Now that Panama can transit 14,000-TEU ships, it worries it will not have water to keep them afloat
 One could not have imagined the Panama and the Suez Canal in commercial competition a decade ago, but one's head is left spinning at all the "new normals" with which world shipping must cope today.
Perhaps there was a hint of it 15 years ago, when ships loading in Singapore and points west might take Suez instead of Panama to reach the consumer-rich hinterlands of North America.
In those early days, one might engage in then new, but now outmoded "wayporting", that is, dropping off containers from mega ships that could not access shallow American east coast ports. These boxes would be picked up by smaller ships that could take them to ports from Houston to Halifax.
Having dropped off their transatlantic transshipment boxes at Mediterranean or Red Sea ports, these mega ships of old would circumnavigate the Iberian Peninsula, cross the Bay of Biscay on to discharge cargo in Northern Range ports from Hamburg to Le Havre.
But much has changed since. Ships have increased in size from the biggest at 14,000 TEU in 2005 to the biggest in 2020 at 24,000 TEU. This has been accompanied widespread dredging of US and Canadian east coast ports to accommodate these mega ships. Thus, bigger vessels, the average size of which is 10,000 TEU, need not wayport as they were once did, but now continue on to the east coast of America, where they enjoy shorter rail and road journeys to where the cargo wants to go.
The only blockages on the Suez Canal are other ships, which tend to get in the way of each other from time to time. But there are no locks to complicate matters.
Not so Panama. Before 2016, the Panama Canal was limited to 4,500-TEU ships. Then came the expansion in 2016 which increased the ship size to 14,000-TEU - on a good day. What makes a good day is having enough water below the keel to keep the big ships from touching bottom. And that is entirely dependent on maintaining Panama's standing as the fifth most rain-soaked country on earth.
But that has been thrown in some doubt after the canal experienced its fifth driest year in 70 years in 2019. Since then, the canal implemented a freshwater fee, extended water conservation measures, and made changes to its booking system.
As a result of these actions, the canal now offers a maximum authorised draft of 50 feet at the Neopanamax Locks, a significant improvement from the 43-foot draft in July 2019, confirming the effectiveness of these measures.
However, there is still a critical need for the Panama Canal to adopt a long-term solution to securing its water supply for the next 50 years. Therefore, the Panama Canal published a Request for Qualifications (RFQ) for the pre-qualification of potential bidders for the engineering, design and construction of a new water management system that will fundamentally change the way Panama handles its water resources.
The canal expects to spend up to US$2 billion in this project, making it the waterway’s largest infrastructure undertaking since the canal expansion.
The core of this effort, research and development will take the lead through the newly created water research centre, in partnership with the Technological University of Panama (UTP). They will identify innovative solutions that mitigate the effects of water availability, including deployment of the latest technologies like artificial intelligence.
"The centre will also infuse innovation throughout the project cycle to push for a more sustainable future for Panama and the global maritime industry. Specifically, we will make sure this project will drive improvements to the social and economic wellbeing of the local communities by creating jobs, improving local infrastructure, and advancing the UN Sustainable Development Goals (SDGs)," said the Panama Canal's geo-technical engineer Daniel Muschett.
Said the canal's water projects vice president Jose Reyes: "We have envisioned a few scenarios for this system over the past few years, from segmenting the Gatun Lake for a reservoir to a pipeline that draws water from a lake with higher water levels to the canal.
"Ultimately, there is no simple answer or single project that will solve the ever-changing environmental and business challenges impacting the canal, so we are focused on implementing an integrated system," said Mr Reyes.
The conceptualisation of the project will be known once we chose the most qualified firm through tendering. "We aim to short-list the most-qualified firms by the end of the year, inviting each to submit their best value proposals for a portfolio of water management projects at the waterway," Mr Reyes said.
The planned integrated water management system will allow the canal to have control over the water levels at the Gatun Lake during any season, they said.
To gain this degree of control, the system will also need to have the necessary technology to properly forecast water levels and effectively control water flow to the navigational channel to ensure sustained operations.
To manage water quantity, this system will increase water storage capacity, important when droughts occur, like the one in 2019. Quality is key to this project as we need to ensure that water quality is kept according to standards for drinking water and salinity levels are sufficient for human consumption and optimal for transit operations.
With 14,000-TEUers afloat in 2005, it was obvious that Panama would have to do something to stay in the game, limited as it was to transiting ships no bigger than 4,500 TEU. At first they figured the expansion would double the ship size to 9,000 TEU. But with a tweak here and a tweak there, even a change of ship shape and adding another layer of containers on the weather deck, the canal could accommodate 14,000-TEUer in a pinch.
The Panama Canal has had as many stresses and strains as anyone in the shipping world in the last 10 years. The first was trying to meet its expansion deadline for its 100th anniversary on 2014 of the revolutionary waterway that solved the age-old problem of getting ships from the Atlantic to the Pacific without having to circumnavigate the cruel passage around Cape Horn.
All was going swimmingly, despite work stoppages and financial interruptions, and by sheer grit and determination the project pressed on. The Panama Canal was even draining cargo from southern California as the Dixie ports, from Virginia to Texas as Asian shippers and beneficial cargo owners heeded the siren calls to "keep cargo on the water" and "make the ship your warehouse" and "cut out the costly overland journey to the consumer-rich lands east of the Mississippi.
But with the advent of handling mega ships, Panama faced new problems and new expenses. Instead of benefitting from the woes of US west coast ports, Panama began to share them. Cargo now risked abandoning the Panama route altogether because today's truly massive ships could use the easy, open channel that is Suez, and find their way to an accommodating harbour on the east coast of North America that have the draft alongside and the quay cranes to discharge mega ships and provide cargo refreshingly short and inexpensive rail and road journeys to where it wants to go.
One top of all that, Panama now has water level to worry about as bigger ships with heavier loads are at greater risk of running aground. If it's not one thing it is another. |
