Canal Expansion Will Restructure US Bunker Market

The expansion of the Panama Canal is going to reshape the US port infrastructure and ship movements. Good for some, bad for others.

And among the receivers of the ”good” will be Panama with the potential to double the number of transits following a time when new records have already been set, and are predicted to continue in 2012. The Canal expansion is scheduled to finish in 2014

The following analysis, shared by many in the shipping industry, comes from Tom Sosnowski, oil market editor at McGraw Hill in the US.

The $5 billion canal expansion includes making the canal wider and deeper and creates another set of locks, among other improvements. With that expansion, larger ships, such as VLCCs and LPG carriers, as well as bigger container ships, will be able to transit the canal.

In the past, the depth and width of the canal locks precluded any ship larger than the Panamax size vessel from transiting the route. A Panamax has a capacity of about 500,000 barrels of crude, while larger ships such as a VLCC can carry up to 2 million barrels.

Also, the number of ships transiting the canal has the potential to double, as two-way traffic will be possible. Currently, the canal run north to south for 12 hours, then reverses for 12 hours.