The Panama Canal expansion: myths and misconceptions surround economic impacts

In early 2016, an estimated $6.2 billion project will conclude with the opening of a new set of locks enabling the Panama Canal to handle larger ships, which has triggered many expectations about the potential impacts on global trade, in particular for ports on the American East Coast.

The common belief is that the expansion will bring additional traffic and economic opportunities—but many experts disagree. In the luncheon session of the CTS Transportation Research Conference on May 20, Hofstra University professor of global studies and geography Jean-Paul Rodrigue outlined the controversy surrounding this multi-billion dollar transportation project.

While the new canal will result in operational benefits like improved capacity and reliability, as well as lower unit costs, Rodrigue said the lower shipping costs will likely not be passed onto consumers and most economic growth will occur in Latin American countries.

While the canal expansion has triggered upgrades at U.S. ports, such as dredging for increased channel clearance, improved piers, and new cranes and yard equipment, it will create a need for expanded inland infrastructure, which could negatively impact local roads, rail crossings, and communities.

On the national level, Rodrigue says the canal expansion may have limited impacts on the inland transportation system and Midwestern economy. Rodrigue said the Midwest could see lower transportation costs for containers and better connectivity with logistical platforms.

The bottom line, said Rodrigue, is that while U.S. ports have upgraded their facilities to handle larger ships, exactly where the positive impacts will be felt is completely outside government control.

Read the full article in the July issue of Catalyst.

Posted in Freight, Infrastructure, Planning

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