The New Panama Canal: A Risky Bet | Hacker News Reader

The New Panama Canal: A Risky Bet

nytimes.com

66 pointsdctoedt54 comments

Wow, what an incredible way to view content!

From the awesome drone videos detailing exactly what I'm looking at, to the great writing and the animations throughout; this was awesome!

I was going to say exactly this--never realized how breathtakingly cool/large/long/complex that canal was until now.

Was it enough to get you to buy a subscription to the NYT? Basic subscription is less than $4/week.

The ads seemed to cover it fine

News publications cost money?

My grandfather worked as a structural engineer on the canel. I have old papers with calculations of stress on the concrete, done by hand. http://www.archive.org/details/panama-canal-lock-design-pape...

Anyway, since container ships are driving this expansion, I wonder if this is a case of scaling the old thing up unncessarily when new technology allows a different solution.

Perhaps an overland transport for the containers across the ishthmus? Seems it would depend on the time needed to unload+load a container ship. Transit time through the canal is 8-10 hours, so if a ship can be turned around in that amount of time, it could be economical to not send it through the canal. I've found some indications that a unload+load can be done in 10-12 hours.

The new canel is estimated to 6 ships a day carrying up to 14,000 containers apiece. You know the old joke about the bandwidth of a stationwagon full of hard drives? The new canal has a "bandwidth" of more a continuous container per second. Hard to do that with a railway.

Even after the completion of the Panama Canal expansion, many larger ships still won't bother to use it because they can't fit under the Bayonne Bridge to reach the major ports near New York. The bridge was supposed to be raised but work has been delayed due to engineering errors and bad weather.

http://www.wsj.com/articles/as-expanded-panama-canal-prepare...

Why would that make a difference?

> Internal arguments soon gave way to bigger problems. There would be work stoppages, porous concrete, a risk of earthquakes and at least $3.4 billion in disputed costs: more than the budget for the entire project.

For a megaproject, 2x overrun is downright wonderful.

They must purposefully underbid knowing that they can run up the cost with impunity?

Of course. Which is why "lowest bidder" rules are often nonsense (they are usually sold as anti-corruption, but it would be much better to simply have strict clauses against overruns instead).

Cost plus with absolute transparency would be best.

the problem with that is then overruns bankrupt the venture/company bidding, and it doesn't get completed, and you have to spend even more having somebody else take over.

Oh, crap, they botched the concrete in the new locks. That's going to be hard to fix.

The concrete in the original locks is a century old and showing no problems. That's a major achievement in general, and in an application where concrete is exposed to salt water, very impressive. Check out almost any seawall or pier that's more than a few decades old.

Sad. When this project was first announced, the Panama Canal Authority insisted they were going to get the concrete right. They didn't.

Not to downplay the importance of good concrete, but I thought the Panama Canal structures almost all handled freshwater (since they rely on the flow of water from Gatun Lake).

Yes except in the lowest locks

All the locks get some salt water. As each lock opens to the neighboring lock, water from the two locks mixes. Enough salt water flows uphill that Gatun Lake is becoming slightly salty.[1]

[1] http://www.dtic.mil/cgi-bin/GetTRDoc?Location=U2&doc=GetTRDo...

"Time was another issue. The contract called for the work to be completed in 1,883 days so that the opening would coincide with the 100th anniversary of the canal’s 1914 inauguration."

Boy do I love arbitrary deadlines!

Great write up. I was really surprised about a few things;

- They're aiming for concrete to last 100 years on the new lock. Doesn't this seem short sighted? The canal is already 100+ years old and its hardly like we'll be air freight and 3D printers in just another 100 years.

- The lock size for these panamax ships being so tight. Current management issues aside, wouldn't it be prudent to plan for ship sizes to grow to new 'panamax' levels? Its reasonable to assume shipping companies will want larger ships 50 years from now, if not sooner.

- $800,000 for a ship to cross. Wow

800k = $61/container for a neo panamax. Which is not bad at all when considering how much stuff can fit in a single container

There already exist ships way larger than new panamax. So I don't think there was ever a question about planning for larger ships... Look at the specs of some of the suezmax ships or the vlcc/ulcc ships out there.

800k seems like a lot, but they know that shipping companies will do the math on the fuel+salaries+operating cost consumed by going the "long way", and how many round trips a ship can make per year between points A and B using the canal vs. going the long way around.

It cost Richard Halliburton only 36 cents to swim it.

For 2016, the canal seems to have 7 different pricing schemes and some sort of loyalty discount for container ships.

I'm surprised they don't price by the maximum width times the maximum length, plus per-hour charges for any required tug boats. Width times length relates well to the portion of the lock capacity being used by a ship.

Because they are wanting to maximize income. Thus, they charge more profitable ships more money. When the canal reaches full traffic capacity, then they charge more for reservations, which prices the cheapers ships out, and leaves the canal full of the profitable ones.

