As the Panama Canal prepares to inaugurate its first-ever expansion on Sunday with a price-tag of US$5.25 billion, news agencies are lauding it as a game-changing development that will reshape global trade.
Some 40,000 workers toiled away for almost a decade to dig the canal’s new access lane—the first expansion of the Panama Canal since it was built in 1914.
The expanded canal will allow ships carrying up to 14,000 containers to traverse trading coasts between the U.S. and Asia much faster.
“Previously, the size limitations of the canal created logistical bottlenecks for U.S. propane exports to reach markets in Asia, forcing shippers to perform ship-to-ship transfers,” according to the U.S. Energy Information Administration (EIA).
“The new, larger Panama Canal locks will allow most Very Large Gas Carriers (VLGC), the type of ship that carries propane and other hydrocarbon gas liquids (HGL), to transit, likely reducing or even ending the practice of ship-to-ship transfers.”
Due to the vessel size restrictions prior to the expansion, the majority of hydrocarbon shipments through the canal last year were refined products, according to the EIA.
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According to a Panama Canal Authority manager quoted by news agencies today, the new canal can accommodate ships carrying up to 5,000 containers and will allow nearly three times as many containers to pass, while importantly removing a critical bottleneck for natural gas between U.S., Asian and South American ports.
“We’re opening up new markets that were never even considered before,” a canal official said, as reported by USA Today.
A new class of ship, the NeoPanamax, will now be able to pass through the canal, which means that 400,000-600,000 barrels of oil per tanker—with four transits per day--can get to market faster.
By James Burgess of Oilprice.com
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