The Panamax cranes were installed last fall, and have been operating at the Seagirt Marine Terminal since January.

The cranes were installed as part of a $105-million expansion of the Port of Baltimore.

With the cranes Baltimore joins Norfolk as the only two East Coast ports that can handle the super sized ships.

Norfolk is the only other port on the East Coast that has these cranes.

Maryland Port Administrator James White says the new cranes will enable the port to handle various consumer goods that will go to retailers in the eastern third of the country.

He says the port will be able to add 5,700 jobs in the next few years.

Former Congresswoman Helen Bentley, for whom the Port of Baltimore is named, says the cranes culminate 30 years of improvements that began with dredging around the port to create a 50-foot shipping channel.

A number of longshoremen attending the dedication ceremony said the expansion will help guarantee jobs at the port for years to come. (wbal.com)

With the Panama Canal scheduled to open a new set of locks to accommodate larger container ships in 2015, City Council members cited increased competition from East Coast ports for Asian trade as a reason to improve the port's cargo handling ability.

Today's 11-2 vote approved environmental findings necessary for BNSF's Southern California International Gateway's final approval, a lease agreement to allow BNSF to build on port property, as well as a 50-year permit to construct and operate the facility.

The switching yards and tracks would be about four miles from the Port of Los Angeles, shortening trips trucks currently make to a rail yard farther inland.

The council denied appeals by detractors, including the city of Long Beach, the South Coast Air Quality Management District, the Long Beach Unified School District, environmental justice groups, and trucking businesses.

Long Beach and Wilmington residents and members of environmental groups who oppose the project say it would be too close to schools and homes. A lawsuit was threatened by the Natural Resources Defense Council, according to the Los Angeles Times.

Representatives of labor and business groups, including the Los Angeles County Federation of Labor and the Los Angeles Area Chamber of Commerce, said the project would help keep jobs in region.

Those against the project said it would be built near four schools and homes in Wilmington and Long Beach. Opponents urged the council to send back to the Harbor Commission the environmental impact report and lease agreement, saying there were no guarantees that BNSF would use a zero-emissions operator. (kcet.org)

Since then, the abundance of domestically produced shale gas has upset previously held assumptions about where the world's liquefaction trains would be concentrated. Just this month, the prospect of competing LNG export projects in North America and Africa influenced Woodside Petroleum's decision to shelve its $40 billion Browse LNG export project in Australia. Moreover, Woodside's chief executive has acknowledged the company's interest in an export facility in Western Canada. Even Qatar Petroleum – the world's top LNG exporter – has had to re-think where and to whom it will sell its LNG.

To be sure, the magnitude of the United States' status as an LNG exporter is still unfolding. Six years ago when the $5.25 billion canal expansion began, only one U.S. LNG export terminal – ConocoPhillips' 44-year-old Kenai facility in Alaska – was in existence. More recently, only one LNG export project – Cheniere Energy's much larger-scale Sabine Pass Liquefaction facility in Louisiana – has secured the required government approvals and is actually under construction. Numerous other export projects – many on the Gulf Coast – have been proposed, but how expeditiously they undergo regulatory review is unclear.

Despite the lingering LNG export unknowns in North America, LNG shipments from the region coupled with the expansion of the Panama Canal could exemplify serendipity on a grand scale.

“The timing and convergence of two unrelated events – the Panama Canal expansion and the unlocking of North American shale resources – will have extraordinarily positive affects for U.S. producers and LNG terminal owners and their counterparts in Asia who purchase LNG," predicted John Hritcko, Jr., Houston-based director of LNG Sales for Wison Offshore & Marine (USA), Inc.

The expanded canal will result in greater integration of the worldwide LNG trade and give U.S. natural gas producers access to prime Asian markets with shorter, more direct transit routes – especially from Gulf Coast terminals, Hritcko explained. In addition, the canal's ability to handle larger tankers could reduce overall LNG shipping costs by approximately 25 percent, Hritcko predicted.

Unlocking Greater Vessel Variety - Exporting LNG from the United States could mean a new customer base for the PCA.

"There is no established LNG trade through the canal due to the size constraints of the locks," said Silvia de Marucci, senior market analyst for liquid bulk with the PCA.

Environmental, financial and market studies conducted by the PCA during the previous decade to justify the canal expansion assumed "very low" LNG trade volumes, de Marucci noted. As a result, LNG trades were not considered part of the target market.

"The scenario looks very different now with the discoveries of shale gas and tight oil in the United States," she said. "Nevertheless, the size determined for the new locks will allow over 80 percent of the world LNG fleet [LNG carriers as well as Very Large Gas Carriers (VLGCs)] to transit the Panama Canal, enabling U.S. exports to gain access to new markets."

The canal commands a small share of the global oil trade because it is located away from major oil trading routes, de Marucci added.

"The traffic of crude oil and petroleum products – including liquefied petroleum gas [LPG] – represented 14.7 percent of the total cargo tonnage transported through the Panama Canal in Fiscal Year 2012," de Marucci said.

Much of the crude oil and refined products shipped via the canal originate from or are destined for regional markets such as the East and Gulf coasts of the United States, Ecuador, Venezuela, the Caribbean or elsewhere in Latin America. The canal also supports the chemicals trade between the U.S. Gulf Coast and Asia.

In the case of oil and products tankers, the largest vessels that can transit the canal are in the "Panamax" class – meaning a maximum size of approximately 70,000 to 80,000 deadweight tons (dwt). The canal's current configuration prevents transits by "post-Panamax" classes of tankers that are more commonplace both in the existing global tanker fleet and in order books: Suezmax, Aframax and Very Large Crude Carriers (VLCC).

During a presentation earlier this year at Platts' North American Crude Marketing Conference in Houston, de Marucci noted that only 16.4 percent of the world's existing tanker fleet and 6.8 percent of tankers on order can use the canal. An expanded canal with new locks will accommodate 56.4 percent of the existing fleet and 44.4 percent of the orderbook, or post-Panamax classes with the exception of VLCCs, she added. A PCA-commissioned market study revealed the expansion could support regional trade as well as long-haul voyages for petroleum products and crude oil.

"Vessels would take advantage of the economies of scale by switching from Panamax to Aframax and Suezmax," de Marucci explained. "In this sense, the design of the new locks allows this vessel size."

