The Panama Canal: Past, Present and Future

The Panama Canal is a marvel of engineering that unites the Pacific Ocean and the Atlantic Ocean. It's also one of the most popular cruise destinations in the world.

Since opening in 1914, the 50-mile waterway has facilitated more than 922,000 oceangoing transits, shortening voyages for cruise and cargo ships alike. For example, cruise ships repositioning between winter seasons in the Caribbean and summers in Alaska save weeks and about 8,000 nautical miles with use of the Canal versus sailing around the tip of South America.

The French were the first to attempt the construction of a canal, starting in 1881, but engineering failures, epidemics of tropical disease and cost overruns forced them to abandon the project. The United States took over in 1904 and was successful not only in building the canal but in eradicating yellow fever and greatly reducing the risk of malaria in the area. The Canal was completed at a cost of $375 million to the United States, and on Aug. 15, 1914, the SS Ancon was the first ship to officially transit the waterway.

According to the Panama Canal Authority, a vessel takes an average of eight to 10 hours to transit the Canal. When you include the time spent waiting for passage, the average jumps to about 24 hours.

The Canal uses locks to elevate vessels above sea level from the Atlantic or Pacific oceans into Gatun Lake, and back down to sea level into the opposite ocean. The locks are fed by freshwater from Gatun Lake, and at 110 feet in width, they are the narrowest choke points along the Canal.

When the Panama Canal was built, it easily accommodated the largest vessels afloat, but in recent years, a significant percentage of new cruise ships and cargo ships have been built to "Post-Panamax" dimensions, meaning they are too large to transit the canal. There are more than three dozen Post-Panamax cruise ships currently in operation.

It is primarily revenue from cargo ships that supports the Panama Canal -- which in turn makes up as much as 40% of Panama's economy. Faced with a potentially disastrous long-term loss of cargo revenue as more and more megaships are built, the Panama Canal Authority plans to build a new, third lane along the canal with locks 180 feet in width. These locks will be more than adequate to accommodate any cruise ship or cargo ship now in existence.

The cost for the project is estimated at $5.25 billion, to be paid by canal users through a graduated toll system. The Panama Canal Authority predicts that no existing lanes will be closed during the expansion and that current operations will not be interrupted. Construction is expected to be completed in 2014.

Sincerely,

Alan Fox
Executive Chairman
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