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Panama Canal Expansion : Antecedents, Status and Future Implications
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Permanent Link: http://ufdc.ufl.edu/AA00013041/00001
 Material Information
Title: Panama Canal Expansion : Antecedents, Status and Future Implications
Physical Description: Archival
Creator: Wainio, Richard A.
Publisher: Panama Canal Society
Publication Date: June 30, 2012
 Notes
Abstract: Richard Wainio’s knowledge of the maritime industry, international trade and global transportation comes from over 35 years of high-level public and private sector experience in many countries around the world. His work includes 23 years employed at the Panama Canal as Senior Economist; Director of Economic Research and Market Development; and, Director of Executive Planning. As Director of Executive Planning, Mr. Wainio’s responsibilities included strategic and treaty planning, Canal capacity planning, capital program development, economic research and marketing. He was also the primary advisor to the Canal’s bi-national board of directors during the transition of the Panama Canal to Panama. Subsequently, he held executive positions with several international ports and shipping companies including Manzanillo International Terminal (MIT Panama), the largest container transshipment port in Latin America and the Port of Palm Beach (Florida). Wainio was, for the past eight years, the CEO/Port Director of Florida’s largest seaport, the Port of Tampa. He also served as President and Executive Director for the American Chamber of Commerce and Industry of Panama. Wainio earned a master’s degree in international management from the Thunderbird School of Global Management and a bachelor’s degree in psychology from Davidson College. He did post-graduate work in Latin American demographic studies at the University of Florida and in economics at the University of Oklahoma. He is active in many international trade organizations and associations and has served as an advisor to the Federal Reserve Bank of Atlanta, and chairman, Florida Seaport Transportation and Economic Development Council (FSTED) and on numerous boards of directors in the Tampa Bay area, including SunTrust Bank.
 Record Information
Source Institution: University of Florida Institutional Repository
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
System ID: AA00013041:00001

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PAGE 1

Antecedents, Status and Future Implications 1 Panama Canal Society June 30, 2012 Richard A. Wainio Port Director & CEO Tampa Port Authority

PAGE 2

Antecedents: Selected individuals and events that influenced the Canal expansion. Status: Brief description and status of the Panama Canal expansion. Implications: What will be the real impact on the US East and Gulf Coasts? Why is the expansion project important?

PAGE 3

May 1879: Baron Godin de Lepinay Canal Lock proposal at the International Congress for Study of an Interoceanic Canal ignored February 1906: Chief engineer John Stevens argued for a lock type canal and convinced Roosevelt to override the advisory committee. June 1906: By vote of 36 31, the Senate approved a lock type canal. Engineers on the Isthmus immediately began work utilizing a design essentially the same in its key elements as the de Lepinay plan proposed 27 years earlier. 3

PAGE 4

o 1904 1914: Original construction and design o 1939 1942: Panama Canal Third Locks Project o 1945 1999: US Navy strategy/Two Ocean Navy/Angle deck aircraft carriers o 1945 1948 Sea level canal feasibility studies o 1964 1970: Interoceanic Canal Studies Commission sea level canal study o 1977: Treaty requirement to jointly study sea level canal o 1985 1993 Tripartite Canal Alternatives Study

PAGE 5

1908: Decision to enlarge locks from 95 feet to 110 to accommodate largest battleship, USS Pennsylvania (98 feet); largest commercial ship, RMS Titanic, had beam of only 94 feet. Although it was a strategic decision, larger lock size increased capacity and enhanced the 5 USS Pennsylvania RMS Titanic

PAGE 6

6

PAGE 7

7

PAGE 9

9 o accommodate Montana class battleships. o May 1942: Battleship construction was suspended in May 1942 and shortly after Third Locks Project halted. o Extensive work completed is big component of current locks expansion. Montana class battleships: Length 920 Beam 121

PAGE 12

12 o Post WWII strategic value of the Canal to the US Navy declined as angel deck aircraft carriers became the center piece of Navy strategy o 1964 1970 sea level canal studies conclusions essentially ended any serious further pursuit/interest in a sea level passage through Panama USS Forrestal First purpose built angle deck USS Antietam converted to angle deck in 1952

PAGE 15

15 SS Ideal X, 524 ft. long; 58 containers MV Emma Maersk, 1302 ft. long 13,800 containers The Container Revolution April 26, 1956

