Panama Looks to Expand Canal

by Will Weissert
PANAMA CITY, Panama

The old shortcut between the seas isn't what it used to be.

Many modern ships are too wide to use the 92-year-old Panama Canal, where traffic is so heavy that vessels still able to squeeze through can face costly delays.

Panamanians were expected Sunday to approve an eight-year, $5.25 billion expansion plan in a referendum. The idea is to build a third set of locks on the Atlantic and Pacific sides, creating a separate lane for larger cargo, cruise and tanker ships while doubling the canal's capacity.

With the future canal in mind, U.S. President Theodore Roosevelt had helped arrange Panama's relatively bloodless independence from Colombia in 1903, and the Americans took over a bankrupt French canal-building effort a year later.

By some accounts more than 25,000 workers died from yellow fever and malaria while building the S-shaped, 80-kilometer channel, which opened on Aug. 15, 1914.

General Omar Torrijos, who took power in a coup in 1968, became a national hero nine years later when he signed a treaty with U.S. President Jimmy Carter to hand control of the waterway to Panama on Dec. 31, 1999.

Now, the largest overhaul in the canal's history is set to happen under his son's watch.


"We consider it a historical coincidence, but a happy one," Lewis Navarro said. "First it was putting the canal in the hands of its rightful owner. Now, after decades of discussion and studies by other administrations, it's up to this government to oversee a necessary expansion."

Without the expansion, the canal will increasingly lose out as shipping traffic finds other routes. Even the Suez Canal is a competitive alternative for the largest ships moving between Asia and the United States east coast, says Maersk Line, the canal's biggest user.

Meanwhile, Nicaragua to the north is enthusiastically pushing its own plan to open an ocean-to-ocean waterway.

"We have to be looking at staying competitive," said Jorge Quijano, the Panama Canal's director of maritime operations. "The only way to do that is to expand what we have."

The Panama Canal now handles 5 percent of world maritime traffic, 68 percent of it to or from the United States.

About 25 of the 37 ships passing through on an average day pay up to $200,000 to reserve a spot in line, which on top of regular tolls pushes the cost of crossing Panama to more than $400,000 for the largest ships, said canal administrator Alberto Aleman Zubieta.

Even a ship that has a reservation waits an average of 16 hours before moving through, and those without reservations wait an average of 28 hours -- delays that cost shippers about $50,000 per day per vessel. And when the canal needs routine maintenance, the delays can grow to six or seven days, with more than 100 ships lining up to get through, Zubieta said.

"Tolls are steep now and the canal is almost maxed out," said Mike Zampa, spokesman for the world's seventh largest shipping company, APL. "You still get through, but there's a reservation system that makes things difficult. They are even using an auction system to sell some slots at much higher rates."