Shipping

Boom or Bust: The Panama Canal Expansion

Despite the myriad of budget overruns and problems encountered during the construction of the US$5.4 billion Panama Canal Expansion, many hope the expanded canal will increase annual Canal revenue from US$2.6 billion to as much as US$16 billion (Fortune). This is especially true since Cosco Shipping Panama paid US$575,545 for its inaugural trip and Hong Kong-flagged MOL Benefactor (10,000 tea) paid US$829,468 — a US$1 million fee seems likely given the canal can handle higher capacity vessels. However, not only did the Expansion open two years late, it was inaugurated (26 June 2016) during a time when global commodities and shipping have taken a hit. Crawling global trade combined with potential safety and construction issues with the canal put the Canal’s revenue rates at risk.