Wednesday, February 26, 2014

The Nicaragua Canal?


 In spite of numerous environmental concerns and a $40 billion estimated cost, a Chinese developer wants to build one.  And there doesn't seem to be an economic case for the project either:
The Panama canal celebrates its 100th birthday this year, and it’s nearing the end of a $5.25 billion expansion project. When the new and improved canal opens early next year, it will allow ships with three times the cargo capacity to pass through, and it will handle up to 16,000 ships a year, roughly a 15 to 20 percent increase, says Jean-Paul Rodrigue, an expert on transportation economics at Hofstra University. “It’s going to take a while for this capacity to be absorbed, if it ever is,” Rodrigue says. “In the medium term, there will not be a need for another canal.”
Proponents of the Nicaragua canal have pointed out that even the new canal in Panama won’t accommodate the latest generation of mega container ships, the so-called Triple E class, which can carry up to a third more cargo. But Rodrigue notes that few ports in the United States, Caribbean islands, or Latin America are equipped to handle these massive ships. Some ports may be overhauled to accommodate these massive ships by the time a canal could be built in Nicaragua, and a few ports in the U.S. have already gotten started on this, but it’s not clear how many will follow suit.
There’s also no geographic advantage to a canal in Nicaragua, Rodrigue says. The few hundred miles shaved off major shipping routes between Asia and North America would be balanced out by longer transit times through a canal that’s more than three times as long as its competitor in Panama.
All in all, Rodrigue says, “At this point in time, from a commercial standpoint, this project does not make sense.”
Parallel canals to split the traffic demand doesn't make any sense, especially with that $40 billion price tag.

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