Despite ongoing expansionary construction work, Panama Canal returns reached a record US$1.03 billion for the 2014 fiscal year, according to the Panama Canal Authority.
Considering the positive financial news and the expansion progress, it came as a surprise to some when, days after the news about the financial returns, the canal’s chief executive, Jorge Quijano, told the Financial Times that the canal is unlikely to return to 2007 precrisis shipping levels.
During the Financial Times interview, Quijano said that, while U.S. grain and energy exports would increase traffic, global shipping numbers from the booming 1990s and 2000s were unlikely to return. “That trend has peaked,” he said.
He cited U.S. companies bringing production closer to home and slowing global trade as a result, and a more frugal U.S. consumer as reasons for the pessimistic outlook.
In the 2007 fiscal year, about 12.6 million shipping containers passed through the canal; in the 2014 fiscal year, that number was 11.6 million.
Quijano isn’t the only executive to voice concern about the current state of the global shipping industry. In an interview with Financial Times in January, Nils Anderson, chief executive of the world’s biggest shipping line, AP Møller-Maersk, stated that global trade was unlikely to grow as fast as it did before the 2007 financial crisis, saying, “The good old days will most likely not come back.”
The canal recently received the last gates to the third set of locks, expected to open April 2016. The canal expansion, which began after a referendum approving the project in 2006, will allow for larger vessels capable of carrying 2.5 times the number of containers that current ships are capable of holding. The project has been mired in controversy, with cost overruns and work stoppages pushing the completion date back. The canal recently received the last gates to the third set of locks, expected to open April 2016.
The canal currently handles about 5% of world oceanic shipping. The expansion project is expected to increase the Panama Canal’s capacity by 20%.
Since Panama took control of the canal from the United States on Dec. 31, 1999, canal returns have accounted for more than US$9.62 billion of national revenue.