Panama Canal Work Resumes after Disconcerting Stoppage

With the trade economies of many US port cities and emerging nations in the west eagerly awaiting the timely opening of an expanded Panama Canal, a worrisome standoff between the Panama Canal Authority and the Spanish company hired to build a new lock system has ended.

After nearly two months of gridlock in negotiations and a work-stoppage spanning most of February, critically important work on the Canal expansion resumed after a preliminary deal was struck between Grupo Unidos por el Canal (GUPC) and the Panama Canal Authority late last week. The Authority reportedly agreed to make payments due to GUPC in December after some funds were withheld because of massive cost-overruns on the immense project. It is estimate GUPC’s work is on pace to exceed the original cost of the project by a whopping 50%.  NACM Economist Chris Kuehl, PhD said it is widely held that much of the expense is corruption-related and goes to “the highest levels of the project.”

It was of considerable importance to stakeholders tied to the expansion and those expected to enjoy better access and less expensive shipping options as a result that the effort get back on track. “The project is expected to be a boon for activity from shippers based in the Western United States and some Latin nations,” Kuehl said. “Short of a quick resolution, this could have jeopardized the goal of having the expanded Canal open by 2015.”

- Brian Shappell, CBA, CICP, NACM staff writer

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