The historical event of the Panama Canal re-opening & where is mass media?
The world is fixated on Brexit! It is apparent in the global media, both established and social media. They preferred to limit coverage of the Panama Canal expansion dedication on Sunday, June 26.
For the past century the Panama Canal served as a bridge between the Atlantic and Pacific Oceans. The Guardian states, “In order to stay competitive going forward the Canal needed to expand. The Canals had to compete with Egypt’s Suez Canal that can already handle over 14,500 TEU and higher. The Suez Canal has no locks and cost less than the Panama Canal but both handle similar traffic volume.”
Today it can boast of doubling the freight traffic and size of ships from 5,000 cargo containers to 14,000 by creating a new set of locks to allow larger ships to pass through. ”The expansion of the canal gives us more options most noteably for routes between Asia and South America and between the eastern United States and Asia”, said Anders Boenaes, Director of Maersk Line shipping company. “It is likely that the Maersk Line will use the Panama Canal more frequently in the future send bigger ships, through the new locks,” he added
The impact on global trade and international politics for the expansion has been controversial. What is driving this?
Was it the cost & time it took to completion?
The expansion took 8 versus 10 years to complete. According to the New York Times,” the budget was originally $3.1 billion but there was a dispute on over $3.4 billion in disputed costs including work stoppages, porous concrete as well as the risk of an earthquake.”
Was it the slowdown in the Chinese economy affecting global trade?
Storm clouds continue to increase on the horizon due to the slowdown in the Chinese economy. This is not good news for Panama Canal authorities, since China is the second largest client of the canal. According to Inter Press Service, “The slowdown in the Chinese transports equals 48.42 million tons in 2015, is one of the factors causing concern regarding this motor of the Panamanian economy, which last grew six percent, the highest rate in Latin America.”
There will be a decline in Asian traffic to the west coast ports, as they will be impacted by the Panama Canal expansion.
According to Zack Equity Research, “railroads with sizable portions of West Coast railways traffic, such as BNSF Railways, a unit of Berkshire Hathaway Inc. (BRK.B– Analyst Report) and Union Pacific Corp. (UNP – Analyst Report) , stand to be adversely impacted.”
However, not all companies are viewing the canal as a major threat. United Pacific cited that much bigger ships with 18,000 20-foot containers that land on the West Coast couldn’t traverse the Panama Canal yet.
While companies with traffic concentration from the East Coast ports such as Norfolk Southern Corp. (NSC – Analyst Report) and CSX Corp. (CSX – Analyst Report) are expected to highly benefit from the increase in volume.
Perhaps the media should re-examine the expansion of the Panama Canal as it will continue to affect global trade.