Impact of the Panama Canal expansion on Latin American and Caribbean ports: difference in difference (DID) method

Abstract

The expanded Panama Canal opened on June 26, 2016. This expansion is the third set of locks that enabled the canal to double its capacity through the addition of new traffic lanes, which allowed neo-Panamax and some post-Panamax vessels to transit across the canal. The widening of the canal has increased maritime traffic within Latin America and the Caribbean (LAC). Major ports in the regions have made huge investments in port expansion and infrastructural development to accommodate neo-Panamax vessels. In this study, we investigated the impact of the Panama Canal expansion (PCE) on the Latin America and the Caribbean (LAC) ports by using the Difference in Difference (DID) method. This impact was evaluated for 100 major and regular ports within the three sub-regions of LAC, namely Caribbean, Central, and South America, before and after the treatment effect, that is, the PCE. The findings from the model revealed that the average container port throughput (TEUs) for the treated ports (DTrp) was more than that of the controlled ports (CONTp) with transshipment hub, Central America, and South America having 20%, 12%, and 34% growth, respectively, since the PCE (the treatment) except for the Caribbean ports (DTrp), which experienced losses of 8% within the LAC region from 2010 to 2019.

The Panama Canal Expansion

“…On the contrary, the results of this research contradict the estimates by the U.S. Department of Transportation and Maritime Administration (2013), Serebrisky et al (2016), andPagano et al (2016), who forecasted that the Panama Canal expansion would increase port preference, boost challenges, and enhance the competitiveness of its maritime cluster, respectively. Additionally, the results partially contradict estimates that the Panama Canal expansion would increase port container throughput in the Central America region (Miller & Hyodo, 2021).…”

“…Likewise, a study concluded that the expanded Panama Canal would produce a smaller impact on the cargo competition for ports located in Europe than those located in the United States given their longer geographical distance from the canal (Hassel et al, 2020). Additionally, Miller and Hyodo (2021) conducted a study on 100 ports on the Latin American and Caribbean sides of the canal and concluded that the Panama Canal expansion had significantly increased cargo volume in Latin American ports, except for some ports in the Caribbean region.…”

Logistika za prometne inženirje

“…PRIMER: PANAMSKI PREKOP [17] Razširitev Panamskega prekopa, ki je bila dokončana v letu 2016, predstavlja enega od največjih inženirskih dosežkov v zgodovini prometa in logistike. Projekt je vključeval izgradnjo novih zapornih komor in širitev kanala, imenovanega »Neo-Panamax«, ki omogoča prehod večjim ladjam.…”

Development Effectiveness Overview (DEO) 2023

“…In addition, an estimated 20 percent of the government's revenue comes from Canal activity (direct, indirect, and induced). The expansion also allowed transport companies to consolidate cargo in fewer vessels, thus reducing fuel costs and carbon emissions (Miller and Hyodo, 2021). For example, doubling the maximum container ship size has reduced total vessel cost per transported container by roughly a third over the last decade (Merk, 2018).…”