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Category: Sea Transport / Government and Politics

Chinese ship inaugurates expanded Panama Canal

Monday, 27 Jun 2016 03:58:57

Chinese container ship Cosco Shipping Panama crosses the new Agua Clara Locks. (AFP: Johan Ordonez)

Panama has opened the long-awaited $US5.4 billion ($7.2 billion) expansion of its shipping canal, completed after nearly a decade of work forecast to boost global trade and improve the 80-kilometre shortcut between the Atlantic and Pacific oceans.

The Chinese container ship Cosco Shipping Panama entered from the Atlantic to begin the first crossing of the roughly 80-kilometre-long waterway, set to emerge at a ceremony attended by thousands of onlookers, several heads of state and foreign dignitaries.

Panama's Foreign Ministry said the event was a diplomatic success, with representatives from China, Japan, Peru, South Korea, Colombia and Mexico in attendance, as well as executives from top shipping firms and thousands of Panamanians.

But Panamanian trade analyst Ernest Bazan said that Panama's reputation has "unfortunately been affected [by the Panama Papers] and that undoubtedly affects the business climate, including the Panama Canal".

The Panama Papers scandal, in which millions of documents were leaked from law firm Mossack Fonseca, revealed how some of the world's richest people use offshore companies to avoid tax and launder money.

The consortium led by Spain's Sacyr and Italy's Salini Impreglio led the US$5.4 billion ($7.2 billion) project that will triple capacity so that the canal can now host 98 per cent of the world's shipping.

Jill Biden, the wife of US Vice President Joe Biden, led the delegation from the United States, which finished building the canal in 1914, controlled it until 1999 and is still its biggest user.

Panama's plan behind the expansion is to triple the $1 billion in revenue it currently gets from canal shipping fees.

However, that goal might still be a decade or more away, according to officials from the Panama Canal Authority, the autonomous Government agency that runs the waterway.

The Spanish and Italian led consortium that carried out the expansion are demanding hundreds of millions of dollars in cost overruns.

"Everybody is always overly optimistic," said deputy chairman of Seaspan Corporation Peter Shaerf, a container ship group with a fleet of 100 vessels.

But regardless of the cost, he said the augmented canal was "wonderful" and "will have a huge impact on trade".

The expansion is "one of the engineering wonders of the world", said Mr Shaerf, speaking at a lavish party for canal clients and investors.

Reuters/AFP

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