The consequences will be wide-ranging if the canal does not deliver.
June 23, 2016 6:25 AM   Subscribe

NYTimes on the newly-rebuilt Panama Canal: "In simple terms, to be successful, the new canal needs enough water, durable concrete and locks big enough to safely accommodate the larger ships. On all three counts, it has failed to meet expectations."

Concerns pile up:
The low winning bid, a billion dollars less than the nearest competitor’s, made “a technically complex mega-project” precarious from the outset ... Last summer, water began gushing through concrete that was supposed to last 100 years but could not make it to the first ship ... Tugboat captains say they cannot safely escort the larger ships because the locks are too small with too little margin for error ... [and] the tugboats themselves are a problem..

Rumors have been out for years. Want to read as concern unfolded? Search Wikileaks for "Panama Canal."
posted by entropone (39 comments total) 17 users marked this as a favorite
 
The low winning bid, a billion dollars less than the nearest competitor’s, made “a technically complex mega-project” precarious from the outset

Oh dear. A lot of procurement processes for large infrastructure processes will discard either the lowest bid or any bid that is more than X% below the median bid or some other process to prevent precisely this kind of thing happening.
posted by atrazine at 6:36 AM on June 23, 2016 [44 favorites]


If there will ever be a death knell to capitalism, it will be the cursed legacy of the term "low winning bid".
posted by AlonzoMosleyFBI at 6:41 AM on June 23, 2016 [27 favorites]


I told the short-sighted fools they would regret not going with my proposal of giving Bugs Bunny a hand saw.
posted by Etrigan at 6:42 AM on June 23, 2016 [6 favorites]


A man, a plan, a low bid, a work stoppage, a cracked lock, an angry tugboat pilots union, &c.
posted by Rock Steady at 6:59 AM on June 23, 2016 [48 favorites]


And somewhere, someone doesn't care about the canal's ability to function at all, because he (and I guarantee you it is a he) has already become very, very rich.
posted by Faint of Butt at 7:16 AM on June 23, 2016 [35 favorites]


They had to sail the new tugs across the Atlantic backwards because they were too unstable under forward thrust. And these tugs need to be laser precise, as there is literally no room for error with the Panamax-class ships in the new locks. The same tugboats that needed to be sailed in reverse across the atlantic - literally stern first through the open ocean - because they were too unstable to steer otherwise. This is... not good.
posted by Slap*Happy at 7:20 AM on June 23, 2016 [12 favorites]


Even if you don't read the whole article, the video of one of the locks leaking is something to behold. Unfortunately, this could all end really bad.
posted by kersplunk at 7:30 AM on June 23, 2016 [4 favorites]


They had to sail the new tugs across the Atlantic backwards

YIKES. Slap*Happy, I'd like to know more--do you have some suggested reading?
posted by MonkeyToes at 7:32 AM on June 23, 2016 [1 favorite]


Well, I hope they can still use the old canal because this sounds like an epic disaster. How many Port Authorities on the Gulf coast and the east coast have been lobbying for expansion of their container handling capacity to prepare for the new canal? Panama may not be the only waste of money. I wonder if this will breath life into the moribund Chinese project to build a new canal in Nicaragua?
posted by Bee'sWing at 7:44 AM on June 23, 2016 [3 favorites]


Sacyr’s consortium included a Panamanian company owned by the family of the canal administrator at the time, Alberto Alemán Zubieta.

The fix was in. The fix was always in.
posted by Capt. Renault at 7:44 AM on June 23, 2016 [2 favorites]


In anticipation of the new Monster-Mega-Post-Panamax ships coming online to use this new canal, there's been an enormous spike this year in the number of ships being scrapped. Many are still fairly "young," too -- like less than twenty years old. This is fairly bonkers.

http://gcaptain.com/ship-scrapping-accelerates-ahead-of-panama-canal-expansion-opening/
posted by wenestvedt at 8:05 AM on June 23, 2016 [4 favorites]


Kind of shocked and embarrassed by this read. A billion cheaper, and no one stopped it on the lock measurements alone? Let alone the concrete costs?

