Panama's Expanding Canal Can't Keep Up With Megaships

A ship carrying four new gates for the Panama Canal Photograph by Rodrigo Arangua/AFP via Getty Images

When it was completed a century ago, the Panama Canal was the largest engineering project the world had ever seen: A 50-mile cut through mountainous, malarial terrain to create gravity-fed water locks that could lift giant freighters and ocean liners 85 feet up from sea level, across the isthmus, and back down again. Now, though, this historic achievement is too small.

Panamanians overwhelmingly voted in a 2006 national referendum to expand the canal. The $5.25 billion project will widen and deepen the existing channel while creating two new entranceways, one on the Atlantic side, one on the Pacific. Most important—and ambitious—the project will create a new set of locks that are bigger and yet more efficient at husbanding water. (Each time the locks open, they drain Panama’s Gatun Lake a little bit.) The project is scheduled for completion by April 2015.

Why would Panama decide to spend a fifth of its gross domestic product on this? Panama and those markets—the U.S., most prominently—that rely on the waterway for imports and exports are concerned that the canal has become a chokepoint. Dozens of ships wait to get through on any given day; at times the wait can be a week. Shippers sometimes pay hundreds of thousands of dollars just for the right to jump to the front of the line.

For decades, the biggest ships being built haven’t been able to fit through the canal. When it was constructed, cargo ships were a fraction of their current size; container-ship capacity has tripled in the past 20 years. And now that a Chinese entrepreneur has announced the route for a visionary project to built a competing canal through Nicaragua, the pressure is even higher.

Panama’s canal expansion has critics. The problem with mammoth infrastructure projects is that they take time. Even as the new canal is being dredged, container ships continue to grow in size. Even the expanded canal won’t fit the very largest ships coming into operation.

There’s another wrinkle, too: climate change. As more of the northern ice cap melts, it’s becoming possible for ships to pass through the Arctic from Asia to the Americas. Opening the once-fabled Northwest Passage will make the Panama Canal far less important. Tiny Panama has very parochial reasons for hoping the planet gets a handle on global warming.

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