PANAMA CITY — The economic downturn has stalled big construction projects across the globe, but here in Panama, smoke-belching steam shovels and dredges work around the clock on what people here call simply la ampliacion, or the expansion.
This month, officials will award the principal contract for the $5.25-billion expansion of the landmark Panama Canal, a project that will probably alter global shipping patterns and cement this Central American nation's place as a center of global logistics.
"This is a financial crisis, and there has been a decline in ship traffic. But we are very much on time and on target," said Panama Canal Authority head Alberto Aleman, addressing rumors that the global recession could cause the project to miss its 2014 scheduled completion date.
The authority is on the verge of choosing among three international consortia, including one led by San Francisco-based Bechtel Corp., to build two sets of locks to accommodate massive container cargo ships. Dubbed post-Panamax, the super-sized vessels are capable of carrying three times more cargo than ships now transiting the canal.
The construction of the two locks -- one at the waterway's Caribbean entrance, the other on the Pacific -- will cost $3 billion or more, take five years to complete and require an army of 5,000 construction workers.
The winning consortium is expected to use the contract's marquee value as one of the world's highest profile construction endeavors as a calling card to bid on other major infrastructure projects around the globe.
The canal authority maintains that the expanded canal will make Panama an even more important transit hub by attracting a bigger share of Asian container freight destined for the eastern United States. Currently, 70% of that cargo is offloaded at Los Angeles, Long Beach and other North American ports and moved by rail or truck across the country. Nearly half a million jobs in Southern California depend on international trade.
"There will be a migration of freight to the canal, the implication being that Los Angeles and Long Beach ports will take the hit," said Mark Page of Drewry Shipping Consultants Ltd. in London. "The U.S. rail lines will also suffer."
Despite the recession gripping the United States and other destination countries, the 9% drop in global container traffic forecast for 2009 and a financing scheme that assumes rising traffic and tolls, Panama's Aleman said the expansion project was moving forward and would not be deterred.
