Commentary: Will the Panama Canal Correct Problems?

Larger ships, known as Neopanamax, were expected to visit ports on the Eastern Seaboard this year, bringing shipping containers from Asia through an expanded Panama Canal. But due to insufficient operational resources within the Panama Canal, far fewer ships than expected have made the passage.  

The $9.4 billion investment by the Panama Canal Authority in a third set of locks was supposed to double the tonnage capacity of the Canal. However, according to the Authority’s transit records, the new locks are operating at about half their anticipated capacity. A shortage of tugs and trained crews has limited the Authority’s ability to efficiently move the mega-ships through the locks. Instead of the anticipated 12 vessel transits per day through the expanded canal, only a maximum of six are being completed.  

“This is like building a massive office tower without sufficient elevators to carry workers quickly to their offices,” said Captain Don Marcus, the president of the International Organization of Masters, Mates & Pilots. Marcus’ union represents sea captains and deck officers on U.S. flagged vessels, as well as many of the captains and crews on tugboats in U.S. ports and Panama.  

The locks, designed in the early 1900s, and in continuous operation for more than a century, rely on locomotives moving on the side of the canal to tow vessels. In contrast, the new third set of locks serving mega-ships are moved by powerful tugboats in a very complicated and risky process that has been documented in a report by the insurance company Allianz.  

It was estimated that the canal expansion would require 70 to 90 of these more powerful tugboats. In practice, however, only 33 of 46 tugboats owned by the Panama Canal Authority are operational. Tug captains employed by the Authority report that many of the canal tugs are not suitable to handle large container ships. Eight tugs purchased from China are poor performers and not fully used, and at least 10 other tugs are not operational. The shortage of appropriate tugs is not entirely the Panama Canal Authority’s fault. Harbor pilots worldwide report that Neopanamax vessels have limitations on their ability to maneuver which, when combined with their increased size, makes them extremely difficult to control. These factors have required a greater number of the more powerful tugs than was initially expected.  

“You would think the Authority would address the problem and acquire more tugboats and train additional crews,” said Marcus. “They have a canal that’s working at half of its capacity and is not generating the projected revenues. As a stopgap, they have hired a Venezuelan company to provide additional tugboats.”  

The waters around the Panama Canal can be very tricky because of difficult currents and tight maneuvering into locks. The Neopanamax vessels and LNG carriers generally require at least two tugboats to move through the new locks. There isn’t much room for error. In February, the Associated Press documented that many vessels were scraping the walls of the locks and wearing out the newly constructed walls and doors.  

“The Authority is at a critical point,” said Marcus. “Everyone acknowledges that there is a shortage of tugs and trained tugboat captains. In order for the new locks to be a success, the Authority must complete its investment in infrastructure and personnel.”  

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