than the container ships that currently traverse the Canal. The Emma Maersk is 56 meters wide, too wide to even fit into the planned third set of locks. The ACP states that the lock plans are still in an early planning stage that may still be altered to accommodate these new vessel designs. Current trends in ship designs are larger vessels of more than 7,000 teu (twenty-foot equivalent units, or the cargo capacity of a standard shipping container, which is twenty feet long) capacity, which are called super post-panamax container ships. Designs are being made for 12,500 teu capacity, which the expanded Panama Canal will be able to handle in 2014. The new designs will have a "carrying capacity of 110,000 tonnes with main dimensions of 349 m length, 45.6 m width, 27.3 m depth and a maximum, structural draught of 14.5 m" (Tinsley "Larger Vessels"). These trends in larger vessels are unlikely to reverse, since shipping companies will profit from the associated lower operating costs per containers shipped. Environmental concerns of the canal project include whether there will be enough drinking water supplied by Gatun Lake, one of two lakes that provides the main drinking supply for the people of Panama. Deforestation has caused less water to be stored in the rainforest, which steadily replenished the Gatun Lake throughout the year; now rainwater during the rainy season runs off the slopes into Gatun Lake and spills into the sea, resulting in water shortages during the dry season. When a ship traverses the canal locks, 52 million gallons of fresh water are drained from the Gatun Lake into the sea. The canal uses 2 billion gallons a day to fill the locks (Reagan "The Panama Canals"), which will only increase with the expansion. So far the expansion plans have avoided the need for building new reservoirs, which would entail relocation of people. Fifty thousand people were forcibly relocated during the creation of the Panama Canal. In contrast, expansion planners have expressed plans to stay on currently owned canal property. The extent of relocations so far are that people will be relocated off of 20 buildings on canal property due to raising the level of Gatun Lake (Matalon “Panama Canal”). The beginning of work on the expansion project has included reforestation along the 51-mile canal. Along with the importance of these forests to the water supply, the forests are also important as an isthmus connecting North and South America. Migrating birds and animals such as jaguars and eagles depend on these routes (Matalon). In such a critical region, it is an important consideration what the expanded canal’s actual impact on the surrounding environment will be. Other environmental concerns include the threat of saltwater contamination of Gatun Lake. This salinization could be avoided by detecting unacceptable salinity levels and flushing the lock water periodically to sea, to be refilled with freshwater (Menendez “Some Worrisome”). But the cost of this procedure or of otherwise protecting the freshwater supply is unknown, and apparently not included in the official canal expansion plans. Climate change in the next 100 years is predicted to include extreme weather such as short and heavy torrential rains along with longer dry spells. This will lead to soil loss and more sedimentation in the canal waterways that will be costly to dredge. In 1996 the El Nino weather led Panama to enforce draft restrictions which China sought legal demands against (Menendez). The operational and legal costs of such climate effects may also not have been completely prepared for by canal expansion planners. Menendez, who is a former head of the National Environmental Authority (or ANAM), states that there has been notable environmental deterioration of watersheds between Panama City and the city of Colon. This deterioration in water quality and quantity affects the whole watershed. The new set of locks would draw from the Chagres River watershed, and presumably be affected by this environmental deterioration already in place. It is unknown how this watershed will be protected. Finally, there are the environmental concerns related to accidental spills and pollution from ships in the canal, and how these risks would affect populations of people near the canal. In response to all of these environmental concerns being voiced, and as an example of the environmental impact of not expanding the Panama Canal, an ACP official has suggested considering the impact of the greenhouse gases from more ships going all the way around South America. But Menendez has called for an extensive environmental impact study of all these factors related to canal expansion, followed by the study being presented at a public forum. There is some doubt about who would benefit from an expanded Panama Canal the most, and whether these benefits would be seen by the people of Panama. The East Coast of the U.S. would benefit from lower retail prices