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June 13, 2013

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What do the capacity constraints on the Panama Canal look like in the medium-long term? Constraints in terms of ship-journeys, not ship-size limits, that is.

If building ever-bigger ships is hitting the limit, and they're anticipating a situation where number of ships through Panama is a major constraint, then that's a business case for a new canal.

Good question. Right now, the Panama Canal is not yet at capacity. The expansion is all about capturing new markets.

Forecasts are a mug's game, but the Canal Authority executives say that they don't expect to need to build another expansion for at least two decades.

Now, this ignores the fact that the Canal Authority quite deliberately allows a chunk of demand increases to feed through into prices. (They are running a business, not providing a public service.) So a Nicaragua Canal could cannibalize some of that business via price competition.

I have found the MOU and legislation for the new Nicaragua Canal, but no business plans or engineering documents. Would you like a link to the 2006 study? It's comprehensive, but in Spanish.

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