Even though the $5.3 billion Panama Canal expansion has yet to be completed, Panama Canal Authority Administrator Jorge Quijano already envisions another expansion within 25 years to handle even larger container ships.
Quijano declined to say when exactly a new upgrade would be needed or how much larger the expansion would need to be, according to Channel NewsAsia. He has said before that another canal expansion would be needed, but his comments to Asian media provided a clearer timeline.
“In 25 years, I'm sure the fourth set of locks will be built,” Quijano said.
The current upgrade will allow the canal to handle ships carrying up to 13,000 TEUs, triple the current capacity. It was originally slated for completion this year, in time for the canal’s 100th anniversary, but is now expected to be finished in 2015, with the opening in early 2016, following several delays and work stoppages that cost the Panama Canal Authority about $300 million in lost toll revenue. Last week, the engineering consortium responsible for widening the canal received a $400 million loan necessary to complete the project.
Quijano said the current expansion will enable Panama, which depends on the canal for $1 billion a year in revenue, to win back global shipping companies that have opted for the larger Suez Canal in recent years.
“We are confident that the new fees we’ll be publishing, possibly for the end of this year or early next, will have the necessary incentives to enable us to get back those clients,” he said, according to Channel NewsAsia.
Quijano said earlier this month that the canal’s loyalty program will reward those carriers that have stayed in Panama with toll reductions of 4 to 5 percent. Over the past two years, some carriers, most prominently the world’s largest, Maersk Line, discontinued their all-water services from Asia to the East Coast via the Panama Canal because, they said, they could not make money with the smaller vessels. Carriers serving the East Coast via the Suez Canal operate vessels of about 9,000-TEU capacity.
The Panama Canal could also face competition from a massive new Chinese-built canal being planned in Nicaragua. Construction on the controversial Nicaragua Canal will begin in December, according to a member of the Nicaragua Grand Canal Commission.