This video was made possible by Brilliant. Learn with Brilliant for 20% off by being
one of the first 200 to sign up at brilliant.org/Wendover. The purpose of the Panama Canal is pretty
easy to understand. It turns a journey of this into this. It brings the US west coast closer to Europe,
and it brings the US east coast closer to Asia. These rather short 180 foot or 55 meter wide
trenches are, combined, perhaps the single most important and most influential waterway
on earth. That’s because the entire shipping industry
worldwide is shaped by the Panama Canal. Hundreds of years ago, the opportunity of
a canal across the narrow country of Panama was identified. After a few earlier false starts, the Americans
went down to Panama in 1903, signed a fairly dubious treaty granting them land, dammed
up a river to make an artificial lake, dug a trench from that lake to the Pacific, dug
a trench from that lake to the Atlantic, and $13 billion and 5,600 worker fatalities later,
the canal was done. It officially opened the Pacific to the Atlantic
on August 15, 1914 as the first commercial ship, the SS Ancon, sailed through. Now, the Panama Canal is not just one straight
shot from ocean to ocean. That’s because the artificial lake they
created, Gatun Lake, is 85 feet or 26 meters above sea level. So, cargo ships, which can weigh more than
a billion pounds, need to get up those 85 feet or 26 meters and then back down again
to transit from ocean to ocean. Like most canals, to do this, the Panama Canal
uses locks. From the Atlantic side, for example, a ship
will be pulled into the first lock by the tug trains on each side of the canal, the
downstream gate will close, water from upstream will be fed in to fill the lock, the boat
will float up, then once the water level rises to match that of the next lock, the gate will
open, and the ship will be pulled into the next lock. Then, the gates will close, the water level
will rise again, the gates will open, then this will all happen one more time until the
third lock raises the ship to the water level of Gatun Lake—those 85 feet or 26 meters
above sea level. Believe it or not, it is these three locks
exclusively that limit what size a large portion of the world’s container ship fleet can
be. A ship has to be under 1,200 feet or 366 meters
long and 168 feet or 51 meters wide to be accepted in the Panama Canal and so a huge
proportion of the world’s ships are built to be exactly this size. This class of ship is called NeoPanamax or
New Panamax or Post Panamax depending on who you ask. Of course, there are certainly ships larger
than the NeoPanamax size. The Panama Canal has a size limit of about
15,000 TEU or twenty-foot equivalent units. That’s a measure of a ship’s capacity
based off how many of these twenty-foot containers they could carry. Now, the largest container ship in existence,
the OOCL Hong Kong, has a capacity of over 21,000 TEU. This ship, like many of those larger than
15,000 TEU, exclusively keeps to the east Asia to Europe route as it can’t efficiently
make trips that require transit between the Pacific and Atlantic since it would have to
circumnavigate South America. But it was really not long ago that the largest
ships that could go through the Panama canal were far smaller than the current 15,000 TEU
size. You see, up until 2016, the Panama canal could
only fit ships smaller than 5,000 TEU. That’s because up until 2016, these didn’t
exist—the Panama canal’s new locks. The old locks can only only fit a ship 106
feet or 32 meters wide but still, given the enormous importance of this waterway, ships
were still then built specifically to fit through. In fact, 50% of the old lock’s users were
exactly as wide as this width limit suggested they were likely built for exactly that purpose. This was a problem for the Panama canal, though,
because, believe it or not, the canal has competitors. It all has to do with geography. When traveling from east Asia to the US east
coast, which is one of the busiest shipping routes in the world, it really is not all
that much further to go west than east. Going from Hong Kong to Newark, for example,
the distance heading west through the Indian ocean, Suez Canal, Mediterranean, and Atlantic
is only a few hundred miles or kilometers longer than going east across the Pacific
and through the Panama Canal. Meanwhile, the Panama canal is not cheap. They charge a $90 toll per twenty foot container
meaning that most ships, carrying thousands of loaded containers, pay hundreds of thousands
of dollars for just a single transit. With the new locks and their higher capacity,
single ships can possibly be assessed more than $1 million per transit if they’re the
largest size, fully loaded. The Suez canal, meanwhile, typically charges
lower tolls. A ship sailing that Hong Kong to Newark route
therefore might choose to take the slightly longer route via the Suez canal versus the
Panama canal as, in the end, when you consider the tolls, it might end up being less expensive. Now, both canals are constantly changing their
fees in order to compete with the other but still, throughout the past decade, the Suez
Canal seems to maintain a slight edge in cost. The Panama Canal’s other competitor, though,
is trains. For the crucial east Asia to US east coast
route, going through the Panama canal, while much faster than circumnavigating the continent,
is still not a direct route. On the Hong Kong to Newark route, the Panama
canal represents an almost 3,000 mile or 5,000 kilometer diversion from the alternative—crossing
the US by land. It is pretty standard practice to ship cargo
from east Asia to Los Angeles and then load it up on trains to get to the US east coast. While overall this usually ends up a little
more expensive than going through the Panama Canal, it saves about a week in transit time
