Yesterday a team of local workmen in Panama would start to dig a hole partfunded by Japan, aided by Latin American cash and big enough to hold the world’s biggest Danish-owned, South Korean-built megaships. The ultimate winner, though, will be China.

The work, which coincides with the start of Panama’s dry season, is the
latest phase in a $5.25 billion (?3.3 billion) project to widen the
country’s famous canal — an expansion plan that could comprehensively
reshape the flow of world trade and could even scupper Warren Buffett’s
$34 billion “all-in” bet on American railways.

Work on deepening the Panama Canal begins amid more evidence of China’s
roaring recovery from the global slump. Over the weekend, the closely
watched Centre for Forecasting Science at the Chinese Academy of
Sciences predicted that the country would return to double-digit rates
of GDP growth this year. More critically for world trade, imports and
exports are expected to grow by 19 per cent and 17 per cent,
respectively.

These are precisely the sort of figures that have given new momentum to
the Panama project — mooted a decade ago when Panama took possession of
the canal from the United States. The aim is to increase vastly the
canal’s capacity, in terms of both size and number of vessels. By doing
so, shipping industry veterans say, it will re-establish the global
importance of the isthmus.

The idea for an expansion began before China’s economic growth had
truly begun to boom. The plans were drawn up in expectation of steady
growth in Japanese exports to the United States and a rising tide of
raw materials heading across the Pacific from Brazil.

It is clear, however, that the widened canal, as both an import and
export route, will become a prime conduit for Chinese-driven global
trade. One effect will be to make transport costs of finished goods
from China to the East Coast of America much cheaper — perhaps by 30
per cent, according to the canal’s operating company.

When the work is finished, the canal will be navigable by tankers with
capacity of a million barrels of crude oil. That, in turn, will open
new routes whereby oil and mineral resources from West Africa can be
taken directly to China — deepening political bonds that Beijing has
carefully fostered in that region. The same dynamic could also bolster
China’s influence in the Caribbean, expected to develop as a storage
hub for oil before it heads west through the canal and on to China.

Economists at Goldman Sachs believe that the new canal could play a
pivotal role in its Bric (Brazil, Russia, IndIa, China) investment
story — as a channel more directly linking the Chinese and Brazilian
markets.

By the time that the expansion work is finished in 2014, the canal will
be able to take ships capable of holding 12,600 containers — more than
double the capacity of the “Panamax” ships that represent the canal’s
present size limit. Moreover, the new canal will also be large enough
for the gas industry’s existing fleet of liquefied natural gas
carriers, most of which are too big to make the Panama crossing and are
forced to take the longer, more hazardous route around Cape Horn.

The reshaping effects have already begun. At the moment, the largest
container ships leaving Asia for the US dock in one of the big West
Coast ports, with Los Angeles the largest of those. Their journey is
completed by freight train, much of it run by the Burlington Northern
rail company, in which Mr Buffett has invested so lavishly.

However, anticipation of the wider Panama canal has shifted the focus:
the combination of West Coast and rail may be quicker, but with
potential cost savings of $1,000 per container, the sea route may
prevail as China’s favourite.

Ports in New York and nearby New Jersey have begun work to increase
capacity and deepen their channels to accommodate even larger ships.
Big retailers, such as Wal-Mart and Home Depot — voracious importers of
Chinese goods — are building hundreds of thousands of square metres of
new storage space around the ports of Houston, Texas.

Chinese consumer demand

China’s growing role in the global economy is to stretch to the shopping basket, within four years (Marcus Leroux writes).

According to IGD, the food industry analysts, China will replace the
United States as the world’s largest grocery market by 2014.

Consumers in China are tipped to spend €761 billion (?666 billion) on
groceries in 2014, against €529 billion this year. Spending in China —
where chicken feet are a speciality and ready meals are unheard-of —
will grow at nearly three times the rate in America and Britain, IGD
believes.