PAGE 16

16 Containerization dramatically lowered transportation costs and greatly reduced the time to market. By itself it did not create the 21 st century global economy but it was a core building block. Other factors of course played a role GATT, the Staggers Act, double stack trains, the computer, internet, large jet planes, the opening of China and the breakup of the Soviet Union. But it was containerization that allowed the creation of global supply chains, brought logistics into the commercial vocabulary, set the stage for just in time manufacturing reducing the need for large inventories, allowed globalized division of labor and set the stage for the dramatic growth in world trade and larger and larger ships. Antecedents: Containerization & Globalization

PAGE 17

17 Barbie: Conceived in 1959 as an all American Girl; but she never was, thanks to container shipping!

PAGE 18

18 Barbie: Originally made in Japan in 1959; Taiwan was added where women in their homes sewed making her statuesque figure using molds from the U.S., machines from Japan and Europe. Her nylon hair was from Japan, plastic for her body from Taiwan, pigments from America, cotton clothing from China. Barbie, simple girl though she is, had developed her very own global supply chain. ( The Box by Marc Levinson)

PAGE 21

Tonnage by Market Segments FY 2010 FY 2011

PAGE 22

22

PAGE 23

23 Development of West Coast Intermodal Double Stack Trains

PAGE 24

SHANGHAI PANAMA CANAL NEW YORK LOS ANGELES 5699 miles 8566 miles

PAGE 25

All Water 23 26 days West Coast 15 18 days Time Savings 5 11 days

PAGE 26

2010 1990 1983 1976 West Coast 65% 80% 30% 15% All Water 35% 20% 70% 85%

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27 Six Generations of Container Ships

PAGE 28

28 o 1993: Tripartite Canal Alternatives Study concludes that present Canal with planned improvements could serve traffic demand until 2020. o Internal PCC studies suggest canal capacity could be pushed to limits soon after 2010 even with planned improvements. o 1996: Regina Maersk is commissioned. First PostPanamax containership with capacity exceeding 6000 TEU. Sovereign Maersk under construction (arrived 1998) has 8000 TEU capacity. Increasingly clear more PostPanamax vessels are the future in container shipping. o 1996 : Alberto Aleman Zubieta appointed Canal Administrator. New Directions, New Vision

PAGE 29

29

PAGE 30

o 1997: Expansion intentions announced at Universal Congress on Panama Canal o 1997: Canal Expansion Office established planning for expansion begins o 2005: Expansion Master Plan Completed need for and feasibility of third lane of larger locks was confirmed o 2006: Referendum in Panama provides green light for the expansion project o 2007 Construction officially begins 30

PAGE 34

Lock Chamber Length: 427 m Width: 55 m Depth: 18.3 m Vessel size LOA: 366 m Beam: 49 m Draft: 15.2 m Pacific Locks Concept Looking North 34

PAGE 40

Beam 12.4 m Existing Locks Max Vessel: 4,400 New Locks Max Vessel: Dimensions of Locks and New Panamax Vessels

PAGE 41

Current Market Reach

PAGE 42

The expansion will extend the Expanded Market Reach Post Expansion

PAGE 43

46%* 63%* 4000 TEU ship 8000 TEU ship Share of the US population Assumptions $400/MT bunker Canal tolls based on 2011 proposal Current ship charter rates Inland move by rail Left of the black line = West Coast has the cost advantage Right of the black line = East Coast has the cost advantage

PAGE 44

36% 13% 4% through New York.

PAGE 45

Response of West Coast ports & railroads Shipper supply chain strategies still shorter and faster via West Coast ports. Ocean carrier strategies including trans shipment and relay services Shifting global production

PAGE 46

Channel and berth depths Port/terminal capacity and expansion plans Emergence of the Gulf Coast as competitive alternative

PAGE 47

Source: Port Websites; CI; AAPA Seaports of the Americas; Norbridge Analysis

PAGE 48

Percentage of active world fleet that has a max draft (

PAGE 49

Tampa Kingston Colon/MIT Caucedo Cartagen a Freeport Mexico South America United States 49

PAGE 50

1996: 235K TEUs 2010: 5.6 M TEUs 2011: 6.5 M TEUs 2015: 8.4 M TEUs (E) 2020: 12.4 M TEUs (E) Panama Ports Company Cristobal Colon Container Terminal Manzanillo International Terminal (MIT) Panama Ports Company Balboa PSA

PAGE 51

Currently 40 acres; expansion to 160 acres planned 4 container cranes; 2 more under consideration 43 foot deepwater channel/berths Plans to quadruple capacity; enough to handle all Cent. FL demand