Preparing for a Changing Outlook - The PCA is already making changes to its operational plans given the prospect of accommodating long-haul tanker voyages and adding LNG carrier transits, de Marucci said.

"The Canal is in the process of developing the necessary navigational rules to administer the new traffic mix expected with the new locks in order to optimize the daily throughput of the waterway while at the same time, ensure a reliable, prompt, and safe operation," she explained.

"The Panama Canal Authority has engaged in a number of market studies to better understand the gas industry and develop market strategies that enhance the canal's competitive position," added de Marucci.

The PCA has consulted with industry groups such as the Society of the International Gas Tankers and Terminal Operators (SIGTTO) to determine how it can best serve the LNG market, PCA's Economics Research Section told Rigzone. SIGTTO's role is to provide guidance to the Canal on best practices and standards in the industry to ensure that navigational procedures and regulations consider all risk factors associated with transporting LNG while at the same time maximizing traffic through the waterway, the PCA unit stated.

Updating a Modern Wonder - The American Society of Civil Engineers includes the Panama Canal on its list of "Seven Wonders of the Modern World." The massive project, initiated by France and completed by the United States in 1914, fulfilled a dream of linking the Atlantic and Pacific oceans first envisioned during the Spanish colonial period centuries earlier.

After nearly a century of operation, the canal is undergoing an expansion to accommodate larger marine cargo traffic. The main facets of the expansion include:

Excavating new, wider and deeper access channels at the Atlantic and Pacific entrances to the canal.

Linking the access channels to two new sets of locks capable of handling post-Panamax vessels – one set at the Pacific end and another at the Atlantic end. Each lock will comprise three chambers, and each chamber will consist of three basins designed to reutilize and thus conserve water.

Widening and deepening existing navigation channels in Gatun Lake and deepen Culebra Cut. Gatun Lake is an artificial lake in the midsection of the canal's route that constitutes nearly one-half of the total length of the canal. Culebra Cut is a man-made valley – and the narrowest part of the canal – that links Gatun Lake to the lock system leading to the Pacific Ocean.

The PCA reported that the expansion was 51.8 percent complete and within budget as of January 2013. The project's targeted completion date is June 2015.

"In the future, we foresee trade growing between Asia and Latin America, where Panama also has a significant competitive advantage due to its unique geographical position at the nexus of the Americas," Jorge Quijano, administrator for the Panama Canal Authority said to Port Technology. "With East Asia sourcing more and more raw materials out of Latin America, in particular coal and iron ore, the expanded Canal will offer enormous new opportunities."

The expansion could cause a reduction in the number of U.S. air cargo centers with the increase to marine shipping capabilities, Air Cargo World reported. However, the rise in container shipping will lead to upgraded ports and expanded railroads and trucking networks. It will likely create many changes for supply chain management as shipping methods shift from air to sea and land.

Large scale expansion

The project has been focused on the widening and deepening of the Atlantic and Pacific approaches, the addition of new locks and deepening the Culebra cut - the Canal's narrowest point, which required four dry excavation projects, according to Port Technology. The expansion will allow much bigger carriers of up to 13,000 standard 20-foot units (TEUs) to safely pass through the canal, Trucking Info said. The current capability of the waterway is vessels of 5,000 TEU or less.

Quijano added this will enable suppliers to reduce operating costs and carbon emissions, as well as increase speed of delivery because fewer ships will be able to transport greater amounts of cargo. Another objective of the expansion is to cut down use of freshwater.

Implications for North American logistics

Air Cargo World said within three to five years, there will only be six major air cargo hubs in the U.S. Hubs in Southern and mid-Atlantic states will have the advantage to remain significant as inland railroad and trucking networks build up to meet increased shipments to Gulf and East Coast ports. There is potential for development of smaller air cargo centers, and ports with links to air cargo hubs may have an advantage because shipments will not experience delays.

Railroads are collaborating with ports to upgrade before the completion of the canal expansion in 2015. Florida East Coast Railway (FEC), the only rail provider to southern Florida's sea ports, is working with Port Everglades and Port Miami to build on-dock rail facilities as these ports will likely experience an increase of cargo traffic, Progressive Railroading said. The connection of the railroad to Port Miami has been suspended since hurricane damage in 2005.

"By summer 2014, we'll have the on-dock rail facility fully operational, which means that from Port Miami, we can hit 70 percent of the American population in a matter of days," Port Miami director Bill Johnson told Progressive Railroading.

He added Port Miami will have an advantage because the Atlantic exit of the Panama Canal will be deepened to 50 feet, and Miami is the southernmost East Coast port at that depth. Port Miami anticipates an upturn in traffic and profits by the end of 2015.

Expanded sea port shipments will create a demand for increased trucking networks. Trucking Info stated the industry has the capability to adapt to increased demand, and container transport will be dictated by ocean carriers and ports. The trucking industry does not predict there will be difficulties in meeting the rise in shipments. The Panama Canal is expanding to such a degree that it will have a large impact on logistics, but inland networks are working to upgrade.

“What we are trying to do is evolve the understanding of what’s going on,” K.C. Conway, the Colliers economist who authored the report, says. “The real story now is what is the inland story and from that who wins and who has the opportunity to participate the most. If we move a lot of cargo into ports, but we can’t move it inland because the airports don’t have the infrastructure, growth will be impeded in that particular region.”

The Colliers report states that within three to five years, there will be just a half dozen dominant U.S. air cargo markets. Candidates include Memphis, Louisville, Columbus, Ohio, Miami, New York, Miami, Los Angeles, Seattle and Denver. Because of the costs involved, air cargo in the U.S. will follow the same hub-and-spoke model adopted by passenger air carriers to maximize traffic. Airports that lack a port partnership won’t be a dominant air cargo market in five years.

The Colliers report cited Memphis as being North America’s top air cargo port. Conway says e-commerce has made Memphis the king of air cargo. He says Nike’s recent decision to move a key distribution center to Memphis was based on the city’s air cargo and intermodal advantages.

