PANAMA/FILE: The 100th anniversary of the construction of the Panama Canal coincides with explansion, which is to be completed by January 2016, but is being hampered by labor disputes and reduced revenues

Record ID: 177085

  • Title: PANAMA/FILE: The 100th anniversary of the construction of the Panama Canal coincides with explansion, which is to be completed by January 2016, but is being hampered by labor disputes and reduced revenues
  • Date: 14th August 2014
  • Summary: PANAMA CITY, PANAMA (RECENT) (REUTERS) PANAMA CITY SKYLINE
  • Embargoed: 29th August 2014 13:00
  • Keywords:
  • Location: Panama
  • Country: Panama
  • Topics: General
  • Reuters ID: LVAE5QRFIQAKUC4IOYD4D0RTJ6X9
  • Story Text: Dubbed one of the "seven wonders of the modern world", the Panama Canal is preparing to mark its 100th anniversary from Saturday (August 15) to Monday (August 17) amidst a tough economic climate, greater competition and an expansion plagued by cost overruns and delays.
    Built nearly a century ago, the canal construction claimed the lives of tens of thousands of poor workers, most of whom died of malaria and other tropical diseases, as they hacked through dense jungle linking the Atlantic Ocean with the Pacific.
    Today, Panama's acclaimed canal is under new pressure with officials reporting lower revenues and a $1.6 billion cost overrun on its massive expansion project now scheduled to be completed in January 2016.
    Jorge Quijano, head of the Panama Canal Authority, blamed tough economic times and competition from the Suez for the falling fortunes of the canal.

    "It all depends on consumption, in the event there is no consumption. It's true that we've lost some (traffic) to the Suez but this is not the only reason. The main reason at this time is that the economy doesn't appear to be on a strong path for 2015 and we're going to possibly see this volume in 2016," he said.
    Labor and cost disputes have plagued the effort to expand the 100-year-old canal, fanning fears of delays that could cost Panama millions of dollars in lost shipping tolls and posing a setback for companies worldwide that want to move larger ships through the waterway that links U.S. South and East Coast ports to Asian markets.
    Nearby Nicaragua is also looking to muscle in on Central America's canal industry after it approved a $40 billion shipping channel across the Central American country that would compete with the Panama Canal.
    With challenges ahead, Quijano told Reuters it was pushing forward with plans to modernize the 100-year-old canal.

    "We are going forward with this project. We are going to continue pushing ourselves, but we can't ignore and have always had on our radar what is happening in Nicaragua. Because if it happens, and it's not going to happen tomorrow, a canal through Nicaragua will definitely compete with the Panama Canal," said Quijano.
    The expansion of the 80-kilometre (50-mile) canal is expected to more than double its capacity, a move that will help boost economic growth in Panama and bring in more revenue from heavier traffic of commodities and other bulky goods.
    But for Robert Jan Van Trooijen, Chief Executive for Dutch Maersk line in Latin American and the Caribbean, the expansion of the canal will not be definitive for the navy lines to decide whether to use more the Panamanian pass away instead of other maritime options like the Suez Canal.

    "Even with the new canal, the Suez is still able to carry larger ships than the Panama Canal. Even with the new canal, the limit is 12,500 TEU's, if I'm not mistaken, whereas the Suez today I don't think there is a limit, at least not with the existing tonnes that's available. But like I said there is certainly no decision taken whether services will be re-routed or not. I think that will depend on the trade circumstances at the time," he said.
    The overall project was first expected to cost about $5.25 billion, but the overruns could increase the total to nearly $7 billion.
    Earlier this month, officials reported that some 75 percent of the canal's engineering project was complete and a third set of locks to allow bigger ships to pass through will be ready in some 16 months.
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