{"id":12621,"date":"2015-02-10T13:19:49","date_gmt":"2015-02-10T18:19:49","guid":{"rendered":"http:\/\/panamaadvisoryinternationalgroup.com\/blog\/?p=12621"},"modified":"2015-02-10T13:19:49","modified_gmt":"2015-02-10T18:19:49","slug":"a-skeptical-panama-pays-heed-to-possible-rival-nicaraguan-canal","status":"publish","type":"post","link":"https:\/\/panamaadvisoryinternationalgroup.com\/blog\/a-skeptical-panama-pays-heed-to-possible-rival-nicaraguan-canal\/","title":{"rendered":"A skeptical Panama pays heed to possible rival Nicaraguan canal"},"content":{"rendered":"

\"nica<\/a><\/p>\n

Tim Johnson of McClatchy’s\u00a0 Foreign Staff reports on the possible competition Panama faces if the canal in Nicaragua comes to fruition.<\/span><\/p>\n

PANAMA CITY<\/span> \u2014 When it comes to interoceanic canals, Panamanians speak with a century of experience. So as nearby Nicaragua moves ahead with a plan to build what it claims would be a bigger, better canal, some Panamanians look on with interest and puzzlement.<\/p>\n

\u201cWe take the possibility of construction of a canal in Nicaragua very seriously,\u201d said Francisco J. Miguez, executive vice president for finance and administration of the Panama Canal Authority, the waterway\u2019s operator.<\/p>\n

The Nicaraguan plan<\/a> is feasible, Miguez said. \u201cWe find that, technically, the project can be built . . . with enough resources and time,\u201d he said.<\/p>\n

Miguez spoke in a measured voice in his office at the imposing headquarters of the Panama Canal, set on a commanding hill. He didn\u2019t display undue concern that a clash of rival canals on the Central American isthmus might be in the offing, one that would have an impact on U.S. consumers and businesses reliant on global trade.<\/p>\n

In late December, Nicaraguan President Daniel Ortega and Chinese telecom entrepreneur Wang Jing formally inaugurated work on what they said would be a 173-mile-long waterway capable of handling the world\u2019s largest ships as they pass between the Atlantic and Pacific oceans.<\/p>\n

Mystery surrounds the Nicaraguan project, especially how Wang plans to finance <\/a>a canal that\u2019s expected to cost $50 billion, and perhaps more. Many Western experts suggest China\u2019s government may eventually emerge as the project\u2019s patron.<\/p>\n

\nRead more here: http:\/\/www.mcclatchydc.com\/2015\/02\/09\/256016\/a-skeptical-panama-pays-heed-to.html#storylink=cpy<\/div>\n
\nRead more here: http:\/\/www.mcclatchydc.com\/2015\/02\/09\/256016\/a-skeptical-panama-pays-heed-to.html#storylink=cpy<\/div>\n

Nicaraguan lawmakers in 2013 granted Wang\u2019s Hong Kong-based HKND Group a 50-year concession to build a canal in return for a payment of $10 million a year once it\u2019s operational. The group was also given a green light to develop ports, an airport, roads and a railway even if the canal doesn\u2019t get built.<\/p>\n

 <\/p>\n

The Nicaragua project comes as Panama is doubling <\/a>its canal\u2019s capacity, adding a third set of locks to accommodate ships more than twice as big as in the past. The $5.25 billion expansion <\/a>is 85 percent complete and expected to be operational early next year.<\/p>\n

Outside maritime experts say Panama has reason to be concerned about an eventual rival canal in Nicaragua.<\/p>\n

\u201cIf it actually gets built, and it is run in a reasonable manner, they are going to get business,\u201d said Richard Wainio, the former director of the Port of Tampa, in Florida, and a shipping consultant. \u201cPeople will use it, and Panama will lose business.\u201d<\/p>\n

But Miguez said Panama Canal experts suspected Nicaragua was mistaken in thinking it would draw supertankers and container ships that were larger than those that would fit through the expanded Panama Canal.<\/p>\n