“The ports that get it and have the air cargo linkage will be much more valuable because cargo doesn’t have to be delayed,” Conway says. “That is one of the advantages that is developing in the Southeast and Mid-Atlantic states. Louisville and Memphis are good examples. There are also opportunities that exist with manufacturing returning to the U.S. Medical devices, pharmaceuticals and other lighter-weight cargo are well-adapted to move by air.”

There is potential for development of some smaller air cargo hubs. Conway says Charlotte is trying to develop air cargo and intermodal capacity, but it’s a little “late to the game.” He says the Greenville-Spartanburg area has a good opportunity to develop air cargo as a result of the inland port in nearby Greer planned by the South Carolina State Ports Authority.

“There is a huge opportunity in Greenville-Spartanburg. It will see a lot of cargo, both manufactured in the U.S. and imported,” Conway says. “It will be consolidated and end up in Greenville-Spartanburg.”

Other cities with opportunities for air cargo growth include Mobile, Ala., and Birmingham, which Conway says can be used to provide relief from the Atlanta airport and also capitalize on cargo coming into the Mobile port. Mobile will also get a boost from the new Airbus plant, which recently broke ground. St. Louis also has potential, Conway says, as another “relief valve” for logistics in the Midwest. He says St. Louis probably has the best opportunity to develop air cargo, but must move quickly.

“From a technology standpoint, Atlanta, Denver, Dallas and Houston are all doing a lot to build up their facilities,” Conway says.

Another issue that affects air cargo development is whether or not a location is in a right-to-work state. He says there is a lot of potential for development in Indiana and Michigan, which recently passed laws to become right-to-work states.

“The right-to-work state issue frequently comes up,” Conway says. “When you look at states that are more unionized, companies won’t tell you that it’s an early disqualifier, but it is. One of the sad things is that there is a general assumption that right-to-work states have lower wages and poorer jobs. You find that is not the case with companies like Volkswagen and BMW that have located in the Southeast.” (aircargoworld.com)

Cities which don't invest CapEx in their port infrastructure may be negatively affected economically, according to the firm’s North American Port Analysis report, which examines evolving trade patterns resulting from the upcoming Panama Canal expansion in 2015. “US ports which invest in infrastructure linkages will be poised to receive larger post-Panamax vessels in 2015 and stand to benefit from accelerating growth in Latin America, Canada and Russia, while ports which are unwilling or unable to spend on infrastructure risk capsizing their local economies.”

The report’s theme, “CapEx or Capsize,” underscores the idea that cities need to spend the capital to upgrade their ports, or risk “capsizing” their economies. Report author, KC Conway, executive managing director of Real Estate Analytics at Colliers International, says it is ‘make-it-or-break-it’ time for North America’s port cities.

The report also looks at emerging inland ports and intermodal facilities in markets such as Charleston, Indianapolis, Philadelphia and the Great Lakes, and the impact that the Panama Canal expansion and changing global trade patterns are having on industrial commercial real estate. (globest.com)

The expansion of the Panama Canal could open up new opportunities for industry in the southern U.S. state by facilitating the movement of bigger ships in the area.

"We identified a huge opportunity in the exportation of liquefied natural gas," said Steve Vassallo, director of the Terrebonne Economic Development Authority, who visited Panama along with other local leaders to investigate possible opportunities.

"U.S. shale gas exportation to Latin America has led to the conversion of several Gulf coast ports into LNG export points.

"We determined to investigate how the Port of Terrebonne and Port Fourchon might be able to capitalize on the opportunity."

However, David Rabalais, director of the Port of Terrebonne, said that even though there is a strong market for LNG, it may be difficult to find investment for exports from the port.

"It is a very expensive undertaking and we may be a little late on the curve," he said.

"I don't see it as a very strong possibility."

Rabalais added that opposition to LNG exports from environmental groups could also put a damper on any plans.

At Port Fourchon, Shell Oil Company announced last month that it plans a partnership with Edison Chouset Offshore, which could be the first LNG barging and bunkering operation in North America, according to another Louisiana newspaper, the Weekly Citizen.

Shell, which has said it wants to greatly expand the use of LNG for transportation, is also planning a gas liquefaction plant in the nearby state of Georgia in partnership with Kinder Morgan Inc. (shipandbunker.com)

"The progress (of the project) is going well and at the end of March 2013 will be at 42% completion," said Bernardo González, general manager of the project for design and construction of the new locks, the largest contract estimated at $3.2 billion.

"In December 2014 the Atlantic locks will be operational," where tests would begin to take place in June of that year, he announced.

Meanwhile, in the Pacific the new channel "will be flooded in September and October (2014) and put into operations in April 2015," he added.

The waterway is being expanded since 2007 to allow the passage of ships capable of carrying three times the load of those that currently transit the 80km canal, through which passes the 5% of world trade.

The main work is the construction of a third set of locks for the passage of vessels of over 400 meters long and 50 meters wide, capable of carrying over 12,000 containers.

So far $4.32 billion has been awarded in contracts for projects with a total estimated value of $5.25 billion.

In addition to the 42% progress in the project of the locks, overall the expansion project is now 53% done, according to the authority that manages the canal.

However, the works were supposed to be done by 21 October 2014, coinciding with the centenary of the canal.

The delay is due to an objection raised by the Panama Canal Authority over the cement that the main contractor was going to use, a consortium consisting of the Spanish Sacyr, Italy's Impregilo, Belgium's Jan de Nul and Panama's Constructora Urbana, said Tuesday the main works contractor consortium. (Mi Diario)

Editor's Comment: Let's see, they've been working on this thing for five years - since 2007 - and it's now 53% done. There are two years between now and April 2015. Does anyone think it's really going to be done by then? This "six month delay" story line was adopted quite some time ago, and it's the story they are going to be sticking with through the May 2014 elections. Once those are over, then the "truth" will become known. I've been reporting for a long time that this project is much further behind schedule than anyone is willing to admit in public.

For nearly 100 years, Panama has been synonymous with the canal that bears its name.

Approximately 5% of world trade today moves through the Panama Canal, and a $5.25 billion expansion project, which will be completed in the first quarter of 2015 after eight years, will not only boost trade but have a massive impact on the country’s economy.

The canal expansion and the $2 billion construction of a subway system in the capital, Panama City, are the primary drivers of the red-hot economy. The economy grew by 10.7% last year, nearly matching the 10.8% growth the previous year. Growth is expected to dip to 8.5% in 2013, but authorities are not concerned.

