Every day an armada lurks outside the entrances to the Panama Canal. Several dozen ships, mostly gigantic cargo vessels, wait in these waters for their turn to pass through the fabled, but increasingly squeezed waterway.

The 38 daily slots allotted to transit through the canal are so valuable that none of these vessels can take a chance of missing it. So they idle, often for days, until their turn comes. If there are any problems, that wait can stretch to weeks, causing enormous costs for the global shipping trade.

The Panama Canal Authority, known by its Spanish acronym ACP, is the quasi-governmental organization that oversees the waterway. ACP has launched a new $5.25-billion construction plan to alleviate such congested situations. The long-anticipated effort includes construction of two new massive sets of locks, excavation of nearly five miles of channel and dredging of several million cu m of material. If all goes as planned, the new waterway will be operational by 2014, the canal’s 100th anniversary.

The new route will ease a bottleneck at the current locks, which raise vessels 85 ft. Improvements now under way will push the total number of daily transits to 40, but there is not room for much more. The recent completion of a $1-billion upgrade has pushed the canal’s operational capacity to about 90%, or about 14,000 transits a year. Going beyond that is unrealistic due to factors like maintenance.

“If traffic continues to grow, it is going to be very difficult to do ma5intenance without affecting the quality of service,” says Agustin Arias, the authority’s director of engineering and projects. “We don’t have the buffer capacity we had before, because traffic keeps on growing and growing.”

The authority makes its money on the quantity of goods shipped through the canal, not the overall number of transits. By accommodating bigger ships, the expansion is meant to maximize the amount of goods that can be carried on any one ship passing through the canal. More than a quarter of the goods currently travel as containerized cargo on so-called Panamax-sized vessels. The size—294.13 meters long, 32.31 m wide and a draft of 12.04 m—is specifically designed to take up every available bit of space in the locks while carrying a maximum of 5,000 20-ft equivalent units, or TEUs.

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  • Yet the exponential growth of international shipping has prompted even larger vessels, so-called post-Panamax ships that can carry up to 12,000 TEUs. Since ships are charged according to the amount of cargo they carry, the canal expansion is all about accommodating post-Panamax ships. “There are about 3,000 ships, about 92% of the world’s fleet, that cannot pass through the current canal,” says Jorge Quijando, the authority’s director of maritime operations. 

    Bidding Plans

    The new locks, with water-saving basins, are the most expensive component. Their combined price tag of $3.35 billion is almost 60% of the entire project cost. The sheer size is the most daunting aspect. “What we are recommending is proven technology that is in use elsewhere,” Arias says. “But no one has ever built locks of the size we are proposing.”

    The new lock chambers will be 427 m long, 55 m wide and 18.3 m deep, more than sufficient for the 366-m-long, 49-m-wide post-Panamax ships. Whereas the existing locks use hinged miter gates, the new locks will use wheeled rolling gates stored within the lock wall.

    ACP developed the cost estimate and schedule with the aid of New York City-based Parsons Brinckerhoff, Broomfield, Colo.-based MWH and Canada’s Clair Murdock Consultants.

    New lock access channels will cost $820 million, which includes $400 million for dry excavations, $250 million for drilling, blasting and dredging, plus $170 million in contingencies. Improvements to existing navigational channels will cost $290 million, which includes $90 million to widen Gatun Lake’s channels, $150 million to deepen and widen canal entrances and a $50 million provision for contingencies. Water-supply improvements will cost about $260 million, including $150 million to deepen channels, $30 million to elevate Gatun Lake’s operational level, plus another $80 million for contingencies.

    Both sets of locks will be bid together in one design-build contract. The bidding will be in two stages, with a prequalification process, says Quijando. ACP decided to divide the work into three components—lock construction, dredging and dry excavation—to minimize risk.

    “Because we don’t put everything on the shoulder of a single contractor or a single group, we are minimizing the risk,” Arias says. “We feel we have significant competition, and that will reduce the possibility of problems occurring as well.”

    ACP officials say the expansion will be self-financed, paid for by ship tolls. The authority has unveiled a plan to increase tolls by 3.5% annually over a 20-year period, starting in May 2008. The anticipated increased capacity of the waterway, allied with the toll increase, is expected to bolster annual revenue from $1 billion to $6 billion.

    ACP also will seek some $2.3 billion in loans or bonds to defray costs over the project’s life. ACP estimates that at the project’s peak—between 2009 and 2011, when lock work begins in earnest—the canal will require up to $500 million per year in extra funds. Revenue from the upgraded canal is expected to repay external debt within eight years.

