The Panama Canal Expansion is a project that has been long awaited not just by Panama, but all the shipping related parties in the world. The expansion creates new alternatives for traffic in the Canal and provides two times the former capacity of the waterway. Before completion of the expansion project and opening on June 26, 2016, the locks could only handle vessels that carried up to 5,000 TEUs. Today the canal is able to receive Post-Panamax vessels, which can carry up to 14,000 TEUs. This opens up significant new opportunities for the shipping world.

The work on this project has been extensive. The Panama Canal expansion started in September 2007 with an estimated cost of $5.4 billion. This project to expand the 102 year old canal has taken almost 100 years, and more than 40,000 workers to make it possible. The Expansion involved the following set of components:

1. New Locks – the construction of two lock complexes, enabling a third lane of traffic

2. Pacific Access Channel (PAC4) – a 6.1 km –long cannel excavation for a canal for the new Pacific locks, bypassing the Miraflores Lake

3. Dredging of the navigational channels along the waterway

4. Water supply improvement – raising the maximum operational level of the Gatun Lake by 45 cm, to improve the water supply and draft of the Canal.

The Panama Canal Expansion has also influenced the economic activities of other countries. US ports as an example have been investing millions of dollars to upgrade their facilities, in order to be able to keep up with the expected increase of trade with the coming of the neo-Panamax ships. Ports in New York, New Jersey, South Carolina, Texas, and Georgia all reportedly have projects in the works.

The United States was in charge of the original canal construction completed in 1914, and was also responsible for the control of the waterway until 1999 when control of the canal was given back to Panama.

The Panama Canal expansion is based on research conducted over 6 years and involved around 100 studies on market demand, technical engineering aspects, economic feasibility, environmental impact, and other aspects. It has been a complex project, which was as well wracked by delays, engineering glitches, cost overruns, and labor strikes. Nevertheless, the expansion is expected to a notable growth driver for Panama’s economy and will have a major impact on global trade and supply chain management. Estimates by the Boston Consulting Group see as much as 10% of container traffic from East Asia and the US shifting from West Coast to East Coast ports by the year 2020. [Read more…]

A short and simple story about the logistics process undergone by a turkey fryer in time for the Thanksgiving holiday:

Thanksgiving is quickly approaching and all I want is a deep fried turkey, a beer or two and a day celebrating with friends and family. Besides beer, I need two ingredients: turkey and a deep fryer. My local department store sells a turkey deep fryer for $69, and it looks sufficient.

After purchasing the fryer I look at the bottom of the package. It reads:  “Beijing, China”. As we all know, Beijing is the industrial garden of the world, but it doesn’t have a port. My turkey fryer was, after it was finished in the factory, transported 120 miles over land, by truck to the nearest port of Tianjin. In Tianjin my fryer was probably put with many other products in one container, with as a final destination: Boston. In Tianjin, my container is loaded on top of a container vessel by a giant crane. This container vessel, is a called a feeder, and relatively a small one, in the container vessel family.

My fryer leaves from Tianjin to Shanghai, the main port of China for international shipping. It’s a 1,000 (land) miles journey. When arrived, the container is put together with all other containers on a bigger container vessel of the type New Panamax. This type of ship can contain up to 15,000 containers, and has a maximum length of 366 meters. One meter extra is not allowed, otherwise it won’t fit through the (new) Panama Canal. It is exactly 9335 miles to the Panama Canal. Although you would maybe expect that my turkey fryer would go through the Panama Canal, something else happened. The container is offloaded in the port of Balboa, right next to the Pacific entrance on the Canal.

The container is then put on a train, and railed to the Atlantic side of Panama. In the harbour of Colón, the container is put on a smaller container vessel most likely carrying only containers for North America. The container ship now heads straight north for the next 2200 miles to arrive in the big port of Newark, New Jersey. After a trip of almost 13.000 miles my turkey deep fryer will be delivered by truck from Newark to Boston, offloaded in a warehouse, and distributed to the department store. What a trip, and it takes only 3 weeks. I feel incredibly rich that something comes from so far to give me and my family a wonderful thanksgiving dinner.

Now I’ll fire up the deeper fryer, drop in the turkey, and if you don’t mind, open my well-deserved beer. Happy Thanksgiving from your friends at Logistics List!

How have 3PL CEOs changed their view of the world given the economic environment and shifts in the third party logistics industry?

Susan Lacefield, Associate Managing Editor at DC Velocity and Robert Lieb of Northeastern University discuss the 17th annual 3PL CEO Survey of North America, Europe, and Asia in this video.

Subscribe to DC Velocity Magazine for Free