Looks like the people of Panama are going to expand the canal by 2015.
A couple of comments: When the original canal was completed in 1914 it proved to be a major competitor for transcon railroads in the US. All transcons lost some business to it, and it put some rrs on a precarious footing right after their new rr line was built (Milwaukee Road). The Milwakee Road eventually lost their transcon due to a lack of business, some would argue because of the completion of the Panama Canal.
Translated in to today’s markets: if the canal were upgraded to accommodate the big container ships on the seas today, would this cut into BNSF and UP’s transcon intermodal franchise? Would this have a chilling effect on capitol expenditures on infrastructure that the rr’s are planning for in the next couple of years?
Investors earn profit in return for accepting risk. The railroads face risk from this and other changes. As as example port congestion in Long Beach and LA is causing freight from East Asia to the Midwestern US to move westbound via Suez to Savanah or Hampton Roads and then on by NS or CSXT into the East North Central States. Another risk to all involved, especially the Panamians, is whether they can complete the project on time and on budget.
That was precisely the concern expressed in the article. Big projects like this have a history of massive cost overruns, and the success of any major construction project depends on the superintedants ability to manage these overruns.
If they expand the canal to handle ‘modern’ cargo ships - by 2015 won’t the modern cargo ships be even bigger than what they would design the canal for today?
At least Panama doesn’t have all those environmental regs and NIMBY brigades to drag the project out for a few more decades, you know, like we do here in the US of A.
As for what containerships might look like in a decade, it might be that the catamaran principle is applied to current designs to effectively double their capacity while maintaining most of the current hull specs and a single crew. Of course, this “wider is better” concept would make all the world’s ship canals obsolete.
The way I see it, by 2015 all the NA railroads will have been “Conrailed” in some form or another, and if OA is still the principal in Europe and Australia, it will have made it’s way here by then. Which means the current focus on ISO double stacks will have become obsolete to the new NA railroad marketplace.
By the way, how do you know that any of the transcons “lost” business to the Panama Canal? Are you referring to business they had that shifted to water? Or new business that began moving at the low, low, all-water rate after the Canal opened – and how would that business ever have moved by rail in the first place? Surely the annual reports of all the transcons would reflect a big hiccup in their traffic and revenue before and after – have you checked those yet?
Intermodals on land between the west and east coast in boxes single and double stack has only been around a limited time.
There is enough domestic freight to sustain this in containers. I remember JB hunt had many yards dedicated to this work. That revenue outstrips traditional over the road revenue.
I support the expansion of the canal. If they can enlarge it and possibly create multiuple pathways to sustain natural disaster, war time destruction and ever expanding sizes of civilian and military vessals.
A simple shipping casulty in the canal today will close the Panama crossing and force shipping to round the Cape Horn which is not really a good option.
1435mm: Actually, the railroad I mentioned, the Milwaukee Road, completed their transcon in 1909. Just as the line was begining to come into element and establish itself the panama canal opened and took away much of the traffic that would have moved on the line. This is a case of the rr not having any business because the line just opened up. NP and UP were more established at that time and I think they were able to absorb the loss, although it was painful. The Milwaukee never fully recovered.
Don’t take my word for it. Jim Scribbons mentions it in his book about the Milwaukee Road, and I think even the company annual reports for the period talk about the affects the canal was having on the ability to maximize the traffic potential of the pacific coast extension.
That article was uninformative about the specifics. Panama plans a third pair of locks that are capable of accommodating post-Panamax ships. In addition the channel will be widened and deepened to handle ships twice as large. It’ll make KCS’s Panama Canal Railroad pretty much a tourist line, that’s for sure. However, given the waste and corruption down there, I’d give them at least ten more years of life. As for the U.S. railroads, their capacity and the west coast ports may well be maxed-out by then so the shipping lines are going to look for ways to cut costs by going to the east coast directly.
There was a thread a couple of months ago about the giant container ships that might use the enlarged canal.
Perhaps, but does the annual report just trot that out as an excuse to investors for management’s sorry performance, or do the revenue and GTM charts in the report show any actual change? More importantly, do the annual reports of ALL the transcons show a “Pamana Canal Effect” at that time? If such a thing exists it wouldn’t affect just the Milwaukee Road. All the roads were charging the same rates by this time under regulation. All due respect to Mr. Scribbins, who I know well, but I don’t think he enjoyed reviewing the traffic and tonnage figures. I haven’t seen any evidence in his books and articles, at least.
"In the early 1900’s, the Milwaukee had indeed begun slipping into the position of a second class railroad. From being the largest of its peers, it began slipping until both the Northern Pacific and Great Northern surpassed it in overall revenues; the Burlington and the Northwestern had surpassed the Milwaukee in total revenues in 1902 and the gap grew larger and larger. By 1912, the Milwaukee had gone from the largest railroad in terms of revenue in 1895 to the smallest among its peers. Even the lowly NP, which earned only half of the Milwaukee’s revenues as recently as 1900, had surpassed the Milwaukee in 1912. Miller’s concerns appeared to be entirely justified: the Milwaukee Road as a Midwestern road was fast becoming a second-class railroad.