on goods from Asia, since railway transportation from California would be eliminated. South American countries shipping to China, such as Brazil and Argentina, would also profit. But will this project only deepen the gap between the rich and poor of Panama? On the cost side, the Panama Canal is meant to be paid for by increased tolls of ships using the canal, as well as foreign credit. There is some debate about whether world trade demand will actually be as high as projected in the future and if the global economy will hold up long enough, in order to finish paying for the canal. There have been traffic jams at both entrances to the canal, however, with some ships incurring over 40,000 dollars in daily operating costs (Reagan). This implies that many shipping companies would be willing to pay large tolls and would still save money they are spending now; some shipping companies (such as BP shipping) have been known to pay nearly a half million dollars just to be allowed to bypass canal traffic jams and pass through the canal first. It is questionable if any contingency plans are in place, should current trends in world trade and the global economy falter; presumably the people of Panama would be stuck with the price tag. The main reason some people suspect that the $5.25 billion price tag for canal expansion will be surpassed is that this estimate was made by Parsons Brinckerhoff. This company overran its budget by 50 percent while building the Boston Big Dig, as well as incurring a tunnel collapse (Kim “Panama Canal”). Yet the ACP relied on them for their expansion plans. There is also some debate about whether the cost of the Panama Canal will be worth it to the people of Panama if there is competition from other canals. Nicaragua has proposed building its own canal. Other countries in the region could also compete for Atlantic - Pacific traffic. The trend in building larger vessels could conceivably make the Panama Canal obsolete in the near future. For nearly one hundred years, Panamax ships were built; they are the 110 foot ships that can just fit into the current Panama Canal. But lately, post- Panamax ships that cannot fit into the Panama Canal are being built by shippers, with the cargo transported by railway across the United States or Canada. The canal is soon expected to meet its maximum capacity. The large Panamax vessels are reducing the number of transits that the canal can handle. In just four more years, it is projected that 37 percent of container ships will be of this larger post- Panamax size (Reagan). It is certain without the planned expansion, that the Panama Canal would continue to lose its share of the world shipping trade. The engineering demands of the new expansion project include designing two three-step locks to elevate sea-level ships to the higher Gatun Lake and lower them back to sea-level again. There will be two new navigational channels to connect to existing channels. Those existing navigational channels will be made deeper and wider to accommodate the new larger container ships. In addition to the large amount of planning that must go into these aspects of the project, there will be an immense, unprecedented amount of dredging. From an engineering viewpoint, the biggest challenge to the new expansion project is its virtual scale. The proposed new reinforced-concrete lock complexes that will bring the sea-level ships to the elevation of Gatun Lakes will each be over a mile in length. This will make them the largest lift complexes in the world (Reagan). In comparison, the Suez Canal in Egypt has no locks or lifting capacity. In order to deal with the problem of protecting the Panama water supply, canal engineers have adopted a plan to recycle much of the water needed to fill the locks. This was inspired from a visit to Germanys Hohenwarthe Locks. In the past, this water was just flushed out to sea after each ship transit of the canal. The plan is to place three large basins adjacent to the new lock chambers in order to catch 60 percent of the water flushed out (Reagan). This water will then be used, in addition to water from Gatun Lake, to refill the lock by gravity pushing the water through culverts in the lock walls, in a process that takes about ten minutes. In this way the new, larger locks will actually use less water than the old locks. The new locks will also employ rolling gates in order to seal the chambers, such as found in Belgiums Berendrecht Lock. These electric-powered twin gates are stored in a recess in the lock wall. One gate can be in use so that canal traffic will not stop while the other gate is retracted and undergoing onsite maintenance. This will avoid the current da Vinci style miter gates that need to be removed and taken to dry dock for maintenance and repairs. The new locks will not need the electric mules that currently guide ships into the canal, which are crucial since the canal has only a two-foot clearance for