“The canal project has opened the doors to an enormous amount of investment. Our potential for growth is unparalleled right now, and I think that you will see more projects and more investment when the expansion is finished,” says Luis Ferreira, an engineer and spokesperson for the expansion project.

The canal expansion and other infrastructure projects, however, are only components of a larger vision to transform the country into a logistic hub, taking advantage of its geographical location at the centre of the Americas.

Other countries, including Jamaica and Trinidad & Tobago, are also keen to become regional hubs, but Panama has a clear advantage. The goal is to emulate Singapore, a small country that is among the world’s top financial centres and home to one of the top five ports.

“Singapore is our model, but we recognize that we still have many years to go before we get to where they are today. We are definitely on the right track,” says Ferreira.

Port traffic in the country is already increasing, even though inauguration of the canal’s third system of locks, now scheduled for the second quarter of 2015, is still more than two years away. Port services increased by 5.4% in 2012, and the government forecasts a major jump by the end of this decade.

ON THE RISE - Panama is already home to the top two container-handling ports in Latin America and the Caribbean, moving more than 6.6 million 20ft equivalent (TEU) containers at two ports in 2011, according to Eclac (UN Economic Commission for Latin America and the Caribbean).

Preliminary statistics from 2012 have the Colon (Atlantic) and Balboa (Pacific) ports maintaining the first and second spots. Traffic at the Colon port increased 20% in 2011, while it grew 17.2% at Balboa. They both overtook Brazil’s Santos port in 2010. Santos is ranked third, with growth of 10% in 2011.

The canal alone is expected to move 8.6 million TEUs in 2016, the first full year the new locks are operational. The country is currently investing close to $500 million in upgrading existing ports to meet forecast demand, and the Panama Canal Authority has commissioned a feasibility study to build its own port. The study for the port, which would be located in Corozal, will be completed this year.

Initial investment would be $500 million, and the future installation would be capable of receiving the massive Post-Panamax ships that will navigate through the new locks. Ships currently passing through the canal have a capacity for 4,400 TEUs, with vessels using the new locks capable of carrying three times this amount.

The country’s airport, which has also undergone a major expansion, continues to see double-digit increases in traffic. Air travel through the country was up 21.4% last year. Investment in construction projects expanded by nearly 30% in 2012, according to the Finance Ministry.

STRONGER TRADE TIES - The government also expects more investment to flow into the special development zone, the Panama Pacifico Special Economic Area on the former US Howard Air Force Base. Legislation from the last decades creates special investment, labour and tax conditions for companies located in the zone.

President Ricardo Martinelli’s government has also focused attention on trade agreements, implementing FTAs (free trade agreements) with several countries in the region, including Canada and the United States.

It is also pressing for incorporation into the Pacific Alliance, a trading block inaugurated by Chile, Colombia, Mexico and Peru last June. It is currently an observer, but has the best shot of joining given its completion of bilateral FTAs with member countries, a prerequisite for full membership.

Alejandro Arreaza, an analyst with Barclays, agrees that Panama has the potential for becoming a hub and is bullish on the rising level of FDI (foreign direct investment) – more than $5 billion in the past two years, according to Eclac – but like other analysts, he cautions that the country also needs to get a handle on its fiscal deficit if growth is to continue strong.

The deficit last year was equivalent to 2.1% of GDP, which Arreaza says is “the main issue that should be concerning authorities and investors”.

Arreaza says the Panamanian government is not only spending heavily on infrastructure projects, but is constantly on the hunt for new projects that will keep driving growth without apparent interest in the deficit.

Fears that the government might spend even faster in the coming months as the 2014 elections approach have dissipated somewhat now that it appears President Martinelli will not attempt to change the constitution to run for re-election, but analysts still expect the purse strings to loosen a bit more. (www.emergingmarkets.org)

Editor's Comment: Total debt in Panama is legally capped at 42% of GDP. Therefore, as the economy expands, the central government can take on more debt and spend more money, to help keep the economy growing by building even more infrastructure. This balanced has caused all of the major rating houses (S&P, Fitch, Moody's) in increase Panama's debt rating to investment grade for the first time in the country's history. Since then those ratings have been further upgraded. So, the only downside (as mentioned in this article) really isn't much of a downside after all. The 8.5% prediction for 2013 is wrong as well. They always predict growth at about 8%, and I always say they're wrong, and then it always comes in at 10%+. They did it again this year...

But some here and in neighborhoods near other East Coast ports are leery of the monster ships that will soon arrive because of a trade project thousands of miles away that they believe will harm their air quality, roadways and waterways.

"We can't afford any additional environmental burdens," said Joseph Della Fave, executive director of the Ironbound Community Corp.

East and Gulf coast ports are jockeying against one another, scrambling to accommodate so-called "post-Panamax" ships: massive vessels that can traverse an expanded Panama Canal. The $5.25 billion project is expected to be completed in 2015 and will nearly triple the size of ships that can travel the canal. (more)

Shipments of fuel, coupled with an increased number of shipments of commodities and energy between the United States, Latin America and Asia, could come to represent the largest sources of demand growth when the project is completed in June 2015, said the Administrator of the Panama Canal Authority, Jorge Luis Quijano.

The shipment of goods in containers, which generates most of the activity for this 50 mile long link, has not yet returned to the same level as in 2007, two years before the global economy had its worst recession since World War II.

The shift shows that growing U.S. shale gas production is redefining the global energy markets.

The Panama Canal expansion is central to this change as the route shortens over 7,500 nautical miles (13,600 kilometers) travel to Asia, where demand for the fuel is fastest growing.

The waterway, which handles 5% of world trade and in the fiscal year prior to 30 September 2012 shipped 333 million tons, is used by 14,000 ships a year, connecting 160 countries and 1,700 ports, according to its website.

"This could be a significant help to our business," Quijano said in a telephone interview Jan. 17 from Balboa. "There has been much interest in shipments of LNG crossing the expanded Panama Canal from the Atlantic to Asia."

The initial plans for a third set of locks on each entrance to the Panama Canal, with an age of 99 years, were based on an effort to capture more traffic of the larger container ships in order to develop routes from Asia to the East coast of the United States, said Quijano.

