In Panama, slow and steady wins the race, it seems.
The opening of the expanded Panama Canal was once again delayed, and after that day finally comes, there will be no rush to introduce new services. The target date was previously sometime in May, but has been pushed back to June as the slow-moving process continues. However, once the canal is ready for commercial ships, it has the potential to substantially alter trade routes and flush certain ports with new business.
Influx of services expected to be gradual following expansion completion
While the South American water route has been adding services in recent months, canal authorities are not blowing expectations out of proportion. Along with the decision to push the canal expansion completion date back to June, recent comments also indicate that services may be slow to turn to Panama. Jorge Quijano, the Panama Canal Authority (ACP) administrator, took steps to tamp down expectations ahead of the canal opening.
"I don't expect our customers to immediately move to use the expanded Panama Canal," he told the Journal of Commerce (JOC) in January. "I expect them to give us a wait and see of maybe three or four months before they start making their major decisions of, 'OK, now I'm going to re-network using the expanded Panama Canal.'"
In 2015, the canal added five all-water container services, he told the media outlet – two for the entire year and three for peak season. Quijano expects to add two more services in 2016 and as many as four next year. The lack of demand and certainty about the completed canal expansion will prevent a stampede of container services, but over the course of several years as the wider water route proves capable of passing on savings, more ships will begin passing through the connection between the Pacific and Atlantic Oceans. The Panamanian government has high hopes for 2017, as it expects to see a $1.4 billion increase in revenue, attributable to the widened canal, Reuters reported.
The expansion process has been purposefully slow
Though less than 4 percent of the project remains incomplete, each step is being taken with extreme care. In early February, the ACP accounced that sill reinforcements in the new locks were finished, according to Material & Handling Logistics. The Cocoli Locks, on the canal's Pacific end, are part way through the filling process. Recently, the Agua Clara Locks, on the Atlantic-facing side, also entered the filling phase. Once the locks on both ends of the waterway are filled, the sills will be tested.
Though the expansion process has been slow and deliberate, the payoff is expected to be substantial for Panama as well as numerous ports, especially those on the Atlantic Coast of North America. The influx of business the widened canal will gradually bring will be significant for harbors already benefiting from myriad shipper decisions to reroute their cargo from the West Coast in recent years.