The BBC reports that Nicaragua has announced plans to dig a new canal between the Atlantic and Pacific oceans, in competition with the nearly one hundred year old Panama Canal. According to the report, if built, the new canal would cost roughly $18B, take 12 years to construct, and would carry so-called “super-ships,” or ships “…up to 250,000 tonnes.”
With only weeks to go before the October 22nd Panamanian referendum vote over whether to expand the current canal, Panama’s citizens will now have to debate not only the local ramifications of whether expansion is desirable, but now the competitive consequences of non-expansion should Nicaragua succeed.
International business leaders have been requesting expansion for some time — according to Wikipedia, Panama considered expanding the current canal locks as early as the 1930s — as the current Panmax limit of about 65,000 tonnes displacement, and 5000 TEUs (Twenty Foot Equivalent Units) is far too small to handle modern supertankers, ocean liners, and many sea-going military vessels. Current expansion plans for the Panamanian Canal would increase this to handle ships of 12000 TEUs (it is unclear based on these reports exactly how large the planned Nicaraguan canal would boast).
However, Panamanians vote, Nicaragua argues that the world needs another Canal regardless:
Nicaragua sought to play down fears its canal would compete for the same trade.
Speaking to Western defence ministers meeting in Nicaragua, Mr Bolanos called for international backing for a project he said would bring new economic life to the region.
“The galloping increase in world business demands another canal in addition to a widened Panama Canal,” he said.
Some economists appear skeptical of the economic necessity for supporting ever larger vessels through the canal, noting some technical limitations in propulsion that might impact the viability of greater vessel expansion. In a Drewry Shipping Consultants report titled: “Post-Panamax Containerships – The Next Generation”, they note that while continued expansion will continue, maintaining a minimum 25 knot speed with single engine propulsion will become impossible beyond 10,000 TEUs:
And with those conclusions, Drewry says it believes that the main liner companies will continue to invest in larger tonnage and that for East/West arterial routes 9,000 to 10,000 TEU ships will become a more popular choice over the next four years. These vessels will reflect current design parameters and will be powered by a single main engine, with a power output of 90,000bhp plus, generating a minimum 25-knot service speed. Compared with 4,000 TEU Panamax, they offer operators potential cost savings of over 35%.
Larger than that and, according to the report, it might even necessitate an larger expansion of the canal than is currently planned by Panama:
However, anything beyond 10,000 TEU will have to be twin-engined-particularly, if a 25-knot service speed is to be maintained – and for similar economies of scale to be achieved a minimum loading capacity of 12,000 TEU will be required.
While unclear just how large the Nicaraguans plan to build their canal, it would likely be larger than whatever expansion plans are on the table for the older Panama Canal. Suggesting that should Nicaragua succeed in this construction endeavour, they may steal Panama’s thunder as the next land-bridge of choice between the Atlantic and Pacific oceans.