PAGE 52

Joint TPA CSX initiative dock unit train terminal Scheduled for completion in 2012 Tampa Gateway Rail Project 52

PAGE 53

Dedicated Truck Lane New express highway access between Port and interstate system scheduled for completion summer 2013 $390 million construction cost I 4 Connector Project 53

PAGE 54

54 Population 2.3 M Population 6.3 M Population 8.8 M 9 th Largest economy in the U.S. GDP over $272 Billion Tampa Orlando I 4 Corridor home to largest concentration of distribution centers in Florida 54

PAGE 55

Projected Southeast Consumer Market: 63.3 million Source: Decision Data 2010 Southeast U.S. Projected Population

PAGE 56

Cargo related activity at Florida seaports generates more than 550,000 jobs and contributes $66 billion in economic value to the state. The cruise industry provides 123,000 jobs and brings $6.3 billion in spending to the state.

PAGE 57

57



PAGE 1

Antecedents, Status and Future Implications 1 Panama Canal Society June 30, 2012 Richard A. Wainio Port Director & CEO Tampa Port Authority

PAGE 2

Antecedents: Selected individuals and events that influenced the Canal expansion. Status: Brief description and status of the Panama Canal expansion. Implications: What will be the real impact on the US East and Gulf Coasts? Why is the expansion project important?

PAGE 3

May 1879: Baron Godin de Lepinay Canal Lock proposal at the International Congress for Study of an Interoceanic Canal ignored February 1906: Chief engineer John Stevens argued for a lock type canal and convinced Roosevelt to override the advisory committee. June 1906: By vote of 36 31, the Senate approved a lock type canal. Engineers on the Isthmus immediately began work utilizing a design essentially the same in its key elements as the de Lepinay plan proposed 27 years earlier. 3

PAGE 4

o 1904 1914: Original construction and design o 1939 1942: Panama Canal Third Locks Project o 1945 1999: US Navy strategy/Two Ocean Navy/Angle deck aircraft carriers o 1945 1948 Sea level canal feasibility studies o 1964 1970: Interoceanic Canal Studies Commission sea level canal study o 1977: Treaty requirement to jointly study sea level canal o 1985 1993 Tripartite Canal Alternatives Study

PAGE 5

1908: Decision to enlarge locks from 95 feet to 110 to accommodate largest battleship, USS Pennsylvania (98 feet); largest commercial ship, RMS Titanic, had beam of only 94 feet. Although it was a strategic decision, larger lock size increased capacity and enhanced the 5 USS Pennsylvania RMS Titanic

PAGE 6

6

PAGE 7

7

PAGE 9

9 o accommodate Montana class battleships. o May 1942: Battleship construction was suspended in May 1942 and shortly after Third Locks Project halted. o Extensive work completed is big component of current locks expansion. Montana class battleships: Length 920 Beam 121

PAGE 12

12 o Post WWII strategic value of the Canal to the US Navy declined as angel deck aircraft carriers became the center piece of Navy strategy o 1964 1970 sea level canal studies conclusions essentially ended any serious further pursuit/interest in a sea level passage through Panama USS Forrestal First purpose built angle deck USS Antietam converted to angle deck in 1952

PAGE 15

15 SS Ideal X, 524 ft. long; 58 containers MV Emma Maersk, 1302 ft. long 13,800 containers The Container Revolution April 26, 1956

PAGE 16

16 Containerization dramatically lowered transportation costs and greatly reduced the time to market. By itself it did not create the 21 st century global economy but it was a core building block. Other factors of course played a role GATT, the Staggers Act, double stack trains, the computer, internet, large jet planes, the opening of China and the breakup of the Soviet Union. But it was containerization that allowed the creation of global supply chains, brought logistics into the commercial vocabulary, set the stage for just in time manufacturing reducing the need for large inventories, allowed globalized division of labor and set the stage for the dramatic growth in world trade and larger and larger ships. Antecedents: Containerization & Globalization

PAGE 17

17 Barbie: Conceived in 1959 as an all American Girl; but she never was, thanks to container shipping!

PAGE 18

18 Barbie: Originally made in Japan in 1959; Taiwan was added where women in their homes sewed making her statuesque figure using molds from the U.S., machines from Japan and Europe. Her nylon hair was from Japan, plastic for her body from Taiwan, pigments from America, cotton clothing from China. Barbie, simple girl though she is, had developed her very own global supply chain. ( The Box by Marc Levinson)