and, for many shippers, this is worth it. Trains, with their relatively low cost, represent
a considerable competitor to the canal, and it is the competition with both these and
the Suez canal that pushed the Panama Canal to make an expansion. That’s why they spent $5.4 billion to build
these bigger locks that could fit larger, 15,000 TEU ships. This would let more of the world’s shipping
fleet through and these bigger ships, thanks to economies of scale, have lower cost per
container which helps make the canal more attractive in comparison the its trains or
Suez competition. Now, this expansion is a great example of
the butterfly effect. In one instance, because the Panama Canal
widened its size limit by a few dozen feet, the state of New Jersey had to spend $1.7
billion to raise a bridge by a few dozen feet. You see, in order to get to much of the port
of Newark, which is one of the largest and busiest in the US, ships have to pass under
the Bayonne bridge. As a huge proportion of the shipping traffic
to the US east coast goes through the Panama Canal, before the new set of locks many of
the ships that wanted to use the port of Newark were the smaller, 5,000 TEU size which could
all fit under the Bayonne Bridge, sitting at 151 feet or 46 meters above the water. With the canal expansion project, though,
more ships would start making their way to Newark that would be too large to fit under
the Bayonne bridge. Therefore, in order for the port of Newark
to stay competitive, they just had to raise that bridge. Beyond that, all up and down the US east coast,
from Miami to Savannah to Charleston to Baltimore and to New York, ports quickly spent millions
and billions of dollars to build facilities that would fit the bigger ships in time for
the opening of the new canal locks. Still today, though, many ports on the east
coast do not have the depth and facilities needed to handle these NeoPanamax ships. This, though, presents an opportunity for
the Caribbean. Deep-water ports in the Caribbean are developing
themselves into major transshipment hubs. What these are are ports where larger ships,
like the largest 15,000 TEU container ships that can now go through the canal, will unload
their cargo which will then be loaded again onto smaller ships bound for smaller ports
closer to the cargo’s destination up and down the east coast. Huge amounts of foreign money are flowing
into the Caribbean to develop these transshipment hubs. CMA CGM, a shipping company from France that
ranks as the world’s third largest, operates the port of Kingston, Jamaica. DP World, from the UAE, operates the port
of Caucedo in the Dominican Republic. Meanwhile, the port of Freeport, in the Bahamas,
is operated by Hutchison Port Holdings from Hong Kong. All of these companies and more have and continue
to focus on expanding these Caribbean ports to suit the increased traffic making its way
through the Panama Canal, into the Caribbean, and eventually to its destination on the east
coast. Sometime soon, though, something could happen
that would be simultaneously great for the Caribbean ports but terrible for the Panama
Canal. You see, two countries to the north of Panama
is Nicaragua. By linking both the Atlantic and the Pacific
to the large Lake Nicaragua, one could have another connection between the oceans. There has been a long history of attempts
to build this canal, most recently in the past decade with a failed scheme by a Chinese
billionaire. Given that this failure was rather recent
there are no current construction plans, but at least somewhere, the world is going to
need more canal capacity between the Pacific and the Atlantic. The shipping industry is growing at a solid
rate of about 5% annually and the Panama canal can only expand so much. One issue is that the Panama Canal could literally
run out of water. You see, each time the canal’s locks open,
millions of gallons of water flow out and downstream. Usually this is not a problem because the
lake upstream has enough water, but sometimes, during periods of reduced rainfall, there
just won’t be enough water to both release the amount needed to operate the locks and
keep the lake at a deep enough level for the largest ships to transit. At these times, which included much of Spring
2019, the canal will have to place restrictions on how much weight cargo ships can carry as
this will affect how deep they sit in the water. They’ve attempted to limit the effects of
this by installing systems to recapture some of the water used to operate the locks and
there are also potential plans to build an additional upstream dam to create an additional
reservoir, but these problems are only expected to worsen as climate change exacerbates the
severity of droughts in the region. All told, what happens in Panama affects the
world. If a drought in Panama restricts the throughput
of the canal, the world economy will feel it. That’s because shipping is what connects
the world’s economy and the Panama canal is one of the most important connectors in
shipping. The canal effectively brings the economies
on one side closer to those on the other and so, no matter what happens, it will continue
to serve as the world’s shortcut. Now, one of the things that those working
at the Panama Canal need to understand is how water works. As in, how weather works, how the water cycle
works, how tides work—all of these things are also, though, concepts that you can learn
about in Brilliant’s Physics of the Everyday course. Brilliant is the best place to learn complex
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Next episode: how planes fly over Panama Canal
I love Wendover Productions!
Finally not planes?
missed that part where panama got liberated within months of colombia rejecting us attempt to take over the project from france