Amid exploding fireworks and
waving flags, a Chinese ship carrying more than 9,000 containers on Sunday
entered the newly expanded locks that will double the Panama Canal's capacity
in a multibillion-dollar bet on a bright economic future despite tough times
for international shipping.
Several tug boats pulled
"Cosco Shipping Panama" into the new locks at Agua Clara under a
cloudy sky in Colon province, about 80 kilometers (about 50 miles) north of the
capital.
"This is the route that
unites the world," said Panamanian President Juan Carlos Varela.
"This new transit route
is the tip of the iceberg in making Panama once again the logistic center of
the Americas," canal administrator Jorge Luis Quijano said as the ship
headed for the Pacific Ocean. "And it represents a significant opportunity
for the countries of the region to improve their infrastructure, increase their
exports."
Thousands of Panamanians who
began gathering before dawn to witness the inauguration of the canal's
expansion waved the national flag as the band struck up a song.
"It's a one-time
experience, a great achievement," said Felicia Penuela, a housewife from
Colon province. "Panama is showing the world that even though it is a
small country it can do great things."
Nearly two years late due to
construction delays and labor strife, the $5.25 billion project formally
launched with the transit of the 158-foot-wide (48.2 meters), 984-foot-long
(300 meters), Chinese-owned container ship. It's one of the modern class of
mega-vessels that will now be able to use the canal.
With 30,000 people and eight
foreign heads of state expected to attend the daylong festivities, officials
are bullish.
"There is evidence that
the Panama Canal, with this expansion, is an important player not only for regional
maritime commerce but worldwide," said Oscar Bazan, the Panama Canal
Authority's executive vice president for planning and commercial development.
"The canal is a winning bet. (Clients) will benefit from saving not only
time but also money, because the canal is a route that shortens distance."
However, the party comes
amid a lull in global shipping due to the drop in oil prices, an economic
slowdown in China, which is the canal's second-largest customer, and other
factors that have hit the waterway's traffic and income.
While authorities anticipate
increasing commerce between Asia and ports on the U.S. East Coast, doubts
remain that not all those ports are ready to handle the huge New Panamex-class
cargo ships. Net cargo volume through the canal from the U.S. East Coast toward
Asia fell 10.2 percent in 2015, according to official statistics. Meanwhile the
Suez Canal in Egypt recently lowered tariffs by up to 65 percent on large
container carriers in an attempt to keep its traffic.
"It's important to remember
that the canal does not create demand. The canal opens the route. Supply and
demand on a world level is what will decide whether the Panama Canal will
really bring more volume or not," said Antonio Dominguez, a general
manager for global shipping leader Maersk Line, which moves about 14.2 percent
of world commerce. "What is certain is that the current canal has maxed
out."
Maersk was among shipping
companies that have reduced passages through the Panama Canal, although
Dominguez said the company is considering a return.
Since the canal was handed
over from U.S. control at the end of 1999, the waterway has generated about $10
billion in direct income for the Central American nation and is responsible for
about 40 percent of its GDP, factoring in related economic activity. Some 35 to
40 vessels transit the waterway each day, and the canal is estimated to handle
about 6 percent of world maritime commerce.
Panama began the expansion
nearly a decade ago. Originally planned to open in late 2014 around the
waterway's centennial, the new locks can accommodate ships that carry up to
three times the cargo of those previously able to use the canal.
Grupo Unidos por el Canal,
the Italian- and Spanish-led consortium that spearheaded construction, handed
the project over Friday, although a series of claims are still pending for
presumed cost overruns of more than $3 billion.
Paul Bingham, a shipping
economist at Boston-based EDR Group, predicted the canal expansion's global
impact will be small.
"The proportion of
world trade that could plausibly use the Panama Canal is constrained by the
geography of the world's population, resource endowments and production
regions," Bingham said. "There is very little a larger canal can
influence at the margin to induce shifts in the geography of world trade, even
through potential reductions in costs of shipping a variety of commodities to,
from and within the Americas."
Credit:AP
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