      With such financial means in hand, the agency expects to keep monthly pay schedules for the contractors. Each contractor will need to have the financial capability to provide about four months of operations, given ACP’s strict payment schedule, Arias explains. “We are a very good owner,” he says. “We pay on a 30-day basis and we are very timely, because if we delay pay, we have to pay the interest automatically.”

    The new locks will be fitted with water-saving basins prompted by the fact that the existing reservoir, the 166-sq-m Gatun Lake, provides most of the country’s drinking water. Every day, more than 52 million gallons of fresh water are lost from the Gatun watershed because of canal transits. 

    In the 1990s, ACP began looking at how to ensure the lake would remain stable, and the expansion design emerged from that effort, Arias says.  “The challenge for creating the plan for new locks was finding a design that would maximize throughput but minimize water usage,” adds Cheryl George, structural engineer with ACP’s canal capacity division.

    ACP considered eight lock proposals for the Atlantic side and 16 for the Pacific side. Officials chose the design primarily because of its proven efficiency with water conservation, achieved by using a series of water-saving basins, some 70 m wide x 5.50 m deep, to be built for each individual lock. They allow water to be re-used rather than flushed out to sea. Although the sheer size of the new lock chambers will require 65% more water than the existing locks, they will use 7% less water per transit.


    Deep Dredging

    The key to keeping costs of the expansion under control is using the canal’s natural assets, Arias says. “Seventy-five percent of what we handle with the canal is navigation channels and we want to take advantage of what we have,” he says. 

    That means the canal authority must conduct a massive dredging program to widen and deepen existing navigation channels within the waterway itself. The job will require the dredging of more than 23 million cu m of material and require ACP to double its existing fleet of dredges.

    The expansion project will increase the width of the cut and navigational channels to 920 ft in straight sections and 1,200 ft in the turns. The new dimensions are necessary to permit cross-navigation in Gatun Lake. 

    A recent widening at the 8.5-mile Gaillard Cut will be augmented by deepening the passage an additional 1.2 m. The lake level will be raised by about half a meter, to 27.1 m, for additional draft. This work will increase Gatun Lake’s usable water reserves by a daily average of 165 million gallons.

    The freshwater dredging  will total more than 27 million cu m of material, with 23 million cu m out of the lake and the cut and 4 million cu m as part of the Pacific access channel. Each sea entrance navigation channel will be widened to 225 m and deepened to 15.5 m below the lowest tide levels.

    Currently, some sections of the approach channels are only 192.2 m wide. The widening will accommodate post-Panamax vessels and two-way traffic.

    “Although the canal authority is already the largest dredging company in Central America, we don’t have the resources to provide all the dredging that the expansion will require,” says Yolanda Chin, navigational channel team leader for ACP’s engineering and projects department. That requires the agency to contract out the dredging of some 9 million cu m of material for the Pacific entrance and another contract for 14 million cu m at the Atlantic approach. The Pacific job will go to bid early next year and the Atlantic work in 2009.

    The dry excavation for the new locks will be built in the footprint of excavation started in 1939 by the U.S. Army Corps of Engineers to add an additional lane, an effort that was suspended for World War II and never resumed. “The Atlantic channel will follow the former excavation almost exactly,” Quijando says.

    The contractors for lock and water-basin construction will be responsible for the excavations for those portions, but ACP plans to contract out the dry-excavation work on the access channels. On the Atlantic side, that will include the excavation of a 3.2-km-long access channel to connect the new locks with the sea entrance. On the Pacific side, work will be a bit more complicated. A 1.8-km-long channel must be dug to connect the new locks to the Pacific entrance. A 6.2-km channel, 218 m wide, will be excavated to circumvent Miraflores Lake and reach the entrance to the Gaillard Cut. 

    The latter may require the excavation of more than 47 million cu m of dry material plus 4 million cu m of dredging. As a result, ACP will split this section into five contracts and put them out to bid, the first as early as next month. 

    The water level in the Gaillard Cut will be 10.68 m above the water level in Miraflores Lake, requiring construction of a series of dams, cofferdams and plugs. Another 7 million cu m of fill material will be required. “We are digging this in stages because we need to do the excavation as slowly as possible in order to provide stability,” says Maximiliano De Puy, ACP geotechnical branch manager.

    The expansion’s most daunting aspect will be logistics. “The key to the plan is synchronization,” Arias says. “That’s going to be our biggest challenge.”