There was a link on Drudge about a Chinese entrepreneur who is trying to line up financing ( ca. $40 billion) for a Trans-Nicaragua canal. This would follow the original 1899 US plan, traversing Lake Nicaragua.
I am sure the engineering is feasible, but what does a second canal do to the existing Panama Canal’s revenues?
Usually, competition increases business (the alternate route from Asia to the US East Coast is via offload at Los Angeles and rail shipment across the US).
Would a new canal increase total passage business ofr merely cannibalize the existing canal’s business?
Not feasible, now that Panama is already building newer and much larger locks for the existing canal. Nicaragua is an inferior route anyway - just look at how narrow and twisty the San Juan River is.
I don’t see how the economics could work out. This might have made sense a few decades ago, when the Panama Canal was just starting to become too small for the largest ships. But now that Panama has begun widening the canal, this guy will be way too late to the party.
For a second canal to increase total shipping volume would mean that the Panama canal is already operating at max capacity, and that consumer demand in the eastern US/Canada/South America is not being fully met. Is that the case?
It’s also of interest to note that the Panama canal imposes a size limit on ships (see Panamax), and the for some time now ships have been built which are too big to pass through the Panama canal. As has been pointed out, the PC is being widened, but the new locks still will not be able to accomodate the largest ships. I don’t know whether there are enough of these monster ships to support a new canal through Nicaragua - or whether more ships (of any size) would sail if that canal were built. It’s likely that Panama did their homework before deciding how big the new locks should be.
More info about the proposed Nicaragua canal here.
There’s no point to a Nicaragua canal, now that they are embiggening the existing one.
My understanding is that the new proposal does not call for going up the San Juan River, as previous proposals would have, but would construct an entirely new canal across eastern Nicaragua. Although the San Juan River is technically entirely within Nicaragua, construction of new locks would necessitate including Costa Rica in the plans. I doubt Costa Rica would cooperate, and in any case if it did it would require sharing revenues, which would cut into the profitability for Nicaragua. The new canal would be entirely within Nicaraguan territory.
In addition to construction of the new locks, the current Panama Canal expansion has involved dredging and widening the existing Culebra Cut, which is about 13 km long, to accommodate post-Panamax ships. This has been enormously expensive. A canal across eastern Nicaragua would have to be at least 100 km long (plus the short stretch from Lake Nicaragua to the Pacific.) So we are talking about building an entirely new canal involving an excavation more than 7 times longer than the longest cut on the Panama Canal, and making it wide and deep enough to accommodate two-way traffic of post-Panamax ships.
The present expansion of the Panama Canal is costing about $5 billion. This is a huge expenditure for such a small country. Nicaragua is much much poorer than Panama. I expect that the $40 billion estimate for the new canal is low.
I think the new proposal is a complete scam. This isn’t backed by the Chinese government (which could have given it a chance, if China decided to do it as a prestige project instead of a money-making operation). Instead, it’s being pitched by a private telecommunications company based in Hong Kong that has no experience in large engineering projects.
I’m sure that Panama did an extensive analysis of expected shipping trends over the next few decades. It is expected that many more post-Panamax ships will be built to use the expanded Canal. (However, I think that there will still be a few ships that are too large for even the enlarged Canal. But these are too few to justify even larger locks and a wider canal.)
I remember seeing dozens and dozens of ships anchored just outside the canal, waiting their turn to go through. They don’t just show up and go, either; they make appointments well in advance. And if they miss their allotted time, they are out of luck. At least, that’s what they told us at the visitor’s center.
A resource doesn’t actually have to be 100% saturated before it becomes worthwhile to expand, either. If, for instance, it’s busier at some times of day than others, or some times of year, then as soon as it saturates at the peak time, there’s going to be some demand. Alternately, maybe they avoid that, by charging higher tolls at what would otherwise be the peak times, in which case another route could mean cheaper tolls which are affordable to more users.
But just because it can in principle be worthwhile doesn’t necessarily mean that it will be. There’s a lot more difference in utility between zero canals and one than there is between one and two, so at the very least one would expect the second canal to be less profitable/practical than the first one was.
The Nicaraguan government has now granted permission for a Chinese firm to dig a canal there: Nicaragua OKs canal to be built by Chinese company
On the map of the Panama Canal on the Wikipedia page, there are points labeled “Empire Reach”, “Gamboa Reach” “Gulebra Reach”, etc. What’s a reach in this sense?
This was referred to in both the OP and my post. As I said, the plan seems to me to be bogus. The company in question has no experience in large engineering projects, and the proposal has huge unanswered questions. In particular, despite what the article says, it would be unlikely that a Nicaragua Canal would be able to accommodate ships too large to pass through the expanded Panama Canal, simply because of the far greater length of canal to be excavated.
In this case, a “reach” is a straight stretch of canal between two turns.
This is critical. According to the wiki article the plan would be for the Nicaraguan canal to accommodate all ships. That is a very big ask. The largest ships have drafts in excess of 25m and beam up to or more than 65m. Even the widened Panama canal will permit vessels of only a draft of 18.3m and a beam of 55m.
Assuming a Nicaraguan canal could accommodate all ships, it would permit the largest VLCC’s, ULCC’s, Chinamaxes and fully loaded capesize vessels through. The widened Panama canal will only permit smaller/lightly loaded VLCC’s and capesizes through due to draft and beam restrictions, and no Chinamax or ULCC’s through. However, there are not that many ULCC’s, Chinamaxes etc so even assuming a Nicaraguan canal could accept any vessel, it would have cornered only a relatively small market.
It’s not officially backed by the Chinese government but they seem to have some fingers in it. The engineering feasibility studies has been contracted to a state owned construction company that were also involved in the three gorges dam.
It won’t work because you can’t work “Nicaragua” into a catchy palindrome.
IMHO - I think this is the reason for building another canal beyond considering transportation concerns - this will mean jobs, jobs, jobs for poor Nicaragua. And if there is a chance some foriegn sugar-daddy, with $$ falling out if it’s pockets, bankrolling it, why not give it some consideration?
Nicaragua was I ere I saw Augaracin.
An agua, a cigar, Nicaraugua!
Nicaragua civic agua racin’
Of course Nicaragua will want it for economic reasons. But Panama, which as I said is much better off economically than Nicaragua, has taken on billions of dollars in debt in financing the Canal expansion. Because of the risk involved in such a small country taking on so much debt, they held a national referendum before going forward with it.
This is what they told us as well. I have some pictures of ships queuing up like planes waiting for their turn to land. We were also told that for the ship we were on it was $150,000USD to go through the canal. I spoke to a couple who had a yacht going through and he said it was $2500USD for him. This was almost exactly a year ago so I’m sure the prices could have changed.