The Panama Canal's Expansion: New Options for Trade

The expansion of the Panama Canal, scheduled for completion in 2015, may lead to a change in trade routes. The number and use of direct, all-water routes between Asia and the U.S. Gulf and East coasts could grow as a result of the expansion, and the greater Caribbean Basin will likely benefit from an increase in the average size of ships transiting the region, which could in turn lead to a higher volume of goods moved through the area as a result of transshipment. Barge traffic on the Mississippi River could also grow in response to the possible volume increase in agricultural goods being shipped from the Gulf Coast to Asia. Many U.S. and Caribbean ports are investing in improvements in anticipation of the expansion.

Ultimately, any shift in trade routes will be in the financial interest of the shipping industry. However, risks and uncertainties for future expansion projects are inherent because it is not clear which — if any — of the potential changes will actually materialize.