Panama Canal plans to double container traffic for $8

The Panama Canal Authority wants to double the container throughput of its iconic waterway, its head, Ricaurte Vasquez, said. Speaking at the International Maritime Conference in Houston, Vasquez detailed an $8 billion investment plan for the canal, which includes a robust water-saving strategy after a severe drought caused the diversion of ships traveling between the United States and Asia.

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Authorities are encouraging shippers to consolidate cargo and reduce water use per vessel, especially container ships. Additionally, the canal plans to expand cargo transshipment capacity on the West Bank, facilitating the unloading and reloading of containers by rail, truck or ship. The expansion will increase the canal’s annual container traffic to 5 million by 2045 from the current 8.3 million.

The canal has prioritized container ships since a 2016 expansion added a third set of locks, but now bulk carriers have returned, with recent slot allocations reserving about 40% of capacity for 2024 at its largest locks. Freight traffic through the canal remains below normal due to alternative route options. However, expected growth in LNG demand in Asia next year may change this trend.

The canal is also wary of possible disruptions from the U.S.-China trade war, which could affect LNG shipments. Vasquez emphasized that energy products have become an integral part of the canal’s revenue and is actively exploring further cooperation with the Port of Houston, a major distribution center in the United States.