Natural and
Technological Risks
Prof. Manuel Heitor
2014
PERSPECTIVES FOR
SOUTH ATLANTIC
AFTER THE
ENLARGEMENT OF
PANAMA CANAL
Natural and Technological Risks
Orientation: Professor Manuel Heitor
Students:
Guilherme Correia
Julius Müller
Vanessa tomás
Table of Contents
Acknowledgement ......................................................................................................................... 2
Abstract ......................................................................................................................................... 2
Methodology ................................................................................................................................. 3
1.
The Panama Canal ................................................................................................................. 4
1.1 Expansion............................................................................................................................. 5
1.2 Current Trade Routes .......................................................................................................... 7
2.
Cases study ............................................................................................................................ 9
2.1 Sines Port – Portugal............................................................................................................ 9
2.2 Sines Port and PSA SINES analysis ...................................................................................... 11
2.3 Suape Port - Brazil.............................................................................................................. 13
3.
Conclusions .......................................................................................................................... 16
4.
Bibliography ......................................................................................................................... 18
1
Acknowledgement
First of all we would like to thank Professor Manuel Heitor for his help and constructive criticism
to focus on the right information and to guide our work in the desired direction. We are also
glad for all the positive discussions and support we experienced during the presentation and
workshop in class of our colleagues and invited guest speakers.
Abstract
This project approaches potential changes in South Atlantic in association with the upcoming
expansion of Panama Canal (for bigger shipping vessels). It considers potential impacts in the
vicinity of Panama Canal and in three ports far away from the canal: two in South America
(Suape and Cartagena ports) and one in Southern Europe (Sines port). The analysis is driven by
international markets competition and demand for goods, still leading to the improvement of
their transportation. It is known that this type of changes and markets development have
impacts in economy, environment and in safety due to the possibility of worse hazard
situations. The IRGC framework is used for the analysis.
The report emphasizes environmental impacts and major risks which are important to predict
the future of the canal. Different trade routes and industrial opportunities in the various ports
analyzed in South Atlantic were developed through different scenarios. As result of our work,
we strongly believe that this expansion of Panama Canal will definitely lead to an increase of
maritime traffic in South Atlantic, mainly larger vessels. Ports will be a key element and there
are many possibilities laying on them, depending on their relative positioning. Yet, considering
emerging new scenarios of energy resources in South Atlantic, there is a good possibility to a
relative boom of industrialization in countries nearby that area.
2
Methodology
For this project we study the Panama Canal area, the importance and possible alterations after
the expansion. Attending to predict what alterations will happen on global trading routes and
the influence of that on local and distant ports. For that we will analyse how ports are in the
present and predict their development after the Panama expansion. For that we consider the
SWOT analysis the most efficient way to do the ports comparison.
3
1. The Panama Canal
Until 1903, Panama remained as part of Colombia, even after the Republic of Gran Colombia
(Panama, Colombia, Ecuador and Venezuela) broke apart in 1830. Panama then promptly signed
a treaty with the US allowing the construction of a canal that became the well-known Panama
Canal.
US Army Corps of Engineers constructed this waterway between 1904 and 1914. It connects the
Pacific and the Atlantic Ocean in Central America and therewith avoids the travel around the
South American continent.
In 1977 an agreement was signed to complete the transfer of the canal from the US to Panama
by the end of the century. The entire Panama Canal, the area supporting the Canal and
remaining US military bases were transferred to Panama by the end of 1999.
Today the Panama Canal Authority (Autoridad del Canal de Panamá) is the executive office that
manages and operates the uninterrupted service of the canal.
There are also two important ports near the canal giving support. Balboa port in Pacific Ocean
side, strategically positioned to be a major player in world commerce and transportation and
the Colon containers terminal in Atlantic Ocean side, a modern port specialized in containerized
cargo.
