Panama Canal Expansion Should Reduce Cost of Transport

Panama Canal Expansion Should Reduce Cost of Transport

Authority official focuses on importance of waterway infrastructure to agriculture.

As trade has grown the Panama Canal has run out of capacity. That's according to Panama Canal Authority Vice President of Market Research and Analysis Rodolfo Sabonge. But the canal will be doubled in capacity by 2014. He says the expansion will be a benefit to the shippers who use it, allowing them to use larger ships and deeper draft vessels and bringing economies of scale reducing the cost of transport.

Sabonge, who spoke last week at the 9th Tri-State Developmental Summit in Quincy, Ill., where transportation was the focus,  says the canal plays a large role in the grain trade and notes grains are among the main exports of the U.S.

"One of the most important segments that use the canal is the bulk cargo and the most important part of bulk cargo is grain," Sabonge said. "Grain coming out of the Heartland of the Midwest, coming down to ports in Louisiana and moving by ship through the Panama Canal to the principle markets, which are in Asia. I think that anything that facilitates the movement of grain will continue expanding the exports of the U.S."

That would include addressing the need for improved locks and dams on the upper Mississippi and Illinois Rivers. Historically, Sabonge says the U.S. has had a competitive advantage with its infrastructure.

"What you see right now in the world is other countries trying to also become more relevant in world economy, like China and others," Sabonge said. "What you see is them investing huge amounts of money in infrastructure. I think that is key; infrastructure is really what allows the economy to grow and what allows all the other economic factors to play a more competitive role in the world."

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