Panama Canal Expansion Could Boost U.S. Ag Exports

November 4, 2015 05:00 AM

The Panama Canal Expansion project that’s slated to be completed in April 2016 could open more agricultural export opportunities for the U.S., with increased shipments in particular going to Asia, says Ken Eriksen, senior vice president of transportation at Informa Economics.

“Certainly the Asian buyers are going to have an opportunity with this,” Eriksen said on Monday’s broadcast of Market Rally with host Chip Flory.

The canal’s expansion started in 2007 with a projected cost of $5.25 billion and is intended to double the waterway’s capacity with the addition of a third lock system, according to the Panama Canal Authority.

“What the Panama Canal Authority wants shippers to do is to use the biggest possible ships out there, and for grain that’s a 97,000-deadweight-ton vessel compared to the 70,000-deadweight-ton today,” Eriksen explained.

For grain, that translates to shipments of up to 84,000 tons compared to 57,000 tons today, he said, noting that freight rate savings could be significant for shipments out of the U.S. Gulf.

Listen to his full comments here:

Eriksen pointed out that especially the corn and soybean markets in the U.S. will benefit with the expansion. However, the canal expansion would also benefit northern Brazil, he added.

“Northern Brazil has expanded its capacity significantly to handle more grains, and they would take advantage of that route through the Panama Canal,” Eriksen noted. “In the end, you’re going to have more attraction for more ocean vessels to come to the Atlantic Basin because you’ve got options between northern Brazil and New Orleans and the lower Mississippi River.”

The massive expansion project on the Panama Canal, he added, was an inspiration for upgrades and expansions on the lock and dam system in the U.S.

“It is phenomenal to be able to stand on top of one of the gates down there and look at that big massive hole and think, ‘You know what? We should be doing this on the locks and dams in the United States,’” he said.


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Spell Check

Deatsville, AL
11/4/2015 07:44 AM

  If we had an administration truly interested in jobs and economic growth rather than feeding entitlement and gov't dependency we would be improving our infrastructure to be competitive in world markets. But if your philosophy is to vote for a living instead of work for it you continue to vote for socialism.

Robert Yeagle
Farmer City, IL
11/4/2015 01:57 PM

  It is a little too late to do any finger pointing for our infrastructure woes. These problems should have been addressed well over 35 years ago. If we do not address them immediately , we will all find out the detrimental effects of failure our water systems. Without healthy locks and dams, our economy is at stake. not only our economy but the world economy. The Russians in the Brazilians are smart enough to know they need to improve their infrastructure to become the true global world leaders in crop production, and they are doing it. We are still dealing with 100 year old technology, locks and dams made of wood. Agricultural products are not the only thing that use the waterways of America. Our whole economy is at stake. We can only vote for a government that will fix our most important problem, and I hope they don't continue to kick the can down the road, if it hasn't deteriorate, and fix this crucial problem. An improved Panama Canal won't help the United States if we can't move are crops out of the heartland.

New Rockford, ND
11/5/2015 02:31 PM

  To Richard of Deatsville: What fantastically stupid comments.