China Shipping Giant Approves Panama Canal Expansion Plan

by Mike Godfrey, Tax-News.com, Washington

29 June 2006

Captain Wei Jiafu, President and CEO of China Ocean Shipping Company (COSCO), has endorsed the plan set forth by the Panamanian government to expand the capacity of the Panama Canal, saying that the move will benefit the global economy and world trade.

In a speech given in Panama last month, Captain Wei stated that with the rapid development of China’s economy, the Panama Canal becomes more important as a vital link for China to import and export goods to and from the East Coast of the United States, the Caribbean and the East Coast of South America.

Nearly five percent of total world trade transits the Panama Canal. Of this trade, 88 percent flows between the United States and Asia.

“I fully support this expansion plan. It will not only strengthen Panama financially by bringing considerable revenues, promote development of Panama’s maritime industry, and ensure Panama’s position as the regional maritime center, but it will also benefit the growth of regional and world trade,” stated Captain Wei.

Captain Wei stated the Canal is possibly at its most critical point in its history, and he highlighted four major developments as compelling reasons for expansion, namely: the canal is already operating near full capacity; the increasing size of cargo vessels; the forecasted increase in demand for the canal; and the greater variety and larger volumes that will be able to transit through the waterway after expansion.

He concluded that to maintain its competitive edge, the Panama Canal’s capacity must be improved.

“COSCO’s fleet not only promotes trade between Asia and the Americas, but also seeks to further its cooperation with the Panama Canal and with the great nation of Panama,” noted Captain Wei.

COSCO, is an international shipping and logistics giant with operations in several areas including freight forwarding, shipbuilding, shiprepairing, terminal operation, trade, financing, real estate and IT industry. The company owns and operates a fleet of 600 vessels with total carrying capacity of up to 35 million DWT.

Under the expansion plans, two 3-chamber locks will be constructed at both ends of the canal. This will create a third lane of traffic wide enough to handle the largest of modern container ships and tankers. New approach channels will also be prepared, whilst existing channels will be dredged to ensure large craft can enter the system.

The $7.5 billion project will take about seven years and employ up to 8,000 people.

Current projects under development within the program include: the deepening of Gatun Lake and the Atlantic and Pacific entrances, the construction of a second Tie-up station in the Gaillard Cut and the further widening and straightening of the Gaillard Cut. With these projects, the ACP is maximizing the Canal’s resources with the goal to attain 330 million PC/UMS tons over the next two years.

Meanwhile, the Panama Canal Authority has learned that the cabinet council of President Martin Torrijos has approved the expansion plans, which have now been presented to the national assembly for review.

If approved by lawmakers, a referendum will be held within 90 days allowing the nation's electorate to vote on the plans.

Recommended