Panel discusses big changes coming at the Panama Canal

The widening of the Panama Canal is expected to have wide-ranging consequences for the flows of global trade, panelists in Charlotte said Thursday, and it could shape how goods move to and from Asia, Africa, Europe and the Americas.

The panel, which included Jonathan Farrar, the U.S. ambassador to Panama, was part of the Discover Global Markets business forum series held this week in Charlotte. The Panama Canal widening project had been scheduled to open in time for the 100th anniversary of its construction this summer, but that date has been pushed back to late 2015 or early 2016.

When the more than $5 billion project is complete, far bigger ships will be able to cross and the canal’s capacity will double. Infrastructure and planning expert Michael Gallis, who helped plan Norfolk Southern’s rail cargo yard at Charlotte’s airport, said that will affect logistics across the East Coast and even in so-called “inland ports,” such as Charlotte.

“What we have learned is you cannot look at the canal as a separate product,” said Gallis. Instead, it will “change patterns across the entire globe.”

Norfolk Southern’s new intermodal rail freight yard opened in December between two runways at Charlotte Douglas International Airport. The $92 million facility, built with the help of $16 million worth of state and local grants, is used to transfer cargo containers between railroad cars and tractor trailers.

The yard at Charlotte Douglas replaces Norfolk Southern’s former intermodal yard north of uptown. The company said the yard has the capacity to handle 200,000 “lifts,” or container transfers, each year, up from 140,000 at the old location.

Airport and city officials hope the intermodal yard will kick off a new development boom around Charlotte Douglas, which is surrounded by large undeveloped tracts. They hope to attract more logistics-oriented companies, warehouses and light manufacturers seeking easy access to ship and export their goods.

Norfolk Southern’s rail lines link the Charlotte Douglas intermodal yard to the port of Charleston. The port is working on a plan to deepen its harbor to accommodate the larger ships that will soon be coming through the Panama Canal – as are other ports along the East Coast, such as Miami and Norfolk, Va.

But Norfolk Southern officials have cautioned that they don’t expect a huge increase in business as a consequence of the expanded Panama Canal.

Farrar said that because global trade is expected to increase rapidly, the canal could be expanded again. “That’s why you already have people in Panama talking about the next expansion,” he said. Another thing people in Panama are keeping an eye on: A possible Chinese-built canal through nearby Nicaragua.

“Panama is watching and waiting to see what happens,” said Farrar.

Farrar told the Observer that while the U.S.-Panama relationship is often viewed through the prism of the canal, the trade relationship between the two countries is more diverse than that. The U.S. has a $10 billion trade surplus with Panama, he said, and the country serves as a major distribution and operations hub for U.S. companies such as 3M and Procter & Gamble.

“It’s a lot more than that,” said Farrar. “It’s not just the canal.”