PAGE 21

Tonnage by Market Segments FY 2010 FY 2011

PAGE 22

22

PAGE 23

23 Development of West Coast Intermodal Double Stack Trains

PAGE 24

SHANGHAI PANAMA CANAL NEW YORK LOS ANGELES 5699 miles 8566 miles

PAGE 25

All Water 23 26 days West Coast 15 18 days Time Savings 5 11 days

PAGE 26

2010 1990 1983 1976 West Coast 65% 80% 30% 15% All Water 35% 20% 70% 85%

PAGE 27

27 Six Generations of Container Ships

PAGE 28

28 o 1993: Tripartite Canal Alternatives Study concludes that present Canal with planned improvements could serve traffic demand until 2020. o Internal PCC studies suggest canal capacity could be pushed to limits soon after 2010 even with planned improvements. o 1996: Regina Maersk is commissioned. First PostPanamax containership with capacity exceeding 6000 TEU. Sovereign Maersk under construction (arrived 1998) has 8000 TEU capacity. Increasingly clear more PostPanamax vessels are the future in container shipping. o 1996 : Alberto Aleman Zubieta appointed Canal Administrator. New Directions, New Vision

PAGE 29

29

PAGE 30

o 1997: Expansion intentions announced at Universal Congress on Panama Canal o 1997: Canal Expansion Office established planning for expansion begins o 2005: Expansion Master Plan Completed need for and feasibility of third lane of larger locks was confirmed o 2006: Referendum in Panama provides green light for the expansion project o 2007 Construction officially begins 30

PAGE 34

Lock Chamber Length: 427 m Width: 55 m Depth: 18.3 m Vessel size LOA: 366 m Beam: 49 m Draft: 15.2 m Pacific Locks Concept Looking North 34

PAGE 40

Beam 12.4 m Existing Locks Max Vessel: 4,400 New Locks Max Vessel: Dimensions of Locks and New Panamax Vessels

PAGE 41

Current Market Reach

PAGE 42

The expansion will extend the Expanded Market Reach Post Expansion

PAGE 43

46%* 63%* 4000 TEU ship 8000 TEU ship Share of the US population Assumptions $400/MT bunker Canal tolls based on 2011 proposal Current ship charter rates Inland move by rail Left of the black line = West Coast has the cost advantage Right of the black line = East Coast has the cost advantage

PAGE 44

36% 13% 4% through New York.

PAGE 45

Response of West Coast ports & railroads Shipper supply chain strategies still shorter and faster via West Coast ports. Ocean carrier strategies including trans shipment and relay services Shifting global production

PAGE 46

Channel and berth depths Port/terminal capacity and expansion plans Emergence of the Gulf Coast as competitive alternative

PAGE 47

Source: Port Websites; CI; AAPA Seaports of the Americas; Norbridge Analysis

PAGE 48

Percentage of active world fleet that has a max draft (

PAGE 49

Tampa Kingston Colon/MIT Caucedo Cartagen a Freeport Mexico South America United States 49

PAGE 50

1996: 235K TEUs 2010: 5.6 M TEUs 2011: 6.5 M TEUs 2015: 8.4 M TEUs (E) 2020: 12.4 M TEUs (E) Panama Ports Company Cristobal Colon Container Terminal Manzanillo International Terminal (MIT) Panama Ports Company Balboa PSA

PAGE 51

Currently 40 acres; expansion to 160 acres planned 4 container cranes; 2 more under consideration 43 foot deepwater channel/berths Plans to quadruple capacity; enough to handle all Cent. FL demand

PAGE 52

Joint TPA CSX initiative dock unit train terminal Scheduled for completion in 2012 Tampa Gateway Rail Project 52

PAGE 53

Dedicated Truck Lane New express highway access between Port and interstate system scheduled for completion summer 2013 $390 million construction cost I 4 Connector Project 53

PAGE 54

54 Population 2.3 M Population 6.3 M Population 8.8 M 9 th Largest economy in the U.S. GDP over $272 Billion Tampa Orlando I 4 Corridor home to largest concentration of distribution centers in Florida 54

PAGE 55

Projected Southeast Consumer Market: 63.3 million Source: Decision Data 2010 Southeast U.S. Projected Population

PAGE 56

Cargo related activity at Florida seaports generates more than 550,000 jobs and contributes $66 billion in economic value to the state. The cruise industry provides 123,000 jobs and brings $6.3 billion in spending to the state.

PAGE 57

57