By Bill Faries Oct. 23 (Bloomberg) — The Panama Canal will double its capacity after voters yesterday approved a $5.3 billion expansion plan, making the 92-year-old waterway more competitive to lure the world’s largest tankers and container ships. The project, which the government says should be completed by 2014, will create a third set of locks and give freighters carrying up to 12,000 containers an alternative route for traveling between Asia and the eastern U.S. “This will have a big impact on container shipping, and less so on crude oil tankers,” said Morten Arntzen, chief executive officer of Overseas Shipholding Group Inc., in a phone interview after the vote. The New York-based company owns a fleet of 116 ships transporting oil and petroleum products around the world. The referendum passed 78 percent to 22 percent, the nation’s electoral tribunal said after counting 96 percent of ballots. Opponents argued the money would be better spent on schools and hospitals and that costs could exceed estimates, the British Broadcasting Corp. reported Oct. 20. Panama, which relies on the canal for about a fifth of its government budget, is becoming less competitive as larger ships classified as “post-Panamax” — too big for the canal — now account for 27 percent of the world’s container ship capacity. That proportion will grow to 37 percent with the addition of 250 post-Panamax ships to the global fleet by 2011, the authority said in a report.
Source) On Sunday, voters in Panama voted in favor of a plan to expand and update the Panama Canal, with about 78% voting in favor and 22% against. The $5.25 billion plan would add a third set of locks that would allow larger container ships, cruise liners and tankers to pass through that currently can not fit into the 108-foot wide locks. The expansion should significantly affect U.S. exports, as American vessels are the canal’s top users. “There will be an impact on the pocketbook,” says U.S. Ambassador William Eaton. “The transit costs will be cheaper, and that will have an effect on the market.” “This is important to the U.S. It’s important to our economy,” Eaton says. Around half of U.S. corn exports travel through the canal, which currently handles around 4% of global trade. The canal’s administrator, Alberto Alemán Zubieta, points out the benefits the expansion will have for agricultural exports. “Now you will be able to bring agricultural products in a larger vessel,” he says. “Then you reduce the unit costs.” According to a spokesman for the Port of Los Angeles, about 30% of the vessels that dock there are too large for the Panama Canal. Construction is set to start in 2007, with an estimated construction time of about eight years. Taiwan has already offered to help with the project’s costs. The locks represent a fifth of Panama’s economy, employing 8,000 workers. Some opponents of the expansion remain vocal, warning of possible corruption, and many who voted in favor of the expansion are cautious as well. “The expansion is necessary, but we all have to watch closely, make sure there isn’t embezzlement and corruption,” says Igor Meneses, a 34-year-old voter from Panama City. “With that kind of money there’s a lot to steal.” The U.S. built the Panama Canal in 1914 and ran it until 1999, when it handed the canal’s operations over to Panama.