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The Future of Panama Canal in hands of its voters

From Lloyds' List Monday September 25 2006

Referendum will decide the immediate fate of the 92-year-old waterway

Next month 2.1m Panamanians will be asked to make a monumental decision on whether to expand the Panama Canal in a referendum that will have a profound impact on Latin American ports and shipping.
If the majority of the votes say ‘yes’ on the October 22 a new set of locks, 427 m long, 55 m wide and 18.3 m deep will open the waterway up to the largest ships under construction, even theoretically the world’s largest containership, Emma Maersk .
The launch of Maersk Line’s latest behemoth in August has only served to underline the limitations of a canal that was opened in 1914 with locks that were 32 m wide.
But it is not just the Panama Canal that needs to bring itself up to date. Redefining the word ‘panamax’ will demand similar upgrades in the rest of the logistics chain.
Ports and terminals in the region will be forced to dredge deeper, invest in new equipment and prepare for larger vessels calling either directly or the arrival of larger intra-regional feeder services.
Canal authority ACP estimates that on purely operational grounds the expansion will benefit Panama to the tune of $5.1bn a year with canal revenues increasing from $1.1bn to $6.23bn as a result of the $5.25bn project.
In addition, ACP argues, a canal with double its existing volumes will be beneficial for its shareholders, the Panamanian people, in many other ways.
Principally the country’s ports are set to benefit most from an estimated $1.15bn a year in additional revenues for the auxiliary maritime industries when the new locks open in 2015.
Construction is expected to take between seven and eight years from approval of the project. Ports are already preparing for the new ‘panamax’ with the country’s leading operators, Manzanillo International Terminal, Panama Ports Company and Colón Container Terminal embarking on $1bn of investment in Balboa and Manzanillo.
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