June 11, 2019

The Panama Canal and Its Impact on Modern Transportation

Written by Garret Weigel | FSMA, Supply Chain

Infrastructure impacts the development of trade routes and ports. In turn, trade routes and ports affect the volume and reach of global trade. In the world history of transportation, probably no other infrastructure creation has been greater than the construction and operation of the behemoth Panama Canal. It has not only altered the course of history, but in so doing has enabled goods to be transported from one part of the world to another.

 

The Panama Canal was recently widened and reopened for business in 2016. This event coincided with the 100th anniversary of the canal. The expansion, named the "Third Set of Locks Project," enabled the canal to double its capacity by adding a new traffic lane. This will allow ships that are wider and deeper to travel through the lanes and locks.

 

A Trans-Isthmian Canal

The canal originated with President Theodore Roosevelt who oversaw the long-term goal of building a trans-isthmian canal. In the late 1800s, American and British leaders wanted to trade goods quickly and efficiently between the Atlantic and Pacific Oceans. A canal located in Panama provided a new potential solution. The project consisted of canals and waterways, locks that control varying water depths required for transit, and lakes in the middle of the pathway.

 

In May 1904, Panama granted the United States the right to build and operate a canal and control approximately five miles of land on either side of the Atlantic and Pacific Oceans. Later that year, construction began; it opened for traffic in 1914.

 

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Since its earliest days, more than 700,000 vessels have traveled through its 51 miles of waterway. This route surpassed the unwanted alternative that previously existed: an 8,000-nautical-mile trip around South America's Cape Horn.

 

Improved Global Transportation

The canal represents the technological prowess of the United States as an economic power by enabling the transport goods from Asia and other parts of the world to the United States quickly and at a lower cost. With the most recent expansion, huge vessels can move massive volumes of cargo that weren't previously possible.

 

President Jimmy Carter and officials from the Panamanian government signed the Panama Canal Treaty in 1977. This agreement relinquished the American control over the canal and gave authority of operation to the Panama Canal Authority beginning in 1999.

 

Previously, Panamax ships (terms for the size limits for ships traveling through the Panama Canal) were about 970 feet long and 105 feet wide. Shipbuilders specifically made vessels of that size with the canal in mind, knowing that they could transport a large amount of container volume. The new ships, called “New Panamax,” are about one and a half times the previous size and can carry twice as much cargo.

 

panamax ships

Panamax ships passing through the Panama Canal. Source: https://maritime-connector.com/wiki/panamax/.

 

Wider Canal, Larger Ships

The widening of the canal and the increase of container volume provided great promise for all of America's cargo and transportation as it relates to ports. It promulgated the construction of new, larger ships with significant cargo-carrying capacity. It enhanced the posture of the United States as part of the global intermodal container freight sector, helping to move goods faster and cheaper, leading to more prosperity.

 

There was other work to be done to accommodate the widening of the canal. Ports and channels that received these new, huge ships needed siding and infrastructure to support them. Port authorities and states (particularly New York, Baltimore, Virginia, Savannah, and Florida) invested in infrastructure and equipment to handle the increased freight volumes. This included the deepening of channels and the installation of higher and stronger cranes. In addition, U.S. port trucking and roadways were planned and designed around the widening of the canal.

 

Reaping the Dividends

The success of the expansion project points to the value of transportation pathways to global trade and our commitment to making them better and easier for cargo to transit through. The benefits ripple through a very complex and deep intermodal structure that includes trucks, inland ports, major highways, and inland transportation routes. The result is more goods available to us at perhaps lower prices, and sooner than we could have ever expected.

 

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Topics: FSMA Supply Chain

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