The traffic on this route represents now 43% of the traffic through the Panama Canal, up from about 11% in the year 2000, said Monica Martinez, a spokesman for the Panama Canal in a response to a questionnaire sent by email.

Unexpected Growth - What they did not anticipate while planning the Canal expansion project was the growth of shale gas produced by the hydraulic fracturing of rocks, said Quijano.

The extraction method increased US gas production by 30% in the last five years, and has also resulted in a 20% increase in the production of the so called light oil, according to the Energy Outlook 2020 report from BP Plc, published this month.

The country will become a net exporter in 2017, according to the second largest oil company in Europe. The fuel is then cooled and liquified to be transported by sea.

U.S. could increase its LNG production to 50 million tons per year by the end of this decade, from zero this year, according to Morgan Stanley.

This would make the country the third largest producer after Australia and Qatar, the bank estimated in a report dated January 28.

The canal expansion project is delayed. Its completion date in June 2015 will be six months behind, compared to the originally anticipated date when the project was approved in December 2006, detailed the administrator Quijano. (Estrella)

“This visit is part of the agreement signed between the Panama Canal Authority and the five institutions that have provided partial financing for the Expansion Program,” Panama Canal Administrator Jorge L. Quijano said at the end of the tour.

The delegation included experts from the Inter-American Development Bank (IDB), the European Investment Bank (EIB), Japan Bank for International Cooperation (JBIC), International Financing Corporation (IFC) and the Andean Development Corporation (CAF).

The Panama Canal Authority (ACP) holds annual visits since the signature of the agreement in 2008. The representatives receive progress reports and visit the expansion site to verify that the different aspects of the financing agreement are met.

The delegation received details on the progress of the Expansion Program, which is currently 50 percent complete. Beginning 2013, the program completed several projects, such as the dredging of the navigational channels on the Pacific and Atlantic sides.

The delegation received reports on the safety and occupational health, environmental safety and the social aspects of the projects. These issues are among the strict requirements that guarantee the financing of the program.

The representatives also received updated information on the waterway’s performance during the last fiscal year, as well as the Panama Canal forecast, budgeted activities and the Expansion Program financial requirements for 2013.

The delegation visited the sites of the different projects within the Expansion Program on the Atlantic and Pacific sides.

In addition, the delegation received an update on the different conflict resolution and claim mechanisms, as well as information on the progress of the construction of the bridge on the Atlantic side of the Canal.

Financing - In December 2008, the ACP signed agreements with a group of five multinational institutions to procure financing of up to US$2.3 billion required for the Expansion Program.

In total, agreements were signed for US$800 million with the JBIC, US$500 million with the EIB, US$400 million with the IDB, US$300 million with the IFC and US$300 million with the CAF.

To date, the JBIC (US$ 800 million), the EIB (US$100 million and the IDB (US$100 million) have been paid out for the program. (Marinelink.com)

"The program continues to progress and reach milestones while we focus the next phases on building the locks," commented Panama Canal administrator Jorge L Quijano.

Quijano stated that dredging of the navigational channels has been completed, including both canal entrances on the Pacific and Atlantic sides as well as the Gaillard Cut. The remaining dredging work to be done in the Gatun Lake will be completed this year.

Excavation of the Pacific lock access channel is 70 percent complete – the project has called for the excavation of more than 50 million cu m of materials along a 6.1 km span of the canal.

Construction of the new locks is 37 percent complete, according to ACP. The locks on the Atlantic and Pacific sides of the canal will feature three chambers, three water-saving basins per chamber, a lateral filling and emptying system and rolling gates.

"We estimate based on the progress that we can begin commercial transits mid-2015," stated Quijano.

The capacity of the canal will be doubled upon completion of the USD5.25 billion project. However HLPFI reported in December that this is unlikely to be the last expansion of the waterway – Alberto Alemán Zubieta, immediate past commissioner of the ACP commented that one more expansion would be required to handle 18,000 teu ships.

To date, the program is 50% complete. “The program continues to progress and reach milestones while we focus the next phases on building the locks,” said Panama Canal Administrator Jorge L. Quijano.

Beginning 2013, the Expansion Program has completed several projects.

Dredging of the navigational channels has been completed. This included both Canal entrances, on the Pacific and Atlantic sides, as well as Gaillard Cut. The remaining dredging work to be done in Gatun Lake is expected to be completed this year.

The excavations of the Pacific lock access channel are 70 percent complete. This project calls for the excavation of more than 50 million cubic meters of materials along a 6.1 km span and is executed in four phases. Three of the four phases have been completed and the fourth phase is 69 percent complete.

In addition, the first shipment of 47 valves, to be used for the operation of the third set of locks, arrived during the last couple of weeks. These valves are part of the Post-Panamax locks electromechanical system that will regulate water flow between the chambers, the culverts and water-saving basin conduit. A second shipment is scheduled to arrive at the end of January. By the end of 2013, a total of 158 valves (culvert, equalization and conduit), 84 bulkheads and 328 trash racks will have arrived for the project. The valves where built in South Korea by Hyundai Samho Heavy Industries. Construction of the new locks has a 37 percent progress. The new lock complexes in the Pacific and Atlantic sides will feature three chambers, three water-saving basins per chamber, a lateral filling and emptying system and rolling gates.

“We estimate based on the progress that we can begin commercial transits mid-2015,” said the Panama Canal Administrator.

The Panama Canal Authority is closely monitoring progress on every component of the Expansion Program to guarantee that contractors comply with the quality required by each contract.

The Panama Canal Expansion Program will be the largest project at the Canal since its original construction and will double its capacity to allow more traffic. (marinelink.com)

Editor's Comment: This article was based on a press release issued by the Panama Canal Authority. In fact, locally in Panama it is well known that the project will be delivered at the very least six months behind schedule, possibly more.

Jorge Luis Quijano, ACP administrator, said "This is a step that marks a new milestone in the timeline of the works of the canal expansion, specifically in the construction of the new locks."

The ACP said this first shipment includes 47 valves that are part of electro mechanical equipment to regulate water flow between the chambers, drains, and water saving basins that will operate in the new post-Panamax locks of the Panama Canal, in the Atlantic and the Pacific.

