Ports & Infrastructure

Preparing for post- Panama

What East and West ports can expect — the good and the bad

On Oct. 22, 2006, the Panama Canal Authority (PCA) received the go-ahead from the people in Panama to proceed with the construction of a new, larger lane of locks. “And they hit the ground running,” says Richard Wainio, port director & CEO of the Tampa Port Authority.

Wainio is an expert when it comes to the Panama Canal. Not only did he spend his first 52 years living in Panama, he spent most of his adult career working for the canal organization. He also has deep roots in the canal’s history — his grandfather was a marine engineer involved in the original 1912 construction.

Lightening speed

Wainio says the speed at which the approximately $5.3 billion project is coming together is staggering. It’s expected to be completed by 2014 and operational in 2015 — a timetable unheard of in the United States, where projects are measured in decades, not years.

“My understanding is that they are already putting together the bid package for the major component of this project — the Pacific and Atlantic locks and the water-savings basins (WSB),” says Wainio.

The locks and the WSB are expected to be around 60 percent of the project’s budget, or $3 billion.

Water not an issue

Although lack of water had been a concern earlier, it was resolved with WSB technology.

Currently, Gatun Lake provides the fresh water for the gravity flow lock system. With every lockage, “Fifty-two million gallons of fresh water flows out to sea every time you open and close those lock gates,” explains Wainio. “So if you build a lock that’s far larger, you’re doubling or quadrupling the amount of water that would flow out to sea. Initially, the canal organization was considering the need to construct new dams and reservoirs and pumping that water into Gatun Lake through culverts through the mountains.”

Then in 2000, the PCA focused on adapting the water-saving basins used in Europe. Now, giant basins will be positioned next to each set of locks. “When a ship locks through, something like 60 percent of the water will transfer laterally into these water-savings basins and only 40 percent will flow to sea. And then when another ship locks through, that 60 percent of the water that’s sitting in the basins will move back into the lock chamber,” says Wainio.

The bottom line, he says, is that there is no immediate need to build new dams or reservoirs. The current reservoir system — in conjunction with this WSB concept — will provide enough lockage water for the foreseeable future.

Preparing for the new canal

As construction goes into full swing, Wainio says East and Gulf Coast ports are scrambling to prepare for the bigger ships and the increased container volume they will bring. “The big fear is that we’re not going to be ready collectively from the U.S. perspective to handle the larger vessels.”

Because most U.S. ports won’t be able to handle the largest ships, Wainio says what we’ll probably see is greater use of trans-shipment centers in the Caribbean basin area. “Anywhere from Colombia, to Panama, through the Caribbean, up to Freeport, Bahamas — containers will be offloaded and then fed from those facilities into the U.S. ports.”
Although the big retailers won’t get the full economies of scale and speed that could be achieved from direct shipment into U.S. ports utilizing the huge post-Panamax vessels, the scenario would have a positive effect on regional ports.

More volume for regional ports

“A major load center in the Caribbean, feeding more containers on Panamax vessels into the U.S., will definitely open more opportunities for regional ports,” says Wainio. “If you have a container port, even if it’s small, and you have a few cranes and 40’ of water, you’re going to get trans-shipment cargo running straight into your port.”
And there are other benefits, he says. “You don’t have to make the huge, risky investments [to handle large ships]. It may be a better way to serve the local market through your own regional port.”

Change for West Coast ports

Wainio doesn’t feel West Coast ports should worry about the Panama expansion. Just look at history.

“In the late ’70s to early 1980s, almost 80 percent of the Far East cargo came to the U.S. East Coast through the Panama Canal, and only 15 or 20 percent went into the U.S. West Coast,” he says. “Then from 1980 to the mid–’90s, that market share swung all the way back to the West Coast, to the point where only 25 to 35 percent was going through Panama. But that 25 percent of the market for Panama was far, far larger than 80 percent had been 25 years earlier because of the huge growth in the market.”
His message to the West Coast, he says, is that they’re not going to lose business. “They may lose market share, but the pie will grow, and they will still have more business than they have today. There’s enough to go around for everybody.”