Panama Canal Expansion

Last Thursday I attended a joint meeting of the Traffic Club of Chicago and CSCMP Chicago Roundtable on the subject of the Panama Canal expansion which will allow bigger ships to cross that country. It was a story of people fearlessly taking big gambles, though ones which have a high chance of paying off.  For the about 80 people who attended this event, it really was a challenge to them also. How do you to take advantage of this major change in infrastructure to the benefit of their organizations?

Panama has chosen, with approval of their people in referendum, to expand the canal so ships roughly double the current size can traverse it. It is mammoth project, multi-year, extremely complex, and difficult to manage. The expansion project is likely to be completed in late 2015 or early 2016. When the US turned over the Canal to Panama, they made a choice, an indeed a gamble, that they would not to just sit on the asset, but update so it could bring in more of the world’s ships, which have continued to increase in size. It would keep the Canal relevant to its business environment. Many so called leaders would have chosen to just milk the asset they got and watch it diminish over time.

But Panama did not stop there. Speaker Kevin Keller of HDR Engineering described the land planning initiatives by Panama to take advantage of the new ships and their new business. Their goal is to be the central hub market for of all of Latin America. It is a gamble, taking advantage of its location and its business initiatives, and again is likely to be successful.

Is it possible in America in 2014 to be bold and daring in America, be willing to meet the challenges of the future? We were fortunate to hear from two people at the meeting who are taking that gamble, one in the public sector, one in the private sector. They are Bill Johnson, Port Director Port Miami and James Hertwig, President and CEO of the Florida East Coast Railway. These two people took a lead role in this major project described below.

The Port of Miami has raised nearly $2 billion dollars in capital funds funded in part by the Port, the State of Florida, Dade County, and among its private partners the Florida East Coast Railway.  There was extremely limited federal funding for this, so alternate funding sources were needed.  Some of this money was used to dredge the harbor to 50 feet to accommodate the ships which will soon be able to transverse the Canal.   Miami is the closest US port to Panama and is also a Latin America business hub. Of course vessels this size are also coming from Europe and  Asia and Miami will be one of the few East Coast ports which will be able to handle these ships. A tunnel opening soon will directly connect the port with the interstate highway system taking this traffic off local downtown roads.  The Florida East Coast Railway has reconnected its rail directly with the port, to significantly improve intermodal access and provide it with new business.

Businesses will find with new Canal improved connections and cost to South America and as well as alternative routes to the Far East including China. Will they take advantage of this?

In all these “gambling” stories it took exceptional leadership to get people to work together and effectively manage these projects. There are lessons here for all of us to learn.

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