On a side note, it's articles like this that really have me thinking about subscribing to an online news site for the first time in years.
posted by Theta States at 8:09 AM on June 23, 2016 [5 favorites]


It's a great article, but I'd like to read the rebuttal. I feel like some of the errors described are so colossally dumb that there's another side to the story. Take the lock size. Any fool could look at the plans and realize the 1400' locks aren't wide enough to hold a 1200' long ship and two 100' long tugboats. The article says a feasibility study said you'd need 1528' locks. So how did the shorter locks get through? Also the unstable tugboats; they also have the ability to move sideways, backwards, really in any direction. Maybe sailing straight forward is not so important in their application? I don't know, but it makes me wonder if there's some room for doubt.

OTOH, this same kind of incompetence happens world-round. Here in San Francisco we're still trying to figure out what to do about our brand new bridge. It's beautiful. It cost $6-7B to build. And the bolts that hold it together in an earthquake are made from the wrong kind of steel, steel that corrodes in a marine environment. For a bridge that's built over a salt bay, in an earthquake area. There's other significant structural problems too. The bridge works, but no one knows if it will last as long as it is supposed to or whether it will survive the earthquakes it was designed to survive. Oops.

(Also related; the Nicaragua Canal a Chinese investor was touting as an alternative to Panama seems to have stalled. No one really believed it was likely to happen when it was announced, for that matter.)
posted by Nelson at 8:34 AM on June 23, 2016 [7 favorites]


They had to sail the new tugs across the Atlantic backwards

This is not necessarily indicative of a problem with the tugs. These days, tugs have the precision you describe using things like 360 degree thrusters for fine control, made for working in ports and relatively calm conditions, not tackling the open Atlantic. It might sound funny to sail it backwards, but that doesn't say much about how well it'll work in the canals.
posted by fatbird at 8:38 AM on June 23, 2016 [8 favorites]


You really have to look at the diagram from the article, showing how much wiggle room they have (the dark lozenges at each end are the tugboats). It looks like someone trying to take a canoe down a water slide.
posted by Halloween Jack at 8:52 AM on June 23, 2016 [1 favorite]


And all this week Marketplace has been reporting that the opening of the new canal comes during a worldwide shipping "doldrums" that could mean we've hit "peak cargo."
posted by Flexagon at 9:01 AM on June 23, 2016 [4 favorites]


Thanks for this post - great read. I was interested in the high death rate it cited for construction of the original canal, and found this article:

Perhaps the worst job -- one to which almost all West Indians were assigned at some point -- was dynamiting. The greatest danger lay with the material's instability; it could blow up at any moment or malfunction upon detonation, remaining unignited until exploding later by accident. Laborers heading out for dynamiting duty frequently carried all their belongings with them, understanding their relatively low odds of a safe return to the barracks. Workers load holes in the Culebra Cut with dynamiteThe worst accident to occur during the canal's construction, in fact, was caused by the premature explosion of dynamite in the Bas Obispo cut on December 12, 1908, causing the death of 23 workers and injuring 40 others.

The most taxing physical labor was in the excavation of the Culebra Cut. Each day workers moved miles of construction track and filled the 160 spoil trains that ran in and out of the Cut. Landslides occurred in the Cut with little to no warning, often burying workers and equipment within seconds and wiping out months of progress.

In 1909, construction of the locks brought a new host of potentially lethal dangers. Eight stories up, riveters worked without safety harnesses on precarious scaffolding, which could become unhooked with any sudden movement. Falling materials would hit other sets of scaffolding on the way down, causing scores of deaths and injuries. A job on the railroad was no easier. Due to the number of train cars running from multiple directions around the clock, working by the spoil dumps on the rail track required constant vigilance so as to avoid getting run over or hit by a swinging boom. In 1914, 44 employees were killed by railroad accidents.

posted by Dashy at 9:03 AM on June 23, 2016 [5 favorites]


Slap*Happy: They had to sail the new tugs across the Atlantic backwards because they were too unstable under forward thrust.

