Page 18: of Maritime Reporter Magazine (July 2016)

THE PANAMA CANAL

Panama Canal

Assessing the Risk & Rewards of the Project

ANDREW KINSEY

The Panama Canal’s impact on shipping routes and vessel sizes since it opened in 1914 is undisputed. This will continue with the opening of a third channel for larger vessels in 2016. This brie? ng examines the risk management impact of this expansion on the maritime industry.

Why is the Panama Canal Expansion

Signi? cant?

The Panama Canal’s $5.25 billion ex- pansion increases the maximum vessel ca- pacity and enlarges the overall volume of transported freight. Existing locks can han- dle ships up to 106 ft. wide, 965 ft. long, and 39.5 ft. of draft. The new locks will accommodate vessels up to 160 ft. wide, 1,200 ft. long, and 50 ft. deep. Container ship capacities will increase from 4,400 to about 13,000 teus. The new locks create a third lane of traf? c for larger “New Pana- max” vessels. The expansion is signi? cant because it impacts the size and frequency of vessels that call on the US East and Gulf

Coast ports, which presently have to use the

Suez Canal coming to the U.S. from Asia.

The Impact

The Panama Canal Authority (ACP) esti- mates that the combined effect of 12 to 14 larger Panamax vessels per day (an average of approximately 4,750 ships a year) com- bined with continued smaller vessel tran- sits will double capacity, increasing Canal throughput from 300m tons to 600m tons

PCUMS (Panama Canal Universal Mea- suring System). PCUMS is the basis upon which vessels are charged for use of the

Canal: one PCUMS ton is approximately 100 cubic feet of cargo space. A twenty foot long container (teu) is equivalent to approximately 13 PCUMS tons.

Insured Goods

The value of insured goods transported will increase with the expanded Canal, as will the risk accumulation. This is the rea- son why proactive loss controls will con- tinue to be needed; including tracking of the risk accumulation. This is one of the biggest lessons learned from the Tianjin explosion in China last year. In particular, the New Panamax ships will be impacted.

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