June 26, 2016. After more than a century after revolutionizing international trade, the Panama Canal will again drastically affect the logistics of many companies. And for the better! All this because at the end of the month the third set of locks and deeper navigation channels will be inaugurated, capable of doubling the channel's capacity and tripling the size of the ships that cross it.
Don't know how the canal's lock system works? Check it out in the video below.
Video 1 – Operation of the Panama Canal
Source: Animated Info
The channel was created to connect the Atlantic and Pacific oceans, reducing the journey of ships that needed to go around the southern tip of the American continent to sail from the west coast to the east coast of the United States, for example, by about 11 days. If before it was necessary to sail for more than 20.000 km, with the construction of the 82 km long channel, it now took about 10 hours to cross the two oceans.
Photo 1 – Possible routes between San Francisco and New York
Source: aquafluxus
Initiated in 1881 by the French, the first attempt to build the canal failed in 1889 due to engineering problems and epidemics of diseases such as malaria and yellow fever. In 1904 the USA acquired the building rights and, ten years later, the Panama Canal was inaugurated. The canal was under the control of the United States until 1999, when it finally passed to the control of the government of Panama.
The current canal receives ships up to 294 meters long, 32 meters wide and 12 meters deep (vessels that have the dimensions capable of crossing the locks of the Panama Canal are known as Panamax). From the 90s onwards, with the increase in globalization and the intensification of international trade, larger ships began to appear, unable to cross the channel (in 2011, 37% of the world's freighter fleet could not travel through that channel). Aiming to maintain the competitiveness of the Panama Canal, in 2007 the expansion works began, with an estimated cost of more than US$ 5 billion. From the end of June, post-Panamax ships, with the capacity to carry up to 13.000 containers, will have the opportunity to cross the channel. In this way, around 95% of the world's fleet of ships will be able to pass through the new Panama Canal.
Photo 2 - Comparison between Panamax and post-Panamax ships
Source: Adapted from Estadão
Channel expansion is expected to affect multiple supply chains. A good part of the cargo that today arrives at the west coast of the USA and goes by train and truck to the east will have to cross the new set of locks, which made ports like Miami, New York and Baltimore also invest in the expansion of their infrastructure to receive super freighters. The liquefied natural gas (LNG) market should be one of the main ones affected by the expansion. US LNG has a huge potential market in economies currently dependent on coal and oil to produce energy, such as Japan and India, which will be able to reduce their carbon dioxide emissions with it. Currently, only 6% of LNG tankers can pass through the Panama Canal, a figure that will grow to 90% after the expansion opens.
The canal, which accounts for about 6% of total world trade and generates $1,8 billion a year in tolls for Panama alone (about 26% of its GDP), contains innovations that make the process easier, cheaper and environment friendly. Fundamental requirements to stay relevant in current times.
References
<http://www1.folha.uol.com.br/folha/turismo/americacentral/panama-canal.shtml>
<http://www.megacurioso.com.br/mega-estruturas/45273-15-curiosidades-sobre-o-canal-do-panama.htm>
<http://www.estadao.com.br/infograficos/canal-que-mudou-panama-faz-100-anos,internacional,343235>
Fernanda Monteiro
More than 11 years of experience in training and consultancy projects, focusing on Logistics and Supply Chain. In consultancy, he carried out projects such as Transformational Logistics Plan, Diagnosis of logistics operations, Strategy and Calendarization of Transport Operations, Measuring the Cost of Serving, Market Study, Mapping of Inventory Reduction Opportunities, Review of the S&OP Process, Management Plan Training and Implementation of Commercial Processes in companies such as Nestlé, Raia Drogasil, Ipiranga, Lojas Americanas, B2W, Coca-Cola, Andina, Embraco, Martins Atacado, Loja do Mecânico, Santo Antônio Energia, Ecoporto and Silimed. She is currently one of the teachers of the Inventory Management Course taught every six months by ILOS. She worked on the development and management of Online Courses in Logistics and Supply Chain, Supply Processes, Demand Planning, Inventory Management and Industrial Management. Still in the training area, she was responsible for applying ILOS business games in companies such as Raia Drogasil, Fibria, NEC, Novartis and Moove.
