Panama Canal expansion to change dynamics of commodity trade

The impact of the Panama Canal’s third lane, set to open in two years, will have major impacts in the way the world do businesses, with coal producers from Colombia, Kentucky and Virginia, as well as Brazilian iron producers and Chile’s copper mines being the most benefited.

According to (in Spanish), giant ships carrying coal from north eastern Colombia and iron ore from Brazil soon will be able to take the commodity directly to China through the canal.  The new option will be cheaper than the current routes and is expected to boost those industries and create jobs.

Chilean copper producers, in turn, will find it a simpler and less expensive way to export the red metal to European markets.

“It is not the same to send one ship carrying 5,000 containers than one carrying 10,000,” told MundoMaritimo engineer Aleman Zubieta, chairman of a committee involved in the channel development since 1995.

“Low transportation costs will unveil a world of opportunities for Latin American miners,” he added.

When the third lane opens, reports Detroit Free Press, the canal’s capacity will more than double. Vessel as long as 1,200 feet and up to 160 feet wide, with drafts as deep as 50 feet, will be frequent users of the channel. The largest ships will carry as many as 13,200 containers — at least double the dry weight of bulk cargo that can pass through today.

On completion of its current expansion the Panama Canal should be able to handle ships with a carrying capacity of between 120,000 and 130,000 DWT (deadweight tons).

Major corporations, including Caterpillar, Dell, Procter & Gamble and Mexico’s Cemex have already turned to Panama as a headquarters for regional operations.

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