While it was known that shipment also included eight screens that have different functions in the locks and four traps to be placed in the water intakes to prevent the passage of objects into the chambers of locks.

The operation, which took seven days, involved the transportation of a total weight of 1304.49 tons of steel.

A second shipment of these valves is scheduled to arrive in the country later this month.

In total, the project will reach 158 valves (sewer, equalization and pipelines), 84 screens and 328 debris traps. (Telemetro)

Witnesses said a crane operator lost control and it fell into a construction area where workers were.

Notably, on 20 November, a worker was killed and four others wounded in the Gatun sector during the dismantling of a tower crane used in the excavation of the locks. (Panama America)

The accident occurred approximately 2:30 pm this afternoon, which left one person dead and four injured.

The injured were transported to the Manuel Amador Guerrero hospital in the city of Colon for treatment.

The incident occurred during the dismantling of a tower crane located in the upper chamber of the excavation of the locks. Right now the authorities are conducting investigations to determine the causes of the event.

In their press release, the company said they "deeply regret what happened, in solidarity with the families of the employees," and they said they would continue to report as the investigation progresses. (Mi Diario)

Port officials believe they have many advantages in the competition for shipping traffic. This includes 20 million square feet of warehouse and office space within 7 miles, convenient access to interstate highways and millions of dollars of improvements to the intersection in front of Port Manatee in order to support larger trucks, the Herald said. Still, other ports including Norfolk, Va. and Savannah, Ga. are actively competing for the work.

Editor's Comment: The expansion of the Panama Canal is prompting ports all up and down the Atlantic seaboard and in the Gulf of Mexico to spend billions on expansion projects, upgrades, and the dredging of ship channels, in preparation for the larger ships that are coming their way. The cheapest way to move cargo is still by floating it on the water. The West coast ports, rail lines, and trucking will all see drops in the amount of cargo they handle every year.

The port recently spent $36 million on two new gantry cranes and a 4.5-acre marshaling yard that expanded its container-handling area to 115 acres. The site is anchored by the Napoleon Avenue Container Yard, completed in 2004. The port can now handle 640,000 20-foot equivalent units in container cargo per year. But the port estimates another $478 million in upgrades will be necessary to help boost that capability to 1.5 million TEUs per year for when the Panama Canal opens its wider, longer and deeper locks in 2015.

When that $5 billion expansion is complete, the canal will be able to handle the passage of ships as large as 13,000 20-foot equivalent units, compared with 5,000 TEU-sized vessels today, LaGrange said. LaGrange said three separate studies have indicated most of the increase in container traffic will go to the East Coast - Baltimore, New York and Virginia - but he said the influx of more container cargo into the Gulf will translate to an annual growth rate of about 7 percent a year between 2015 and 2025. LaGrange said the port will soon hire a firm to determine the current and potential value of the container terminal to attract outside investment. That possibly could be a shipping line, stevedoring firm or financing entity that could take an equity position in an upgraded terminal and take a share of the revenue. "We know the challenges in securing state funding and federal funding at this point," Gresham said.

The port is gearing up for a $26.1 million upgrade of its intermodal rail yard next to the Napoleon Avenue terminal. The project should increase its capacity with a more efficient layout and set the stage for another 10.5-acre yard that would add 65,000 TEUs of container capacity.

Here in New Orleans, port president and chief executive Gary LaGrange has said that he expects his facilities to see an "incremental growth" from its two new container cranes, and has looked for new public-private partnerships to help raise capital in anticipation of the project. But between now and 2020, that $14 billion that's slated for investment needs to be closer to $30 billion, according to the report. Otherwise, it predicts bad times ahead for consumers, contending that the price of goods will rise, job growth in the port sector will fall and the U.S. will become less competitive in the global market.

The report is part of the society's Failure to Act report, which examines the economic consequences if current investment trends in infrastructure continue.

With the scheduled widening of the Panama Canal expected to be completed by 2015, the average size of container ships is expected to increase, which will require infrastructure upgrades at major U.S. ports and dredging harbors and channels to authorized depths.

The report stresses the role that the ports play in the U.S. economy, estimating that the facilities support about $270 billion in annual U.S. exports and 738,000 jobs.

In a conference call with reporters on Thursday, Andy Herrmann, president of the American Society of Civil Engineers, said making up the investment gap would help maintain "a critical link to make international commerce possible," and suggested that the nation's cargo facilities would benefit from a unified investment policy on infrastructure improvements.

He also suggested that money could come from the multibillion-dollar Harbor Maintenance Trust Fund, a decades-old cache created by Congress to pay for maintenance work at U.S. ports and harbors.

Jerry Bridges, chairman of the American Association of Ports Authorities and executive director of the Virginia Port Authority, said commerce at the ports supports the jobs of more than 13.3 million U.S. workers.

"Those are huge numbers, and we need to prepare," Bridges said. "This is the critical time for port planning and forethought, to make sure that we're compeititive in the world going forward."

U.S. Sen. Maria Cantwell joined LaHood in the warehouse of PCC Logistics, where LaHood referred to her as “the freight senator.” She faces a re-election challenge from Republican state Sen. Michael Baumgartner of Spokane, whose signature issue is bringing home troops from Afghanistan.

Shipping industry executives, including BNSF Railway CEO Matt Rose and Port of Seattle CEO Tay Yoshitani, groused about the U.S. government’s lack of a freight policy at a Seattle convention last fall, while Canada invests heavily in its British Columbia terminals and inland railways.

There’s no new money or freight project list, but Cantwell and LaHood mentioned this state’s $150 million Vancouver (WA) Rail Project – where state and federal higher-speed rail funds will separate freight trains from Amtrak passenger trains, to reduce delays for both – as the kind of work that needs to be done. In Seattle, a South Lander Street overpass in Sodo was proposed years ago but lacks adequate city and state money.

LaHood said his federal board will be modeled on the Washington State Freight Mobility Investment Board. He said Washington state performs better than most in coordinating trucks, trains, and ships.

Seattle port backers worry about the 2014 widening of the Panama Canal. About 70 percent of cargo entering Seattle winds up in markets beyond the region, therefore the biggest ships can deliver their goods by passing through the enlarged canal to Gulf of Mexico ports. Would a national freight strategy tilt the balance away from the Northwest?