Panamax ships. Instead, the new locks will use tugboats at the bow and the stern of the post- Panamax ships, in order to steer the gargantuan container ships into the new lock chambers. Presumably, there will be much more leeway in the lock widths, even taking into consideration the size of the new behemoths coming through. This will eliminate the need to otherwise supply over a dozen guiding mules at each new lock, cutting costs in this regard. Some have voiced doubt over whether the ACP can handle such a large undertaking. There is some speculation that the ACP, which occupies the largest public building in Panama, is already too corrupt. Budgetary mismanagement, embezzlement and government corruption concerns have led some people to wonder if expansion project plans will become too complicated and compromised. There is the possibility that delays in construction could beset the project too. Taken together, these possibilities show that there is a real possibility that the canal expansion project could fail. The reasons to suspect that corruption will entangle expansion plans are due to the present institutions. Panama is currently ruled by a small elite of European descent who control the wealth (Kim “Panama Canal”); the people in power now also have some ties to former dictators such as the current president‘s father, Omar Torrijos, or Manuel Noriega. According to Kim, there is rampant institutionalized corruption and half of the Panama population live in poverty. Foreign interests in the canal expansion are strong, with little sign of it benefiting the ordinary people of Panama. In 2005, the largest shipper through the canal was China, exporting to the East Coast of the U.S. As an example of possible corruption, the ports of the Panama Canal are owned in turn by a series of companies that are ultimately owned by a Hong Kong company, whose owner has ties to the Chinese government in Beijing. Li Ka-Sheng is the 10th richest man in the world, and has come under U.S. intelligence scrutiny. Fears of such a powerful foreign company include its ability to leverage its power by threatening to take its business somewhere else, as well as the potential to use the canal for illegal shipments. Others see this privatization and foreign management in Panama as a key to its economical prosperity, a view held by the mayor of Panama City (Cullen “Panama Rises”). But ordinary people in Panama remain seem to be mostly concerned about making a living in Panama, and unconcerned about the Panama Canal. However, in the 2006 vote for the canal expansion, the people voted overwhelmingly in favor (“Voters Approve”); this was among rumors and some evidence of government funds used for vote-buying. In response to criticisms of the ACP, canal expansion supporters point to the way Panama has successfully run the canal efficiently and profitably since 1999, when the U.S. ceded control. In spite of increased traffic, the canal has managed to run mainly undisrupted since that historical turnover. Even former U.S. President Jimmy Carter, the U.S. co-signer of the treaty to turn over canal power to Panama, was present during the opening ceremonies of expansion work, stating that he was proud of the canal expansion underway. In spite of the many challenges to accomplish this expansion project, ACP officials stress that most of the technology that is proposed is already being used in other canal projects around the world. The new technologies, such as the water recycling capabilities and the new lock gates, have been modeled after existing European locks. And the challenge of the current expansion project is no where near as daunting as the original project the U.S. undertook to build the Panama Canal, deemed the worlds greatest engineering project. References Cullen, Bob. “Panama Rises.” Smithsonian Magazine, March 2004. Kim, Dayhawk. “Panama Canal (Expansion): Whose Is It?” Global Pulse, 27 Sep 2006. Retrieved 7 Nov 2007 from http://www.globalpulse.net/archives/americas/panama_canal_ex_000384.php Matalon, Lorne. "Panama Canal Expansion Spurs Environmental Debate." National Geographic News, 27 Jun 2007. Menendez, Gonzalo G. "Some Worrisome Environmental Aspects of the Panama Canal Expansion." The Panama News, vol 12, no. 14, 23 Jul- 5 Aug 2006. Nelson, Rainbow. "A Great Day for Panama: $5bn Expansion Blasts Off." 4 Sep 2007. "Panama Expansion Under Way." BBC News, 3 Sep 2007. Reagan, Brad. "The Panama Canals Ultimate Upgrade." Popular Mechanics, Feb 2007. Tinsley, David. "Larger Vessels Increasingly Popular." 16 Aug 2007. Vasquez, Ingrid. "Analysis: Expanding the Panama Canal." AOL Country Watch. 19 Feb 2005. Retrieved 7 Nov 2007 from http://aol.countrywatch.com/aol_printwire.asp?vCOUNTRY=133&UID=1375565 “Voters Approve Panama Canal Expansion.” USAToday, 22 Oct 2006. Wikipedia. "Panama Canal expansion project." Retrieved 7 Nov 2007 from http://en.wikipedia.org/wiki/Panama_Canal_expansion_project. Read More