MonkeyToes: YIKES. Slap*Happy, I'd like to know more--do you have some suggested reading?

Here's a forum/ email chain post on tugboat control.


wenestvedt: In anticipation of the new Monster-Mega-Post-Panamax ships coming online to use this new canal, there's been an enormous spike this year in the number of ships being scrapped. Many are still fairly "young," too -- like less than twenty years old. This is fairly bonkers.
According to the data, of the 19 ships sold for scrap this month, five were panamax units of 4,200-4,800 teu and four were over-panamax vessels of 5,300-6,500 teu.

teu = "twenty-foot equivalent unit,"
an inexact unit of cargo capacity often used to describe the capacity of container ships and container terminals. It is based on the volume of a 20-foot-long (6.1 m) intermodal container, a standard-sized metal box which can be easily transferred between different modes of transportation, such as ships, trains and trucks.

When Panamanian residents supported the expansion of the Panama Canal in 2006, Maersk Line was already preparing to take delivery of Emma Maersk, the first of their new E-Class Post New Panamax container ships. Here's a comparison of containership sizes. And ships are getting bigger.

Meanwhile, all the ports on the East Coast and Gulf of Mexico are dumping money into improvements to court Panamax ships, saying why they are the best choice for carriers.

Also to consider: The IMO's Maritime Safety Committee (MSC) at its 93rd session (May 2014) approved changes to the Safety of Life at Sea (SOLAS) convention regarding a mandatory container weight verification requirement on shippers. This comes into effect July 1, 2016, and there are lots of questions for shippers.

Demystifying the New SOLAS Regulations - The FAQ that all shippers need to know (from a company that offers services to help shippers). See also: Frequently Asked Questions about Container Weight from the World Shipping Council.
posted by filthy light thief at 9:04 AM on June 23, 2016 [15 favorites]


"It's a very sobering feeling to be up in space and realize that one's safety factor was determined by the lowest bidder on a government contract." -- Alan Shepard
posted by jim in austin at 9:09 AM on June 23, 2016 [29 favorites]


Those are good links, filthy light thief. My dad & brother are international freight guys, and this week's news is what I intend to use as small talk the next time we chat. :7)

Also, I am interested in how this whole Canal issue intersects with Amazon's moves into in-house transport (buying an ocean freight line, running their own vans, etc.). Will it help them or hurt them? Will their future pivot off of hired shipping capacity and onto in-house capacity hurt the ocean freight companies?
posted by wenestvedt at 9:10 AM on June 23, 2016


I heard on a radio talkshow that offloading a ship on the US west coast and shipping by rail or truck gets cargo to the east coast a week faster than shipping through the Panama Canal.
posted by Bee'sWing at 9:14 AM on June 23, 2016


Let's see now, one of those ultra massive ships floats through the second or third lock, the lock starts to fill but the ship is not rising, in fact it's sinking a bit, and the cracks start gushing. Soon the ship is sitting on the bottom. Ok, empty the locks and find a temporary way to plug up those leaks. A few weeks later they renew filling that lock. The water is rising but slower than expected and the ship is not rising, sitting on the ground cracked the hull.

Do they not think about worst case scenarios?
posted by sammyo at 9:15 AM on June 23, 2016


I heard on a radio talkshow that offloading a ship on the US west coast and shipping by rail or truck gets cargo to the east coast a week faster than shipping through the Panama Canal.

How much does it cost by comparison, though?
posted by asterix at 9:19 AM on June 23, 2016 [1 favorite]


How much does it cost by comparison, though?

Good point, speed would only matter for some types of cargo.

