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Panama
Canal project goes on
By Chris Kraul, Los Angeles Times
June 26, 2009
PANAMA CITY - The economic downturn has stalled big construction
projects across the globe, but in Panama, smoke-belching steam
shovels and dredges work around the clock on what people here
call simply la ampliacion or the expansion.
Officials will soon award the principal contract for the
$5.25 billion expansion of the landmark Panama Canal, a project
that will probably alter global shipping patterns and cement
this Central American nation's place as a center of global
logistics.
"This is a financial crisis, and there has been a decline
in ship traffic, but we are very much on time and on target,"
said Panama Canal Authority Chief Executive Alberto Aleman,
addressing rumors the global recession could cause the project
to miss its 2014 scheduled completion date.
The authority is on the verge of choosing among three international
consortia, including one led by San Francisco-based Bechtel,
to build two sets of locks to accommodate massive container
cargo ships. Dubbed post-Panamax, the supersized vessels are
capable of carrying three times more cargo than ships now
transiting the canal.
The construction of the two new locks - one at the waterway's
Caribbean entrance, the other on the Pacific Ocean - will
cost $3 billion or more, take five years to complete and require
an army of 5,000 construction workers.
The winning consortium is expected to use the contract's
marquee value as one of the world's highest-profile construction
endeavors as a calling card to bid on other major infrastructure
projects around the globe. The canal authority maintains the
expanded canal will make Panama an even more important transit
hub by attracting a bigger share of Asian container freight
destined for the eastern U.S.
"There will be a migration of freight to the canal,
the implication being that Los Angeles and Long Beach ports
will take the hit," said Mark Page of Drewry Shipping
Consultants in London. "The U.S. rail lines will also
suffer."
Deeper segment
Despite the recession gripping the U.S. and other destination
countries, the 9 percent drop in global container traffic
forecast for 2009, and a financing scheme that assumes rising
traffic and tolls, Panama's Aleman said the expansion project
is moving forward and will not be deterred.
"We factored in a margin of error and we are ahead of
the projections," he said.
A new 4-mile access channel on the Pacific side is 85 percent
excavated, and dredging is under way. The new segment will
be much deeper than the existing canal, allowing passage of
quarter-mile-long ships carrying 14,000 cargo containers,
compared with maximum 4,500-container ships that now transit
the 50-mile waterway.
The winning contractor will be awarded a $50 million bonus
if the expansion is done by 2014, the 100th anniversary of
the Panama Canal's completion by the U.S. Army Corps of Engineers.
But global shipping companies are wary of the rising tolls
the canal is charging to fund the expansion.
Michael Kristiansen, Latin America operations chief for Danish
shipping giant Maersk, said the expanded canal will divert
some U.S. freight away from U.S. West Coast ports, but how
much will depend on transit times and the impact of the canal's
toll hikes.
Another factor is whether U.S. ports on the Eastern Seaboard
make changes to accommodate the biggest ships. Ports including
Savannah, Ga., Charleston, S.C., and Miami are too shallow,
and the Bayonne Bridge blocks their access to the Newark,
N.J., port, the most important in the New York area.
As a defensive measure, Maersk and other shipping lines serving
the Asia to Eastern U.S. routes are taking a close look at
westward routes through Egypt's Suez Canal. Although Maersk
is not yet diverting traffic away from Panama, it plans to
open a Suez route for post-Panamax ships in the near future,
Kristiansen said.
In addition to the Bechtel-led consortium that includes Japanese
partners Taisei Corp. and Mitsubishi Corp., two other groups
also placed bids in March for the contract. They include teams
led by Grupo ACS of Spain and another led by Sacyr Vallehermoso
of Spain and Impregilo of Italy.
http://www.chron.com/disp/story.mpl/business/6500204.html
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