As the Panama Canal prepares to celebrate its 100th anniversary, insurers are warning of the increased risks that will arise from its plan to double the cargo-carrying capacity of ships transiting one of the world’s most important waterways.
In a new report entitled Panama Canal 100: Shipping Safety and Future Risks leading marine insurer, Allianz Global Corporate & Specialty (AGCS) identifies that the value of insured goods transiting the canal zone may increase by over US $1 billion per day following completion of the “Third Set of Locks Project”, which will see two new sets of locks constructed, creating a third transit lane for larger ships.
Every year, over 12,000 oceangoing ships navigate the canal, a figure which could increase significantly following the anticipated opening of the new locks in 2015. It is forecast the expansion will enable between 12 and 14 larger vessels per day (approximately 4,750 additional ships per year) to pass through the canal. Significantly, many of these ships are expected to be new-Panamax class container vessels of 12,600 teu, which are far larger than the existing largest vessels able to access the canal (4,400 teu).
Expanding capacity brings new risks
With approximately 3 percent ($270 billion) of world maritime commerce ($9 trillion) already transiting the Panama Canal every year, the safe passage of vessels is critical. However, AGCS experts warn the increased traffic and larger vessels may challenge the Panama Canal’s improved safety record over the past decade with the risks exacerbated through the initial period of the canal opening.
Captain Rahul Khanna, AGCS’s Global Head of Marine Risk Consulting, explains the potential risk management impact of this expansion: “Larger ships automatically pose greater risks. The sheer amount of cargo carried means a serious casualty has the potential to lead to a sizeable loss and greater disruption. For example, a fully-loaded new-Panamax 12,600 teu container ship is as long as four football fields with a beam of up to 49 meters and could have an insured cargo value alone of $250 million.”
If operating at its full projected capacity following expansion, AGCS estimates that this could result in an additional $1.25 billion in insured goods passing through the canal in one day, with larger ships playing a critical role in increasing throughput capacity.
However, such vessels can pose serious salvage challenges in a congested shipping environment, even potentially leading to blockages. In the event of an accident there may be an insufficient number of qualified experienced salvage experts available to handle the new- Panamax ships.