"After the Pacific Extension was completed, however, this began to change, and the change was dramatic. After 1913, the Milwaukee gained revenue more rapidly than any of its competitors, and by 1925 had outstripped them all. The dynamic growth of the NP and GN prior to 1912 appears to have been diverted after that date to the Milwaukee, and b
In addition to the distinct probability that modernizing the Panama Canal will run well behind schedule and over budget, there’s the minor detail that even rainy Panama may not have enough runoff to operate the new locks! That was mentioned (and quickly glossed over) in the TV documentary I watched on the subject.
It is now 2006. Even the rosiest of optomistic schedules won’t see post-Panamax ships passing through the Panama Canal for nine years. I wouldn’t sell my UP and BNSF stock just yet.
It is obivous that you have a fuller understanding of what happened with the Milwuakee, certainly I am not going to take issue with that. I am only repeating what I read in books. When the PCE was abandoned I was still in diapers! I also understand that it is a controversial topic, and that from time to time certain people tend to let their view on the matter cloud the facts.
Otherwise:
I don’t think the canal’s opening and operation can be overlooked with respect to transcon traffic in the 1910’s - perhaps the profitability of certain railroads improved, but overall traffic was affected by it. Certainly if railroads were able to haul what traffic there was more efficiently then of course profitability would increase regardless.
I feel that a revitalized canal in 2015 would certainly give the major intermodal carriers a run for their money - BNSF probably has the most to lose along with UP. NS and CSX would be hauling the containers either way - ships docking on the east port with destinations inland would have to use them and ships docking at Texas would wind up using those two carriers for points east no matter how you slice it.
Of course this is pending the successful completion of the canal - something that could never come to fruition. It is a government project, and that already places it at a disadvantage because it will be subject to political pressures not noramlly seen in the private sector. Throw in some corruption and you may have all the fixins for a mess.
In the account I read, the engineer who is co-ordinating the project says the new, larger locks will recycle the water and actually use 7% less water than the existing ones.
Someone with deep pockets will have to step up to finance this, and since the Chinese are already there in Panama [ Hutchinson Whampoa, as site managers, I think].
Maybe they will provide the deep pockets, but you can bet, it will not be without strings !
“110 ft wide by 1050 ft long, and 85 ft deep. The usable length of each lock chamber is 304.8 metres (1000 ft).”
According to a story in today’s New York Times the added locks will be 60% wider and 40% longer. (BTW, while you’re there, check-out this satellite image of North Korea.)
The unspoken factor is that I’m sure the U.S. Navy would dearly like to be able to move Nimitz class aircraft carriers (length 1092 ft, beam 134 ft, draught 37 ft) through the canal. They’d also have to consider that the flight deck is much wider. So I wouldn’t be surprised if Uncle Sam ends up paying for many of the improvements.
No. Traffic still needs to be transloaded inland, regardless of the location of the port, either East or West Coast. All that extra container capacity on ship board equates to more traffic at ports and on rails. Infrastructure already severely limited could easily take a hit.
The numbers I get for the dimensions on the new locks are 1400 x 180 feet. This is adequate for most Panamax container ships, but already too small for the Emma Maersk, the latest and the largest container ship, which is 1300 long with a 184 beam. Something called a Malaccamax container ship is now viewed as the largest practical size. At 1542 x 196 feet it would carry 18,000 TEU’s. From what I read, anything larger would require rebuilding supporting infrastructure everywhere.
Given that completion of the expansion is about ten years out, I would say any assesment of the impact on BNSF and UP is highly speculative.
Your question was will this hurt intermodal? There only way it could hurt is that all railroads will need to spend more money for increased capacity. The amount of IM will only increase due to more and better ships being able to go both ways. Europe will have access to west coast ports previousely unavailable and Asia to east coast. There will still be transcon IM as there is only so much east coast port capacity and RR’s will get the time sensitive freight. Traffic pattern are always in a state of flux and this is how it always has been. Remember the B & O railroad impacted the B & O canal when it first opened. The railroad got the time sensitive freight and the canal hauled bulk goods.
The Straits of Malacca is the passage past SE Asia into the Indian Ocean. I dont recall a specific narrow passage in the straights; the size limit could be related to ports along the route or maneuverability. THere is a lot of shipping in that channel…on Radar, it looks like a bridge sometimes!
As to the US Navy and the Panama Canal, the last Aircraft carrier capable of passing though the current locks was the USS Midway, and it had a “hinged” section on the angle deck, so it could be “Folded” up to enter the canal. Dont know if they ever actually did that, though.
The politicians probably would like to use the canal to reposition Carriers, but they have to keep in mind it wouldnt take an overly sophisticated terrorist action to put both sets of locks out of commission for a while, stranding any ship that happens to be in the upper lake…and it would be REAL TOUGH to fly many power projection sorties from a lake that small! As it is, the number of carriers we have are already fully scheduled without trying to swap from coast to coast![2c]