Economy & Budget

Wider Panama Canal Would Aid Chinese

Panama is planning to build a deeper, wider Panama Canal to allow Communist Chinese super-containerships carrying cheap 21st century slave-labor under-market goods to have direct access to the Gulf of Mexico and key NAFTA/CAFTA ports such as Miami.

In the shipping industry, Panamax container ships are defined as those that are able to fit through the 1,000-foot long and 110-foot wide canal locks. Typically, Panamax containerships were designed to carry 4,500 TEU (“Twenty Foot Units,” the length measurement of the standard ocean steel container). The first generation of post-Panamax container ships was built to carry up to 9,800 TEU. Today, a new class of super-post-Panamax vessels is under construction, designed to carry up to 12,500 TEU.

The post-Panamax fleet in service at the end of 2000 consisted of some 300 containerships. Experts expect that containerships with 9,000 to 10,000 TEU capacity are starting to dominate main arterial shipping, such as between China and the United States. Containerships with 12,000 TEU plus capacity will be phased into operation between 2009 and 2010. Super-containerships with 12,000 TEU capacity have to be built with twin engines to maintain the 25-knot speed required for a maximum load which will involve at least 21 containers stacked across the weather deck.

The drive to build super-post-Panamax containerships is driven by a desire to achieve economies of scale thereby reducing transportation costs. Goods produced by a 21st century Red Chinese slave trade would not be competitive in the United States if transportation costs from Asia could not also be reduced dramatically. Just as China has sought to capture the world market on cheap under-market labor, China today is pushing to reduce transportation costs to the United States to the cheapest levels possible. For the unbridled capitalists in China, as well as in U.S. mass marketers such as Wal-Mart, Home Depot, and dozens of others, the “best” cost of labor would be zero, or as close to zero as possible.

The vast majority of Chinese containers are designed for “intermodal transport,” with the intent that trucks and trains will deliver the Chinese containers from port cities to their ultimate destination in U.S. cities. Those seeking corporate profit without any regards for morality or the economics of the middle class also view the “best” cost of transportation to be zero, or as close to zero as possible. With some 50% to 60% of all containers from China destined for Midwest and Eastern U.S. cities, reducing transportation costs includes opening ports in the Gulf of Mexico and the Atlantic to avoid having to pay U.S. transportation costs to lug Chinese containers across the U.S. in trucks and trains.

Panama President Martin Torrijos has decided to put to referendum a $6 billion project to build new locks in the Panama Canal sufficiently deep and wide to accommodate post-Panamax ships. President Bush, when visiting Panama during November 2005, supported the plan to expand and modernize the Panama Canal, a plan now estimated to cost $10 billion. Critics such as the Council on Hemispheric Affairs have argued that the cost of expanding the Panama Canal could be as high as $25 billion. As we have noted previously, port operations at both ends of the Panama Canal are already being operated by the Communist Chinese company Hutchinson Ports.

Citing the increasing congestion in west coast ports such as Los Angeles and Long Beach resulting from a dramatic increase in the import of Chinese manufactured goods, shipping industry experts have argued that either the Panama Canal must expand to accommodate the huge volume of Chinese imports or the Canal will simply become obsolete. Otherwise, post-Panamax ships containing Chinese goals will be forced to utilize the Suez Canal to access the U.S. market via the Mediterranean Sea and the Atlantic Ocean.

In 2003, west coast ports handled approximately 80% of the more than $100 billion imported from China, with Atlantic ports accounting for about 19% and Gulf Coast ports picking up the extra 1%. As noted by Michael Bomba of the Center for Transportation Research at the University of Texas at Austin, “the volume of Chinese import trade handled by East Coast ports has more than doubled between 2000 and 2003, with the largest jump occurring in 2002, when shippers began to search for alternative routes.” In the shipping industry, the Longshoreman Union’s west coast strike is widely quoted as a reason importers of goods from China have sought to open up Mexican ports and a variety of east coast ports (including New York, Newark, and the Port of Virginia centered on Norfolk) as an alternative ports of entry.

In 1998, the state of Florida created FTAA Florida Inc., a 501(c)(6) non-profit corporation primarily to promote Miami’s bid to become the headquarters of a planned FTAA secretariat. Governor Jeb Bush sits on the FTAA Florida Inc. board and the Florida legislature funds half of the organization’s annual $1.3 million budget. As recently as the Fourth Summit of the Americas held at Mar de Plata in Argentina in November 2005, the Bush Administration has continued to push for reviving a Free Trade Area of the Americas initiative.

Describing CAFTA as a “stepping stone toward FTAA, the Port of Miami’s website describes the port as the “Cargo Gateway of the Americas.” Even though the website emphasizes that “the conventional wisdom is that the increased volume will mainly be U.S. exports,” the text acknowledges the importance to the Port of Miami of imports from Asia:

The shift in Asian trade to East Coast ports via all-water routes through the Suez and Panama canals, however, resulted in the Far East being the fastest-growing region for the port in 2005, reflecting an increase of 34.96% over fiscal 2004. Trade with Asian countries represented 22.71% of the total tonnage handled at the Port of Miami during 2005, second only to South America, which accounted for 23.42% of total trade.

While Miami is positioning to be a FTAA gateway, virtually no notice is given in the mainstream media, to the extent to which Miami absorbs an ever-increasing volume of cheap-manufactured goods from China. Today, China with nearly 1 million tons annually tops the list of 25 countries ranked in total tonnage at the Port of Miami.

Miami’s intermodal prospects for attracting an increasing volume of Chinese import are enhanced by the plans to develop I-95 as the “CAFTA corridor.” An organization known as the “I-95 Corridor Coalition” has formed as “an alliance of transportation agencies, toll authorities, and related organizations, including law enforcement, from the State of Maine to the State of Florida, with affiliate members in Canada.” We have separately argued that Governor Jeb Bush’s recently announced $491 million deal to purchase rights-of-way from CSX railroad was intended to position CSX to be a NAFTA railroad, not to promote light rail commuter train development in Orlando, as publicly positioned in the media.

Once approved, the building of a new set of locks to accommodate super-post-Panamax standards will take six years or more, about the same time frame envisioned for the delivery of the first vessels in the 12,500 TEU generation of super-post-Panamax containerships. Deepening ports and upgrading equipment to handle super-post-Panamax ships will take at least as long. As noted by the Florida Seaport Transportation and Economic Development Council’s Five-Year Plan to Accomplish the Mission of Florida’s Seaports 2005-2006 noted:

To accommodate these (post-Panamax) ships efficiently, essential portside requirements include deeper water and faster-moving container cranes with longer reaches. In addition, ports must have berths that can accommodate such large ships and their cargoes. These ships also impose significant landside access requirements. If the containers they carry are to be moved by truck, then uncongested roadway connections are needed. If the containers are to be moved by rail, access with unimpeded rail connections are needed. In the later case, this means on-dock or near-dock rail, fewer grade crossings and provisions for double-stacked trains. Efficient intermodal container transfer yards are required to maximize port throughput.

At the Port of Miami that long-term process is well underway, with the goal of being able to accommodate super-post-Panamax ships with ease the date they are ready to start transiting the new and improved Panama Canal.

Even as port improvements in Miami are being billed as preparing for NAFTA, CAFTA, and FTAA, the driving force is the steadily increasing flood of imports anticipated from China. The true winner of NAFTA, CAFTA, and FTAA (should it ever come to be) is China, not Mexico or Honduras, or any other NAFTA, CAFTA, or FTAA trade partner. The day under-market goods made by 21st century slave labor in China are restricted from entry into the U.S. market is the day the enthusiasm for super-post-Panamax containerships in Miami will collapse.

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