“These ports are going to very well when the Panama Canal opens, becuase they’re ahead of the curve on this,” LaHood said. Rather than pit regions against each other, Cantwell predicts USDOT would endorse projects aiding West Coast ports to increase their Asian trade, while competing against Canada and Mexico.

Lacking specifics, Thursday’s visit seems mostly about relationship-building, or keeping Puget Sound on a cabinet member’s mind.

At the photo-op site, PCC Logistics, a cornucopia of products is being loaded rail-to-truck or truck-to-rail: solar panels from China, pomegranate juice from Azerbaijan, peas and hay from eastern Washington, pork from Kansas.

History buff LaHood could have mentioned how federal stimulus programs for trade date back to Henry Clay’s “American System,” in the 1820s. He stopped at the river port of Lewiston, Idaho before Seattle and at a north Spokane freeway project afterward. (seattletimes.com)

Editor's Comment: Did you catch that? The Project Director for GUPC just said they are at least one year behind schedule, but now they are trying to catch up, and they hope to be just six months late. So the facts that I've been reporting for more than a year have once again been validated. The GUPC filed their request for an additional $573 million dollars (that's more than half a BILLION in case no one noticed) and they blame the delays on strikes by workers. And the rain. They say the Panamanian government was too slow to deliver permits. They say the concrete they wanted to use was not accepted by the government. All of these things are the reasons why they want to be paid an additional $573 million dollars. And of course - there's the conflict of interest issue. The Administrator of the Panama Canal Alberto Aleman Zubieta was formerly involved in the Panamanian construction company CUSA, which is a major player in the GUPC consortium. Do you think they will be getting their money? Of course they will. Do you think they will be penalized for mismanaging this project? Of course not. Hey, it's just money. Raise the tolls, what the hell...

Editor's Comment: There's no way in hell this project is going to be completed in 2014. None. Everyone knows it. No one is talking about it. Mid-2015, tops.

Ports up and down the U.S. Atlantic Seaboard -- including Port Manatee, which has dredged its Berth 12 to accommodate larger vessels -- are in a frenzied race to get ready for the larger, slower, more efficient ships that one day will ply the oceans. They are dredging harbors, expanding rail lines, taking a look at port facilities and distribution centers and, in the case of the New York City area, preparing to elevate the roadway on the Bayonne Bridge so that bigger vessels can slip underneath to Newark Harbor. “It’s been said that it’s a game changer. Yes, it is,” said Alberto Aleman, a Texas A&M-educated engineer who has been administrator of the canal for 16 years during a period in which the United States handed off control to Panamanian hands. (For The Full Story - Click This Link)

The first expansion in the history of the century-old shortcut between the Atlantic and Pacific should double the amount of goods that travel through the canal each year.

Currently, there are two lanes of locks that allow cargo ships up to 965 feet long and 106 feet wide to pass through. Prior to the expansion, the canal operated at a capacity of 35 ships per day, forcing dozens of vessels to wait a day or longer before entering the canal.

The main component of construction is the addition of a third lock that will allow up to 15 additional vessels to pass through daily. The new locks will account for about half the cost of the $5.25 billion project and will operate similar to the old ones - moving vessels through a series of chambers based on the water level.

Major renovations will increase the depth and width of the Gatun Lake and Culebra Cutto to allow larger ships, up to 25 percent longer and 50 percent wider to pass. According to ACP officials, the locks in the canal will also use 7 percent less water after the expansion.

In June 2012, the ACP reported 41 percent of the project’s construction was complete. While dredging work remains well ahead of schedule, delays in constructing the new locks continue to hinder deadlines.

According to ACP data, the dredging of the Pacific and Atlantic entrances is well above 85 percent complete. However, as a result of revisions in the contractor’s design, the construction of the locks is estimated at seven months behind schedule.

Hoping to attract vessels, the Panama Canal Authority officials will offer special rates to large ships transporting products such as coal and iron ore. Money generated from toll rates, typically several hundred thousand dollars for large ships, will be used to pay off the project’s loan debt from development banks.

Source: http://www.constructiondigital.com/under_construction/delays-for-panama-canal-expansion-project

Editor's Comment: Wishful thinking. I keep hearing this "six month delay" mantra, and that's now the official line. However my sources continue to tell me the real delays are much greater. Every very large public works project faces delays, and this one is no different. If this thing was being built in Boston, it wouldn't be ready until 2026.

Construction On The New Locks As Part Of The Project To Expand The Panama Canal

To achieve this they are using $3.2 billion dollars to build two new channel outputs, one in the Atlantic and one in the Pacific, through which will pass ships carrying 12,600 containers and of 366 meters in length, an increase from the current maximum of 4,400 containers and 294 meters in length of the ships that pass through the Panama Canal today.

Each of the exits to the ocean will consist of three water chambers closed with locks that will raise them the 27 meters between the two oceans and Lake Gatun - situated in the middle of the canal - and following the operation of such systems, boats advance to equilibrate the water level between adjacent chambers.

According to project leaders, the expansion will allow a ship to pass through the new locks on each side of the canal in about two hours, and to complete its passage through the Panama Canal in an average of 10 hours.

The difficulty of extending the canal lies in the dimensions of the work, which will have 158 valves and 16 gates, each weighing a total of 50,000 tons, which today are being built in factories that the Italian company Cimolai has close to Venice.

"The gates are the most technically complex part of the project," said Ametller, who explained that, while those already installed in the channel are hinged, the new gates are on rollers and they have a height equivalent to a 20-story building, and that a good portion of their interior is empty so they can be dragged to close and open the lock.

As explained by the Spanish engineer, the gates operate in a dual system to ensure that in case of breakdown, the branch continues to operate and there are different sizes depending on the ocean side where they are located.

"The biggest ones will be on the Pacific side where there is the most seismic hazard, and because the tides are higher," noted the manager, who said they are being built with "100% European steel" from Italy, the Czech Republic, Macedonia, Germany and Poland, and they will be moved by boat to Panama - "in fours" - during 2013 for testing in early 2014 and to have completed the project on October 21, 2014.

The largest of these gates are 33 meters high and weigh 4,300 tons, and the installation of these structures will begin on the Atlantic side once they have built the concrete base on which they will be placed through a mechanism calculated down to the millimeter by the engineers who designed the enlargement.