\u201cOur preliminary assessment is that there is not (a market). You don\u2019t see trends right away going to bigger than 14,000-container vessels. There\u2019s no trend moving in that direction,\u201d Miguez said.<\/p>\n

 <\/p>\n

Panama Canal Administrator Jorge L. Quijano said in mid-2014 that the expansion would allow the passage of 98 percent of the current world fleet of ships.<\/p>\n

Basically, the two countries are wagering on whether cargo ships will grow ever larger and trade routes will adjust as ports invest in deeper channels and bigger gantry cranes to handle the super ships.<\/p>\n

 <\/p>\n

Since the 50-mile-long Panama Canal began operating in 1914, the largest ships that could fit through the locks were called Panamax vessels, equipped to carry about 5,000 20-foot containers. After the expansion, the largest ships that will fit, which are known as post-Panamax and are the length of aircraft carriers, can haul 13,000 to 14,000 such containers.<\/p>\n

 <\/p>\n

Miguez said the post-Panamax vessel\u2019s size hit the current sweet spot.<\/p>\n

\u201cIt\u2019s a vessel that provides very good economies of scale. It\u2019s an efficient vessel. And it\u2019s also a flexible vessel. That means it can be loaded and unloaded within reasonable times in ports,\u201d he said.<\/p>\n

\u201cWhen you get to really, really big vessels . . . it\u2019s a matter of, can you fill them? Because when business is booming, when the economies are growing, it\u2019s easier to fill a 14,000 (container) vessel or more,\u201d Miguez said.<\/p>\n

\u201cBut when you have, you know, economies that are not doing well, then sometimes those vessels become less flexible, less profitable, if you cannot fill them quickly to keep services day in, day out,\u201d he said.<\/p>\n

 <\/p>\n

A project description released last month by the HKND Group said the Nicaraguan canal would handle gargantuan future ships hauling up to 25,000 20-foot containers or monster bulk carriers the length of 12 football fields.<\/p>\n

A U.S. shipping expert questioned whether such large ships <\/a>would find profitable routes moving through a potential Nicaraguan canal.<\/p>\n

\u201cI don\u2019t think you\u2019ll ever see grain moving in that size ship,\u201d said James R. Brennan, a partner at Norbridge, a Concord, Mass.-based consultancy for shipping companies and ports.<\/p>\n

 <\/p>\n

But factors such as financial feasibility may take a backseat to overarching goals for industrial development and global standing, if it turns out the Chinese government is behind the Nicaraguan canal, Brennan said.<\/p>\n

\u201cI think it\u2019s very, very difficult to bet against the Chinese government if they want to do something,\u201d Brennan said.<\/p>\n

 <\/p>\n

The U.S. government has been largely silent on the project, and Miguez said that was likely because a second trade route wouldn\u2019t hurt U.S. commercial interests.<\/p>\n

\u201cRemember, about 60 percent or more of goods that move through the Panama Canal either come or go to the United States. So if the United States has a second route available for them, it means they have redundancy and more reliability,\u201d Miguez said.<\/p>\n

If shipping trends head toward larger ships, Miguez said, Panama would be ready to build a fourth lane on its canal that would accommodate them.<\/p>\n

\u201cIf the demand exists, we will go to a fourth set of locks,\u201d he said.<\/p>\n

\nRead more here: http:\/\/www.mcclatchydc.com\/2015\/02\/09\/256016\/a-skeptical-panama-pays-heed-to.html#storylink=cpy<\/div>\n","protected":false},"excerpt":{"rendered":"

Tim Johnson of McClatchy’s\u00a0 Foreign Staff reports on the possible competition Panama faces if the canal in Nicaragua<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-12621","post","type-post","status-publish","format-standard","hentry","category-news-articles-panama-perpsective"],"yoast_head":"\nA skeptical Panama pays heed to possible rival Nicaraguan canal - Blog and Newsletter<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/panamaadvisoryinternationalgroup.com\/blog\/a-skeptical-panama-pays-heed-to-possible-rival-nicaraguan-canal\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A skeptical 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