Ohio soybean exports have topped more than 2 billion bushels in recent years – equal to half of the state’s production – making logistics and infrastructure a critical part of the industry. While infrastructure in Ohio itself is important, more than 600 million bushels that leave the state also pass through the Panama Canal, which has played a major role in maritime trade by connecting the Atlantic and Pacific Ocean for more than 100 years.
Since opening in August of 1914, the canal, as well as the system of locks and dams have simply been maintained, while the size of cargo vessels has continued to increase in width and depth. In 2006, the people of Panama passed a referendum to add a new entrance channel for larger ships as well as a third set of locks to accommodate a higher percentage of today’s cargo ships and remain relevant in global commerce.
“Clearly ocean transportation and the global economy has been transformed significantly since the original canal was open. There are larger ships crossing our oceans carrying much more volume than years ago and these ships have grown to a point where they exceed the capacity of the Panama Canal,” said Jeff Magyar, Ohio Soybean Council (OSC) board member and Soy Transportation Coalition (STC) board member.
Construction began in 2007 and after a few setbacks, the expansion is slated to open June 26, 2016. In addition to the third set of locks and entrance channels, the project deepened and widened current areas of the canal as well as expanded the artificial lake that is integral to the gravity-fed system. After expansion, the canal can accommodate larger ships and heavier loads. Previously, ships up to 106 feet wide with a 39 ½ foot depth could be accommodated, while the new locks will handle boats up to 160 feet wide with depths up to 50 feet.
“You can put more revenue producing freight in the ship for a given cost of transportation,” said Mike Steenhoek, Executive Director of STC. “We think it will improve the economics of US soybean exports, and we need any help we can get. Any opportunity to remove cost from our transportation system, which the Panama Canal can do, will help preserve the competitiveness of our industry.”
In addition to being a critical part of soy transportation, the canal expansion serves as a tangible example of the need to repair and improve Ohio’s own infrastructure. Several staff and board members from OSC visited the Panama Canal with STC in December 2015 and will use the experience to continue the conversation in Ohio on the importance of maintaining and updating our current inland waterway systems.
“There’s not a lot we can do about what happens in Panama, but there’s a lot that we can do about what happens in the United States. So becoming more familiar and developing greater knowledge of this expansion project should help us to increasingly insist upon investments and enhancements in our infrastructure,” added Steenhoek. “If the links in our logistics chain that lead up to the canal – our roads, inland waterway system, locks and dams – if those aren’t strengthened then the Panama Canal expansion will be a missed opportunity. When one link in your chain gets stronger you need to strengthen those other links as well.”