>Doesn't this seem short sighted?

there's a balance between planning for the future and unreasonable expectations or overplanning. expecting concrete to last 100 years seems like a reasonable expectation to me. We might not be post-container-ship in 100 years, but there's a good chance there's some other reason the current locks are obsolete - anything from the locks being too small, to Gatun lake being dried up, to automated ports making it easier to unload, transport overland, and re-load onto a waiting ship.

This reply supports the second point of the locks being so tied to the current panamax size. Obviously there is balance of current cost to future benefit but this upgrade seems entirely tied to what is relevant today, when we know 20 years from now will be different. If you look at ship sizes they tend to jump a fair bit every ~20 years.

There must be another factors like the lake depth encouraging them to restrict to this size. It just seems too short sighted (from my uneducated view), especially when as others have pointed out there are already much larger ships.

A few recent discussions related to the upcoming expansion opening:

https://news.ycombinator.com/item?id=11913026

https://news.ycombinator.com/item?id=11937133

https://news.ycombinator.com/item?id=11810754

That's pretty scary about the size issue... that the largest container ships + 2 tugs = the max size of the lock with no wiggle room. If a container ship drifts the tug has no where to go to escape being squashed.

Wow I had no idea this canal was such a disaster in the making, and the article didn't even mention the canal the Chinese are building in Nicaragua which would significantly shorten shipping routes compared to Panama.

"Are building" is a bit premature. Quoting https://en.wikipedia.org/wiki/Nicaragua_Canal :

> "Major works" such as dredging will take place after a Pacific Ocean wharf is finished and the wharf's construction will not start until after August 2016. ...

> Media reports have suggested the project would now be delayed or even possibly canceled because Wang Jing's personal wealth declined greatly as a result of the 2015–16 Chinese stock market crash.

And how's that one coming along

Instead of Hyperloop, Musk should have invented underwater canal system.

I mean, ain't the ocean floor the inviting highway? with minor to none obstacles? Design multiple tubes inside each other (to compensate high pressure) and suspend it at 100m deep water level with computer-regulated height and start rolling cargo by using pressure pushing it from one end to the other.

(I'm aware its bit more complicated than that, but you get the idea!)

I like the idea, but it seems completely impractical. How is this possibly cheaper than boats?

Also, building a floating tube in the water seems a lot harder than an elevated tube on land, because you can't possibly reach the ocean floor for supports.

Its cheaper because the differences in height/pressure between both ends would push the cargo on its own. It would be similar to drooping an object from height - when gravity works you don't need extra energy to push the object.

You wont reach the floor. It would be suspended on simple "air bags" controlled by computer - again using the simple physics of gas in fluid being pushed upwards.

Why does it look like the tankers have to wait around a long time before going through?

Part of it might be that tankers have been parked near the canal because of low oil prices. Some of them even skipped the canals (Panama and Suez) altogether to lengthen their route hoping for oil to go up.

> Some of them even skipped the canals (Panama and Suez) altogether to lengthen their route hoping for oil to go up.

No. It was because crude oil is so cheap, its cheaper to burn the oil than pay the Suez transit fees.

True, but tankers were also being parked all over.

Yeah, but not at transit points, at offloading points (notably Houston/Galveston).

Really, I thought I saw an article on it because of some weird scheduling, might be way off, they did blend together at the time.

http://gcaptain.com/oil-tanker-backlog-in-u-s-gulf-seen-as-n...

Wow, the down voters are going a bit wild - why is toomuchtodo being down voted?

Wrong. When traders are using vessels to capture the congango spread, they park the vessels near a demand center, not in the middle of the route. Furthermore, unless you own the vessel or have it on a time charter, somebody else has claim to that vessel after you, and if you take too long the demurrage fines quickly outgrow the price spreads you're hoping to profit on.

Entry time slots into the canal are booked months in advance. Arrive late, and you lose your entry time. Tolls are also paid in advance.... all cash up front.

Okey Dokey but why is it all tankers that are waiting?

Because they got there on time or ahead of schedule. They book their entry time hours/days from when they expect to arrive, to allow for unexpected delays.

So what is it about tankers that makes them arrive at the wrong time while cargo vessels don't have to wait?

That's a really good question.

Selling timeslots to more urgent traffic? Transit arbitrage, allowing some coin whilst waiting out low oil prices?

I'm speculating, but it seems a possibility.

Good speculation. Oil tankers are carrying a fungible commodity, whereas container ships often have specific goods that need to be delivered at specific times. Seems like if you can deliver a few days late to a depot that has plenty of buffer storage, you're good to trade/sell your canal appointment with someone who needs it now and save some cash.

Every energy commodity purchase contract and charter party has strict time allowances, after which the charterer can get hit with faaat demurrage fines, so good speculation but not correct

How does that explain the current fleet of idled offshore storage tankers then?

They were chartered on time charters and they're sitting outside the demand centers appropriate to whichever contract they sold forward to lock in the gains.

Any source on that?

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