I wonder if the canal will affect the power of the unions on the west coast. It might be harder for them to go on strike.
posted by Bee'sWing at 9:21 AM on June 23, 2016 [2 favorites]


wenestvedt: I am interested in how this whole Canal issue intersects with Amazon's moves into in-house transport (buying an ocean freight line, running their own vans, etc.). Will it help them or hurt them?

From the past Los Angeles/Long Beach port closures due to labor strikes and ongoing issues with port congestion, I've heard that large companies realized it's in their best interest to diversify their routes and routing options.

To this, Mexico is investing heavily in its own infrastructure, from the port of Mazatlan to the road and rail networks from the Pacific coast to points east and north, into the US. Mexico is selling itself as a cheaper and more reliable (i.e. no unions) than LA/LB, and with improvements to inland transportation, they could be faster than moving west from LA/LB.

And then there's the pitch for reshoring or nearshoring instead of offshoring, due to hidden costs and uncertainties, which would continue to change flows of goods.
posted by filthy light thief at 9:40 AM on June 23, 2016 [4 favorites]


"The low winning bid, a billion dollars less than the nearest competitor’s"

Taken alone the billion dollar figure isn't necessarily scary; say if the bid was for 15 billion. But the bid was for 3.7 billion. They came in 20% less than the next highest bidder. That is the worrying number.

Bee'sWing: "Well, I hope they can still use the old canal because this sounds like an epic disaster."

It's still there; the plan seems to be to use both sets of locks water permitting.

I'm really surprised the decision was made to forgo land based tugging. That seems to be one of the serious problems. I wonder if they will end up recovering from the problems with Neo-Max container ships being pushed by wind by enclosing the entire lock structure in a building.
posted by Mitheral at 9:55 AM on June 23, 2016 [4 favorites]


I wonder if the canal will affect the power of the unions on the west coast. It might be harder for them to go on strike.

Wait times were a bigger issue, at least last year with the congestion at the port, to the point that some people paid more to ship goods to the east coast and truck them back west. But the largest ships now calling at the Port of Long Beach won't be able to fit through the newly widened Panama Canal, so that's only an option if you don't go through the Panama Canal.

In terms of west coast competition, the ports of Seattle and Tacoma also have terminals large enough to accommodate such ships. The Canadian Port of Prince Rupert in British Columbia expects to be able to handle such vessels by 2017, followed by the Port of Vancouver early next decade.
posted by filthy light thief at 9:56 AM on June 23, 2016 [2 favorites]


Actually, they sailed the tugboats backwards to roll back the odometers.
posted by dr_dank at 10:07 AM on June 23, 2016 [22 favorites]


"One hundred and twenty six and halfway between three and four tenths. Why? "
posted by j_curiouser at 10:10 AM on June 23, 2016 [4 favorites]




Amazon's moves into in-house transport ... running their own vans

Not to derail, but this part is kind of a shit-show. Amazon Prime users especially are screaming, because they're supposed to get two-day delivery, and some of them (myself included) had deliveries changed at 7:59 PM from "Out for delivery" to "Delayed, coming in the next three days" or just never showing up. There's at least one page of issues on the Amazon help center that's 60 pages of people complaining and Amazon people going "are you sure your delivery information is up to date", and reports of free months of Amazon Prime given as apologies.

Amazon logistics seems to be having some serious issues and will need to grow up very fast.
posted by mephron at 11:47 AM on June 23, 2016 [2 favorites]


guys, guys, guys - the Panama Canal is not in the Amazon! It's like, a thousand miles north, in Pa-na-ma!

Man, you guys shoulda stayed in school.
posted by From Bklyn at 12:29 PM on June 23, 2016 [11 favorites]


And somewhere, someone doesn't care about the canal's ability to function at all, because he (and I guarantee you it is a he) has already become very, very rich.

