More than a year ago, a supersized Panama Canal welcomed a modern generation of gargantuan ships. That would seem irrelevant to many of us in Chicago and the Midwest. Except:
This metropolis, this region, thrives on global trade — the export of what our people manufacture and grow, the import of goods that stock our stores and component parts for much that’s built here. So when a single construction project reshuffles how stuff glides around the planet, a disproportionate share of the impact will fall on this region’s trade-sensitive economy.
So far, Chicagoans and Midwesterners, so good. Retrofitting the canal for the 21st century was a huge and risky bet. The early evidence suggests it’s paying off for just about everyone. And with the healthy global economy driving markets for all manner of goods, there’s a strong chance an investment that cost this region next to nothing will deliver dividends here for decades to come.
The scope of the reconstruction created locks that dwarf those negotiated by Mississippi River shippers: The new Panama locks are longer (1,400 feet) and wider (180 feet) than the original 1,000-foot-long-by-110-foot-wide canal, which opened more than a century ago. The new locks are also deeper, by 18 feet, all to accommodate bigger, heavier ships. The canal now welcomes ships carrying up to 14,000 containers, a huge boost from the previous capacity of 5,000.
In June 2016, Panama authorities invited the world to the new canal’s grand opening. The nine-year expansion cost $5 billion and attracted a flock of naysayers, gloom-and-doom predictors and skeptics who warned of trouble ahead. The New York Times called the canal’s future “cloudy at best, its safety, quality of construction and economic viability in doubt.”
Some had fretted that even if Panama built it, ships wouldn’t come in sufficient numbers. But the canal is up and running, working smoothly with no major incidents. That’s a confidence-builder worldwide.
Commercial mega-gambles don’t just ripple across countries, they shift trade across continents like tectonic plates. Thousands of miles from Chicago, traffic on the canal shapes the Midwest and U.S. economy. What goes down the Mississippi and through the canal to Asia is, among other products, American corn, soybeans and wheat.
The first year of the canal’s operation is paying off handsomely, as shippers send more U.S.-bound cargo through the passage, The Wall Street Journal reports. Here’s the equation: Bigger ships = lower shipment costs = more competitive products and prices. That’s something American consumers should appreciate.
Canal execs report that, in 2017, the tonnage of goods moving through the locks has increased by 23 percent. In October, the canal marked the passage of the 2,000 ships that wouldn’t have fit through the old locks. That traffic surge yields tens of millions of dollars in tolls and a trading boom for U.S. East and Gulf Coast ports.
We don’t yet know the full ripple effect of the new canal on the Midwest. The overall Midwestern impact is limited for now but likely to expand as the shipping industry adapts. ...“It will take a while for logistics patterns to adjust for the larger ships to come online and/or be resassigned to the Gulf-Asia route,” Northwestern engineering and transportation professor Joseph Schofer tells us. “But the trend is underway.”
The U.S. created the canal at the cost of many dollars and many lives. The expansion was built by Panama, which invested billions on what looks like a winning bet. Ships are getting bigger for economic reasons, capable of carrying more supply to meet demand in countries worldwide — helping Midwestern manufacturers, food producers and the U.S. economy in the global game of commerce. No matter what disparaging words you hear from Washington about trade, it keeps this region strong.
The canal — long dubbed one the Seven Wonders of the Modern World by the American Society of Civil Engineers — again lives up to its billing. May its impact on the American Midwest continue to grow.