Source: Times Online

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• Panama Canal Authority signs agreement with U.S. port

     The Panama Canal Authority (ACP) has signed an agreement with Port Everglades of the United States to generate new business, the Manager of the Panama Canal Authority (ACP), Alberto Aleman Zubieta, announced on Wednesday. “The ACP and Port Everglades will work together to promote the commerce to Florida through the Panama

• Shipments of LNG through the Panama Canal may rise after the expansion

    Shipments of liquefied natural gas through the Panama Canal may climb once expansion work on the waterway is completed, in 2014. Read at Shipments of LNG through Panama Canal may rise after expansion

• Costa Rica company to join the consortium digging the Panama Canal expansion

    Costa Rica’s Meco will be joining the Spanish construction company FCC and Mexico’s ICA as part of a consortium for the dry excavation of the Panama Canal extension in a contract worth us$267.8 million dollars. The consortium beat out Belgium’s Jan de Nul, Brazil’s Oderbrecht and the ISC Panama consortium

• Strike in the ports of Panama

    Employees of tug operator Smit Panama have announced a strike to start from 0800 hours local time Monday, December 14. Smit Panama is said to be in discussions to secure an agreement with its employees as soon as possible.

• Alberto Alemán Zubieta (Panama) receives International Maritime Prize

    The prestigious International Maritime Prize for 2008 has been presented to Mr.

• Panama Canal Excavation Contract Awards Last

    The Panama Canal Authority awarded the fourth and final contract for dry excavation for a channel to its third set of locks to FCC-ICA-MECO, a joint venture between Spanish, Mexican and Puerto Rican engineering companies The PAC-4 contract, as it is called, will help create an access channel linking the

• Transit time via the Panama Canal to show one years from the previous year 27.5 percent decline in the 1st Quarter of fiscal year

    The Panama Canal Authority reported a 27.5 drop (20.29 hr) in the transit time rate the ships spent passing through the canal (Canal Waters Time) for Q1 2010 fiscal year (October-December), as compared with the same period in 2009. The CWT numbers also showed a 20.7 percent decline in transit

• Magnetometer Aid Panama Canal expansion

    The Panama Canal expansion project is yielding some interesting ‘artifacts’.

• Magnetometer Aid Panama Canal expansion

    The Panama Canal expansion project is yielding some interesting ‘artifacts’.

• Panama Canal Gets like to dredge the entrance Atlantic

     The Panama Canal Authority said it has received bids from a number of global engineering and construction firms for the contract to dredge the Atlantic entrance to the canal. The Atlantic entrance dredging project is part of the Canal’s $5.25 billion expansion program to ensure larger, wider ships can reach the

• Significant expansion of the port on its way

    The Port of New Orleans has some major projects to look forward to in the New Year. The renovations are geared toward taking advantage of the upcoming expansion of the Panama Canal. By 2014 some of the largest ships now sailing the seas will be coming through the expanded Canal

• Panama marks 10 years since the return of the Canal

    Panama marked the 10th anniversary of the end of US control over the legendary canal linking the Atlantic and Pacific Oceans, long considered one of the world’s engineering wonders. The United States returned the waterway to Panama’s control on December 31, 1999 as the world prepared to usher in a

• Panama Canal Gets like to dredge the entrance Atlantic

    The Panama Canal Authority said it has received bids from a number of global engineering and construction firms for the contract to dredge the Atlantic entrance to the canal. The Atlantic entrance dredging project is part of the Canal’s $5.25 billion expansion program to ensure larger, wider ships can reach the new

• Panama Canal CEO Says Auto Shipping Showing Recovery

     The Panama Canal Authority has begun to see “signs of recovery” in shipping traffic, including from freighters transporting cars, said Alberto Aleman, the authority’s chief executive officer.  Aleman said he expects traffic in the fiscal year ending in September to total about 295 million tons, up from a previous range he

• Panama Canal and Port of Palm Beach unveil strategic alliance

    To encourage growth and capitalize on the Panama Canal’s expansion, the Panama Canal Authority (ACP) and the Port of Palm Beach embarked on their first-ever strategic alliance yesterday. In an official ceremony held in the ACP’s Administration Building in Panama City, Panama, ACP Administrator/CEO Alberto Alem?n Zubieta and Port of