If I were him I'd park my wealth in a shady bank in Panama City just for the sheer delicious irony of it.
posted by 3urypteris at 12:30 PM on June 23, 2016 [4 favorites]


How the hell was a project of that size not controlled a lot more tightly??
posted by Burn_IT at 1:12 PM on June 23, 2016


Burns me up because this is exactly the sort of thing nationalists in the US used to argue against turning control of the canal zone over to Panama in the 90s. Not that the US has done incredibly well managing huge public infrastructure projects. But annoying for this to be a thing people can use to argue in favor of American empire.
posted by Wretch729 at 1:28 PM on June 23, 2016


Re costs and time, Panama vs Rail: From a 2014 FoxNews article:

Shipping goods from Shanghai to New York via Panama takes 25 to 26 days .... only about 20 percent of China’s exports to the U.S. head through the Panama Canal. Typically, Chinese goods are shipped to West Coast ports and then moved overland by truck or train to the East Coast, a method that generally takes between 19 and 22 days....

there are other reasons businesses choose the ship-to-rail routes. One is that it's often cheaper. Recently a number of major Pacific ports in the U.S ... have paired with western railroads likely Burlington Northern Santa Fe and Union Pacific to form the U.S. West Coast Collaboration (USWCC)....

the overland route is also more environmentally-friendly .... On average, shipping from Asia to the West Coast on a Post-Panamax ship and transferring the cargo to an overland method to get it to the East Coast produces two-thirds the CO2 emissions than shipping the same amount of goods through the Panama Canal.

posted by Twang at 1:45 PM on June 23, 2016 [3 favorites]


via reddit I was watching the official video describing the new passage, and my reaction was pretty incredulous about replacing the train thingies (mules?) with a rotating set of up to 3 tugs for each ship.

Great if you're a Panamanian tug crewman, but not very efficient!
posted by Heywood Mogroot III at 7:08 PM on June 23, 2016


How much does it cost by comparison, though?

Good point, speed would only matter for some types of cargo.


I used to do incoming trade missions for a port with delusions of grandeur. The sales pitch was - our port means goods get to market 3 days faster than inland ports.

An influential European logistics VP, after a couple of bottles of wine that turned into scotch, said to me something to the effect of: "Your bosses realize nobody here gives a shit about three days, right? Cost is the only driver here, and the sea is the lowest cost. You won't give us comparable costs because you know that.

We are here because the trip is free, the food is good, and we can see the ports we are actually going to do big business with on the same trip."

I realized that, though my bosses did know that, they had cushy jobs that allowed them to travel and sell a narrative back to local folks that they bought up because they want the jobs. That was more or less the end of my economic development career. It's sick to watch people sell a story (and to be complicit) they know is false.

If you are shipping fresh food or seafood, time matters a great deal. The high value cargo - shellfish - mostly goes by plane. Other stuff will go by sea, but it's engineered and stored such that 3 days is inconsequential. For regular cargo - inventory management is a science that has taken the "need goods faster" completely out of the equation in 99% of scenarios.

Shipping is a cost game - there are a few other factors (port usage ratio allows one to better estimate how fast cargo will get off their ships; local logistics/multi-modal infrastructure is key for a number of products) but the port rate to dock/unload/load and the mix of costs for getting cargo from the port its leaving to to market is all that really matters.
posted by scrittore at 6:45 AM on June 24, 2016 [7 favorites]


the overland route is also more environmentally-friendly .... On average, shipping from Asia to the West Coast on a Post-Panamax ship and transferring the cargo to an overland method to get it to the East Coast produces two-thirds the CO2 emissions than shipping the same amount of goods through the Panama Canal.

Shipping is horribly dirty because of the heavy fuel oil used. Though there have been some experiments in revisiting the idea of wind-powered ships using modern technologies and materials. One promising avenue is Flettner rotor ships, which have tall cylindrical sails. Perhaps eventually some kind of optimised wind-powered ship design will emerge that is capable of carrying some or all types of freight (especially if emissions pricing is brought in to provide incentive).
posted by acb at 2:08 PM on June 24, 2016 [2 favorites]


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