Proposed growth of Panama Canal would impact Port of Charleston

Panama has proposed a $5.25 billion expansion for its canal—a vital link between the Port of Charleston and trade from the Far East —to accommodate the surging growth in world trade.

Panamanian President Martin Torres, who announced the plan during a town hall-style meeting in Panama Monday night, said the 52-mile canal is almost at capacity in handling the current volume of ships.

The proposal, which must be endorsed by the citizens of Panama, would double capacity by adding a third shipping lane with the construction of a third set of locks. If the referendum is approved later this year, construction will begin in 2007.

The expansion would also clear the way for the biggest container vessels, which in recent years have outgrown the waterway’s 900-foot length limit. The project is scheduled for completion in 2014.

South Carolina State Ports Authority spokesman Byron D. Miller said as important as the project is in terms of enhancing the Panama Canal’s competitiveness, it’s also important to the Port of Charleston.

“Charleston has a fair amount of business that comes through the canal, as Asia and the west coast of South America make up about a quarter of the total container trade we do,” Miller said. “From that perspective, this is an important development for the Port of Charleston.”

More than half of the ships being built now by Denmark-based A.P. Moeller-Maersk A/S, the world’s biggest container-shipping line, and its rivals are too big for the Panama Canal. Maersk, Japan’s Nippon Yusen K.K. and others are building bigger vessels as trade between the United States and Asia grows at about 10% a year.

Companies stepped up freight shipments through the canal after labor disruptions in 2002 at U.S. West Coast ports. Retailers save about 20% by using the canal instead of cross-country trains to ship to stores in the eastern United States. Cruise ships and other cargo vessels also use the canal.

While a wider Panama Canal will likely speed more trade Charleston’s way, Miller said the port is ready for it.

“Charleston is already prepared for the so-called post-Panamax ships, the vessels that are too big for the Panama Canal,” he said. “We have a draft of minus 45 feet as a result of the 2004 dredging project, we have the higher bridge, bigger cranes with four additional on order and new IT systems.”

The canal, which was built by the United States and turned over to Panama in 1999, is the world’s busiest after Egypt’s Suez, handling about 14,000 ships a year and generating almost $1 billion in annual toll revenue.

Ricaurte Vasquez, chairman of the Panama Canal Authority, said in an e-mailed statement that his agency has been studying the expansion for the past five years.

“This project will be for the benefit of the people of Panama and world trade,” Vasquez said. “We aim to be at the center of global trade and become a great maritime hub.”

Coincidentally, a group from the Panama Canal Authority is in Charleston today filming activity at the SPA’s terminals for their public education campaign in anticipation of the vote.