You can thank, or throw muddy water at Jimmy Carter for giving away the Panama Canal.  Darkness shrouds his actions in the two Treaties he signed, to transfer this piece of American property.

Nevertheless, the Treaties and the  transfer of the Panama Canal will have more of an impact on the United States than just squelching anti-American riots, likely started by the Panamanian Government in the first place,  while we had such a weak President in office.  To this day much of the real story about the two canal treaties (the first is meant to allow gradual Panamanian “control of the zone” through 1999; the second will completely relinquish it all to Panama in the year 2000) has been obfuscated by sophisticated propaganda, through political and media hyperbole and lies.

Pacific Side of Panama Canal

In 1904, America paid $10 million to Panama for the Canal Zone, and $40 million to the French who ran out of money while building it in the late 1800s, and lost too many workers to tropical diseases.  The Panama Canal was completed in 1914, costing the U.S. an additional $375 million.  That’s a grand sum of $420 million U.S. dollars to start with and not accounting for military transportation, buildings for them to live in, etc.

The U.S. ran the Canal until 1999, when it was turned over to Panama through a treaty signed by Jimmy Carter, President of the U.S. at the time on September 3, 2007 after the approval by the Cabinet, National Assembly and the Panama’s then-president, Martin Torrijos.  Torrijos stated that the Canal will generate enough wealth to transform Panama into a First World Country and with expectations of reducing the poverty level of 30% to 8%.

According to the original treaties, US sovereignty over the Canal area was to be “in Perpetuity.”  The United States controlled the Canal since it’s completion in 1914 as a nonprofit, international utility until the anti-American riots in Panama broke out and the spineless President, Jimmy Carter was “forced”  to negotiate its withdrawal from panama in 1977.  A negotiator, he is not, he gave away the horse and the barn with a gradual transfer of sovereignty from the United States to Panama over the former Canal Zone and the operation of the Canal itself.  In addition, the handover of all ten US military bases along the canal and the withdrawal of the 7,000 troops stationed there, all to end by noon on December 31, 1999.

Today, no stars and stripes fly anywhere around the Canal or Quarry Heights, the United States’ nerve centre for Latin America.  So much for the Original treaties which stated “US sovereignty over the Canal area was to be “in perpetuity.”  Well, a new era began for Panama, actually, a world game changer began.

On April 24, 2006, Panamanian President Martin Torrijos presented his plan to expand the Canal with a third set of locks. A project that will double the capacity of the Panama Canal by 2014, by allowing more and much larger ships to transit.  The Panamanian citizens approved it in a national referendum by 76.8% of the vote on October 22, 2006.  The project began almost immediately.

Aerial View of Panama Canal and Site of Third Locker

The project creates a new lane of traffic along the Canal by constructing a new set of locks with two lock complexes — one on the Atlantic side and another on the Pacific side.  Each with three chambers, which include three water-saving basins and new access channels to the new locks widening the existing navigational channels.  Excavation to deepen the navigation channels and the elevation of Gatun lake’s maximum operating level.  Just about nything that floats on water today, will be able to access this Canal.

What Does All This Mean?

Put simply, it means increased competition between ports, and mega dollars to complete new Infrastructures.

The two busiest Canals in the world are the Suez Canal and the Panama Canal.  Now, let’s think about the ramifications of such a wonderful and innovative project as the expansion of the Panama Canal nearing its’ completion date of 2014.

Larger vessels will be able to sail through the expanded Panama Canal, which will reduce the needed ports of call.

The shift of geography and the pressure on infrastructure and warehousing, a real issue on the east coast, will take these ports to the eastern coastal area of the U.S. and away from the west coast.  Currently, only the Port of Norfolk has the 50-foot depth necessary to accommodate the larger “post-Panamax” container ships.  New York and New Jersey have approved and begun projects to increase their depth by 2014.  Charleston, SC, Savannah, GA and the Port of Miami are well positioned to benefit if they can get their infrastructure in place by 2014 and each to the tune of about 640 million dollars.  They are asking for Federal funding.  No surprise there.

In other words, the trade patterns of the global market are expected to shift with increased Asian trade moving from the Pacific to the Atlantic Ports in the U.S.  The Port of Miami is the closest U.S. Port to the Canal, but they still need to accommodate the new generation of larger and wider cargo vessels that will pass through the newly widened Panama Canal. Therefore, they are spending 2 Billion dollars to deepen their waters, build a port tunnel for more efficient access to and from their facilities and provide on port rail linked to the national rail network.

