Have you heard? Panama is expanding its canal! This is good news for our farmers, and for all of us in the U.S.A.
Portions of the canal are to be new, and other improvements will be the expansion of the existing canal. The Panama Canal Authority is excavating and dredging enough dirt to displace roughly 100 Empire State Buildings. This massive effort to enlarge the canal that crosses the Isthmus of Panama could have positive repercussions closer to home, potentially boosting U.S. crop prices and reducing rail and shipping costs for farmers all across the U.S. With the $5 billion project two-thirds complete, this effort is well on its way to completion.
Along with the construction of new locks, the expansion of the Panama Canal is expected to more than double the size and quantity of container ships that can pass through it. Currently, about 55% of the globe’s fleet of ships which carry dry cargo are able to fit through the Panama Canal. When the project is complete in 2015, about 80% of the fleet will be able to fit through. The expanded canal will be wider and deeper, allowing for ships to carry more bulk and heavier loads.
For example, at the Port of Portland’s (Oregon) grain terminal, the channel was dredged to a depth of 40 feet, because the Panama Canal allows for a depth of 39.5 feet. The new depth of the Panama Canal will be 50 feet when completed. This will allow the Port of Portland to dredge their channel deeper, allowing for heavier loads to be shipped into and out of their port.
While much of the focus has been on the larger canal’s impact on imports to the U.S., the expansion is also expected to impact the shipping of out-bound U.S. grain and farm products to Asia, Europe and Africa.
The implication is that more corn, wheat, soybeans and other grains from the Midwest will be able to move down the Mississippi River and through the Panama Canal on its way to the West Coast and Asia instead of being shipped by railroad. Additionally, grain shipments from the West Coast will be able to move out of its ports directly onto cargo ships headed to the eastern U.S., Europe and Africa via the Panama Canal.
There also is speculation that cargo ships from Asia may now be able to bypass West Coast ports and go directly through the Panama Canal on their way to the eastern seaboard and Europe.
All of this means that our farmers will be better able to market their products on a global scale in a more cost-efficient way, which, in the end, will reduce food prices, and allow us to keep a bit more in our pockets.