Dredging at Panama Canal Expansion Proceeding Despite Contractor Delays

The Panama Canal expansion project has been even further delayed after a protracted and acerbic conflict between the canal’s governing authority and a contractor. However the dredging necessary for the project has proceeded apace: the last of the dredging is expected to be complete by the end of this year.

The Panama Canal Authority has been working to expand the landmark waterway since Panamanian voters approved the project in 2007. Officials initially hoped to have the project completed this year in time for the centennial anniversary of the original canal’s completion but now it is not expected to be open until at least the end of 2015. The most recent delays were announced after the contractor in charge of building and installing the new canal’s massive locks stopped work for more than three weeks in February over a conflict about who should pay for price overruns.

The backhoe dredge Alberto Alemán Zubieta works on the final leg of dredging at the Panama Canal. Work should be finished in December.

The contractor is a consortium called Grupo Unido Por el Canal (GUPC) led by Spanish company Sacyr and comprising Impregilo Constructora Urbana S.A. and dredging giant Jan de Nul.

In a report to stockholders Sacyr reported $1.6 billion in cost overruns nearly 50 percent higher than the contract price of $3.1 billion. Disagreement over who should pay for these overruns became a standoff when GUPC shut down all work on the project in the midst of negotiations. For a while it appeared the two sides would not be able to resolve the issue: authority officials were reported to be exploring options of hiring another company to complete the work which would have added at least another three years to the project. However on February 20 work resumed and on February 27 a preliminary accord between the parties was announced.

The upshot of the conflict is that the contractor now says it will not complete the locks until December 2015. A spokeswoman for the Canal Authority noted that the original contract estimated the completion date to be October 2014 but prior to the conflict GUPC had already pushed that date to June 2015.

But dredging on the canal has played no part in the project delays. Three of the four major dredging projects required for the expanded canal – the Pacific entrance Atlantic entrance and the Culebra Cut expansion – are finished. The fourth – the expansion and deepening of the channels through Gatun Lake – should be completed by the end of this year.

Dredging at the Pacific entrance was contracted to Belgian company Dredging International. Work began in April 2008 and was completed at the end of 2012. The navigation channel was expanded to 225 meters wide (about 738 feet) and deepened to 15.5 meters (about 51 feet). Contractors removed a total of 8.7 million cubic meters (about 11.38 million cubic yards) of underwater material using cutter suction dredges D’Artagnan and Vlaanderen XIX and trailing suction hopper dredge Lange Wapper.

The contract to dredge the Atlantic entrance was won by Jan de Nul which began the work in September 2009 and finished it in April of last year. It dredged and dry-excavated 17.9 million cubic meters (about 23.41 million cubic yards) of material over a 13.8-square-kilometer (about 5.27-square-mile) area which widened the existing entrance from 198 meters (about 650 feet) to 225 meters (about 738 feet). Jan de Nul also widened the north access channel to the new Atlantic locks to 218 meters (about 715 feet). The contract included an option to deepen the channel to 16.1 meters (about 53 feet) which was executed requiring the removal of an extra 2.3 million cubic meters (about three million cubic yards) of material. Jan de Nul used hopper dredge Filippo Brunelleschi and cutter suction dredges Hondius and Marco Polo for the project.

The authority itself took responsibility for most of the expansion dredging along the canal using equipment owned and operated by the authority’s Canal Dredging Division (CDD). The complex expansion of the narrow Culebra Cut was completed at the end of 2012. The dredging to expand the channels through Gatun Lake has largely been executed by the CDD with the support of the authority’s backhoe dredge Cornelius rented to and operated by Boskalis crews. A portion was contracted to Jan de Nul. Dredging International S.A. also conducted work in the lake dredging the reaches along the north end of the Gatun Lake navigation channel. That was completed in March 2012.

About 1.8 million cubic meters (about 2.35 million cubic yards) remains to be dredged from Gatun Lake near Gamboa reach. That work will be completed by the Authority’s mechanical dipper dredge Rialto M. Christensen backhoe dredge Alberto Alemán Zubieta and cutter suction dredges Mindi and Quibián; it should be finished by December. At that point all the dredging for the expansion will be complete and the waterways will be awaiting the new locks.

The announcement of further delays on the long-anticipated expanded canal have some ports cringing and others breathing a sigh of relief. Only a small portion of ports are ready to receive the mammoth new boats that will be floating through the expanded Panama Canal and those ports are eager to begin profiting. But dozens of other ports throughout the Americas and Caribbean are still rushing to expand their capacity or seeking ways to finance the expensive endeavors. Those ports are happy to have extra time before the world’s shipping routes transform due to the new canal.

But if more problems pop up that delay the canal there will be deeper repercussions for those invested in the global maritime industry experts said. Bill Johnson director of PortMiami which has undertaken $2 billion in projects to prepare for the new canal told the Wall Street Journal (WSJ) in February that if the project “drags on for years and years that’s not good.”

Preparation work continued through the stoppage anyway. WSJ reported that old Panamax vessels are being scrapped at an ever-increasing clip and replaced by neo-Panamax vessels. Jonathan Roach a senior container analyst at Braemer Seascope estimated twice as many scrapped Panamax ships this year as last regardless of the delays – signs of industry faith that the expanded canal will eventually open reported the WSJ.

“Plans to replace the Panamaxes are well on the way despite the expected delays” Roach said.