LAST week, U.S. Vice President Joseph Biden traveled to Panama to highlight the economic importance of the Panama Canal, the lifeline for global trade and commerce.
Biden first visited the Port of Houston, Texas, where the world's first container was shipped, and later toured the Panama Canal expansion project.
The Panama Canal plays an important role in U.S. and global commerce: two-thirds of the ships transiting the canal originated from the U.S., and more than 1 million ships have transited the canal since its opening in 1914.
According to a study, "Panama Canal Expansion: Impact on U.S. Agriculture," the canal expansion will allow ocean vessels to be loaded with an additional 500,000 bu. of soybeans for the export market, which will equate to an additional value of $6-7 million per vessel. This increased efficiency of transportation will allow U.S. agriculture to remain competitive in the international marketplace.
"One-third of the U.S. grain and soybean exports travel through your canal," Biden said at the port. "By one estimate, each bushel will be about 35% — 35 cents — cheaper because of this canal, making American farmers even more competitive."
"What you're doing here today, and what my colleagues and I are witnessing, is going to change global commerce," Biden said. "It's shifting once again. A new generation of massive vessels, known as post-Panamax ships, are able to carry twice or even three times as many containers as what has come before. These ships are wider, longer and their drafts are deeper."
Presently, two lanes in the canal cannot handle the post-Panamax ships. The Panama Canal expansion project, set to be completed by the end of 2015, will include the addition of a third lane that can accommodate the larger vessels. In addition, the massive new locks will also be able to accommodate ships with 50 ft. drafts that are 1,200 ft. long and 160 ft. wide.
The Panama Canal Authority estimates that cargo volume will double by 2025 after the expanded canal is opened in 2015.
"So, if we make the right investments at home, we will allow the U.S. ports to handle larger ships coming through this modernized canal. When exports can carry two to three times more in each container ship, that saves business. That saves money. That saves shipping costs. That saves fuel, and it makes manufacturers and farmers in America more competitive," Biden concluded.
U.S. investment will be necessary to modernize the nation's ports to accommodate the large vessels, including deepening ports to 50 ft., ensuring adequate channel width and installing post-Panamax cranes.
Any Gulf and East Coast ports not upgraded will fail to benefit from the canal expansion.
Currently, ports in Norfolk, Va.; Baltimore, Md., and New Orleans, La., have completed massive renovations to handle the post-Panamax ships, while other ports are still working to secure the proper funding to complete the necessary improvements.
The Soy Transportation Coalition and the Panama Canal Authority recently extended their partnership to perform joint promotional events and exchange information in the effort to raise awareness of the Panama Canal expansion and its potential impact on U.S. agriculture.
The memorandum of understanding (MOU) between the two organizations was originally signed in May 2011.
"Last year, approximately 600 million bu. of U.S. soybeans transited the Panama Canal en route to our international customers," explained Pat Knouff, chairman of the Soy Transportation Coalition and a soybean farmer from Minster, Ohio. "We anticipate that this important link in our logistics chain will become even more significant following the completion of the canal expansion.
"It is in the interest of both the Soy Transportation Coalition and the Panama Canal Authority to work together to ensure that we fully take advantage of the future efficiency gains from the expansion," Knouff added. "If we don't, it will be a missed opportunity. Extending this memorandum of understanding between our two organizations helps ensure that our collaboration toward this end will continue."
Jorge L. Quijano, chief executive officer of the Panama Canal Authority, added, "We welcome partnerships with organizations that benefit from the services offered by the Panama Canal. This MOU will enable us to keep the Soy Transportation Coalition informed about the progress of the Panama Canal expansion and its impact for the transportation of this commodity through the waterway."