A system side pools allows for the reuse of 60% of the water in each compartment, so as to reduce the total consumption by 7%, and the operation of the facility will be reviewed from a number of control points.

The passage of water from the lake to the compartments and between the pools shall be regulated through the use of 158 valves built by the Hyundai car company in Korea.

The consortium estimates that a large freighter passing through the Canal will use about 200 million liters of water, but that the ship be "more efficient" and "in smaller numbers" and on the other hand will have less of an impact than a larger number of smaller vessels, according to the environmental manager, Panamanian Luis Villarreal.

GUPC should guarantee 99.6% availability for navigation, or they could be penalized and they even might have to take over the maintenance of enlargement during the first two years following the completion of the project.

But officials of the consortium are optimistic because the project is "under constant audit" and "tests", and so far 15% of the work on the gates has been completed, so that the timetables fall in line with the deadlines, concluded Ametller. (Panama America)

Editor's Comment: Designed by a Spanish engineer. Valves built by Hyundai. And a Panamanian environmentalist. What could go wrong?

Delays - On April 4 2012 it was reported by the Journal of Commerce that the consortium responsible for building the new locks, Grupo Unidos por el Canal (GUPC), submitted a letter to the Panama Canal Authority with a new work schedule indicating an expected completion date six months behind the original target date of October 2014 - 100 years after the canal was first completed. According to Alberto Aleman Zubieta, the Panama Canal Authority's Chief Executive Officer, "the company is trying to catch up with lost time."

In December of 2011, the project was reported to be "at least one year behind schedule" and in March 2012, Zubieta said the project was "delayed at least seven months," and that GUPC was accelerating the work in an attempt to make the original deadline. According to the contract, a penalty of $300,000 per day will be applied if GUPC cannot complete the locks on time.

In an early June statement by the Panama Canal Authority, officials reported that the first monolith for the new locks was completed, marking an important milestone. The delay to April 2015 is a result of GUPC's difficulty in meeting its contractual agreements for the standards of the concrete mix for the locks, which delayed the laying of the concrete from January to July of 2011. (shipandbunker.com)

Editor's Comment: This isn't news for Panama Guide readers. I was the first one to report on the real and factual details of these delays, and only now the contractors and representative from the Panamanian government are starting to begrudgingly accept and report the facts. They fell way behind, and then were still falling farther behind and have since been trying like hell to make up for lost time. They have been trying to blame the delays on one thing or another, but my inside sources tell me the delays are actually being caused mostly by poor or inadequate management of the movement of people and logistics on the job site. They tell me stories of heavy equipment that can't move because there's no fuel for it, things like that. But guess what? Name one very large public works project that has not faced any delays. There are none. All large projects such as this are bound to face delays, sooner or later. However the bottom line won't change very much. The expanded Panama Canal will eventually be completed, more and larger ships will pass through, the government of Panama will make even more money off of the canal, and everything will be just fine.

Darby is part of the Texas House Transportation Committee, which held hearings recently to determine whether transportation infrastructure such as railways and highways were ready to handle any increased trade coming as a result of the expansion. Testimony at the hearings indicated that it takes about 10 days to two weeks less time to truck goods from California than to go through the Panama Canal to Houston, which needs to deepen its port to receive the larger ships that will come through the enlarged Panama Canal, Darby said. Even so, the expanded canal could have an effect on goods coming through San Angelo as progress continues on the Ports-to-Plains Corridor, Darby said.

The corridor is a 2,300-mile stretch of highways from Canada to Mexico that runs through San Angelo. Part of the overall vision is to also have improved rail service so goods can be sent east and west when they reach San Angelo, making the city a central transit hub. "I think it may be a while in coming, but I think with us being a hub for rail and highway, we should see increased trade," Darby said. He said that Mexican ports could take in more goods from the Panama Canal and end up shipping those north through Texas, and San Angelo, as well.

Precinct 4 Commissioner Yantis Green, who has been in contact with county commissioners on the Texas coast, is optimistic. He said commissioners at conferences he has attended are abuzz with preparations to have an influx of traffic from their port authorities, which are beginning to deepen, widen and dredge their ports. "I think you'll see a gradual increase in commercial shipping in East Texas," Green said. Moreover, goods that come to Texas could be less expensive, thanks to the bigger boats, he said. "The more you can put on a ship at one time, the cheaper it is," he said.

Part of the hope is that the transportation of goods from the Texas ports will flow through San Angelo once it becomes more established as part of the Ports-to-Plains Corridor. "What we're seeing is there is some more opportunity for more and more freight to come into Texas," Michael Reeves, the president of the Ports-to-Plains Alliance, said of the Panama Canal expansion. He said most of the corridor is focused on moving goods from Mexican ports, but San Angelo could take advantage of the increase in trade overall, citing as an example the possibility of moving goods from Corpus Christi to Denver, with San Angelo in that trade route. "From the importing perspective, it could lower transportation costs," Reeves said. (San Angelo Standard - Times)

The construction work is planned to start during the summer of 2012. This terminal will be capable of handling container ships up to 18,000 TEUs (twenty-foot equivalent units), designed to support more than 2 million TEUs in the initial performance, with future expansion capabilities and offers for additional storage facilities and logistics; and is expected to be completed and operational before the opening of the Panama Canal in late 2014.

The expansion of the Panama Canal at a cost of 5.2 billion dollars, is built to handle a large flow of traffic and to accommodate the next generation of ships "Super Post-Panamax" so named because they exceed the limitations size of the existing Canal. The ports on the West Coast, in the Gulf of Mexico in the United States, the East, South America and the Caribbean do not have the capacity to receive vessels of this size, and with this new port the problem will be solved.

John Carver, leader of the group of Aeropuertos, Puertos e Infraestructura Global (PAGI) of Jones Lang LaSalle, said the Transit Terminal will have a significant impact in the new era of the Panama Canal. This was the first terminal designed for the Canal expansion and will increase the strategic value of Panama as the primary global axis for shipping. The Grupo de Proyectos de Desarrollo of Jones Lang LaSalle will soon begin to manage the process of supply and marine dredging and construction elements. (Telemetro)