This definitely creates a concern for warehousing, as extra cargo storage will be necessary to load and unload these larger vessels.   The east coast already has congested traffic and will have more with the addition of more trucking to get the products to the midwest.  Rail and Air are major factors for transporting to the midwest but getting railroad spurs in place might not be so easy in highly populated areas and  air transport is costly as the cost of jet fuel is very expensive.  Off shore drilling, do I hear an amen?

Port Diversification Strategies

Unfortunately, shippers still recall the Los Angeles/Long Beach lockdown of 2002.  A labor dispute was ignited, when Pacific Maritime Association (PMA) plans to increasingly automate the port facilities came full front on September 22, when the PMA locked workers out of the seaports for 36 hours in response to alleged work slowdowns by the International Longshore and Warehouse Union (ILWU).  The ports reopened briefly on September 29, but by evening, they were locked out indefinitely.  the lockout lasted 10 days and cost the economy more than a billion dollars a day.  Ships were lined up as far as could be seen even from the Bay Bridge as it hit all 29 seaports all along the western sea coast.  With no end in sight, the shipping lockdown on the West Coast, caused companies to lose millions in money,  merchandise and–trust.  Some companies were staring bankruptcy in the face if it were to last much longer.  More than 10,000 U.S. bound containers were unloaded at Ensenada and seven other Mexican ports even though they lacked the proper infrastructure to handle such a feat.

Ever since the Pacific Maritime Association (PMA) and the (ILWU) were embroiled in a feud with each other, shippers have been committed to diversifying their options and strategies that expand their port options and to reduce possible future risks.  It’s no wonder the funding to the Panama Canal has been a world-wide funded project.

What About California’s Ports?

Fear is in the air that the new and improved Panama Canal will divert trade and transportation.  They could quite possibly lose tens of thousands of jobs and some estimates are upwards of a hundred thousand lost jobs when you account for all the trades and industries that could very well be effected.   Tens of thousands of regional jobs are also at risk, of course, no one is yet quite sure what, in fact, and who are at a larger risk as of right now.

What is worrisome however,  is California’s 10% unemployment rate.  Heap the possible layoff’s on tope of  these already double digit numbers, it doesn’t take a rocket scientists to figure out there will be problems and not just financial.  People are going to go without jobs and security for just so long.  When they can no longer put food on the table and the already deep in debt state can not help their residents, what will happen then?  Will they pull together and devise a do or die survival plan?

The one industry that might be salvaged is the ship building business in Southern California, with the inexorable march of technology into larger vessels needed for the widened Canal.

California has barely recovered from the the collapsed housing market.  Large Corporations and many small businesses have fled the State  in record numbers to avoid excessive taxes to fund over spending.  The State’s  many welfare programs paid for by too few.  Illegal immigrants coming in from Mexico and who knows where else, to claim jobs and/or welfare checks.  Schools, medical, housing, voter fraud…you name it and it’s a problem.

California hopes to make their ports more competitive and have spent millions of dollars upgrading their ports with modern technology, computerized loading and unloading procedures and enhanced automation.  The ports directly or indirectly support about half a million jobs, from longshoremen to truckers and warehouse workers and those who sell and rent to them.

Port of Los Angeles/Long Beach, CA

All of the above, will be worthless unless some of the problems with California and its obdurate and litigious bureaucracy are dealt with such as;  Local politicians always bucking heads, environmentalists who don’t want pollution or destruction of anything, liberal media that does not accurately report news, and Hollywood out-of-touch-bunch, constantly resist whatever is in front of them.  Liberals boycott, protest or riot on the streets. Instead, these people should all be working together to keep California above water and to eventually prosper again.  The arrogance and uncompetitive thinking will ultimately give California the final straw that broke the camels’ back if they refuse to pull their heads out of the sand.

Governor Jerry Brown has stated that the State deficit had grown from $9.2 billion to $16 billion and they need to raise taxes.  Their annual budget is set for July 1st.  Another politician who hopes to fool all the people some of the time and pray to succeed all the time.

Most states have weathered the economic storm and cut back but that can not be said of California.  There’s word the state is set to spend a lot more than it will be bringing in.  It’s doubtful the residents of California will get the full truths surrounding the financial issues due to the inept or unwilling media, corrupt politicians and a Governor who believes the solution is more taxes on the rich.

He and his fellow minions will begin their parade of distorted propaganda, political sloganeering, special-interest lobbying presidential arm twisting, corruption, deception, and cover-up as a signal the welfare state of California is doing wonderful under the current dirty politics and executive deceptions.  They do have 55 Electoral College votes by-the-way.

In My Humble But Accurate Opinion.

Barbee Kinnison

 www.newsnationbrewing.com