With the enlargement of vessels, problems of accessing and crossing the canal started to
appear. The state of Panama initiated the project to enable future access for Post-Panamax
vessels. The Grupo Unidos por el Canal (GUPC) is responsible to design and construct the third
set of locks. Also several project parts and phases are obtained by foreign companies, such as
the valve system or delivery of the lock gates. The total investment is estimated with $ 5.25
billion. The expansion should be finished by 2015 although some financing problems delayed
constructions. Momentarily already 70% of the total project is finished.
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1.1 Expansion
As the Panama Canal is not at sea level, it depends on two traffic lanes and sets of locks to
elevate the vessels on the required water height for transiting.
The existing locks are each 305m long, 34m wide and 13m deep, limiting transit to vessels with
a nominal carrying capacity of up to approximately 5,000 TEUs or 85,000 deadweight tons
(dwt), carrying up to 62,000 metric tons of bulk cargo at a 12m draft.
To assure the canal remains a competitive passage for future traffic a third lane of locks is built
to handle Post-Panamax ships. Therefore also several other construction projects, as listed
below and shown in Figure 1, need to be accomplished to guarantee future safe access:
●
excavation and widening of the canal entrances (A , G)
●
construction of two new Post-Panamax locks, one at the Atlantic (B) and
another at the Pacific (F) ends of the anal
●
excavation of a new north access channel for the Pacific Post-Panamax locks (E)
●
elevation of Gatun Lake’s maximum operation level (C)
●
Deepening and widening of the Gatun Lake and Culebra Cut navigational channel (D)
Figure 1: key elements of canal expansion program
Source: Panama Canal Authority, Canal Expansion Program – Components Report, p. 2, 2011.
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After the successful completion of the project, the dimensions of the new locks at Gatun and
Miraflores Lake (see Figure 2) would be 427m in length, at a width of 55m and depth of 18m.
Which enables the canal to handle Post-Panamax ships, which size can reach (or exceed) 366m
in length, 49m wide, and 15m in draft. This allows to accommodate vessels with a nominal
carrying capacity of up to 12 000 TEU or 180 000 dwt (carrying up to 140 000 metric tons of
bulk cargo).
Figure 2 – Locations of the third set of lock in the Panama Canal
The new locks will have three consecutive chambers, which act as steps to move vessels from
sea level to the level of Gatun Lake and back down again. Each chamber will have three lateral
water reutilization basins, filled and emptied by gravity to save costs and energy for additional
pumps.
Figure 3 – Locks configuration for existing and expanded canal
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In Table 1 the old and new values are compared to see the outcome of the projects possibilities.
The additional and enlarged lock systems contribute to an increase of treatable ships and total
cargo at less time.
Table 1 – Comparison of the original and expanded canal characteristics
Characteristics
Original Canal
Expanded Canal
Ship standard
Panamax
Post-Panamax
Beam
32 m
49 m
Length
294 m
366 m
Draft
12 m
15.2 m
Vessel Capacity
4 500 TEU
12 000 TEU
Bulk Carrier Capacity
52 000 DWT
119 000 DWT
Construction
$ 387 million USD
$ 5 250 million USD
Annual Capacity
(number of ships)
13 500 – 14 000
16 000
1.2 Current Trade Routes
The Panama Canal is a crucial component on the development on local and global economy.
About 5% of global trade is transported through the canal which sums up to 815.000 ships.
The Panama Canal, located at the narrowest point between the Atlantic and Pacific oceans, has
had a far-reaching effect on world economic and commercial developments throughout most of
this century by providing a short, relatively inexpensive passageway. Also, the canal has
influenced world trade patterns, spurred growth in developed countries and has been a primary
impetus for economic expansion in many remote areas of the world. For example, a vessel
laden with coal sailing from the east coast of the United States to Japan via the Panama Canal
saves about 4 800 kilometers versus the shortest alternative all-water route and for a vessel
laden with bananas sailing from Ecuador to Europe the saved distance is about 8 000
kilometers.
By far, most of the traffic through the Canal moves between the east coast of the United States
and the Far East, while movements between Europe and the west coast of the United States
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and Canada comprise the second major trade route at the waterway. Other regions and
countries, however, such as the neighboring countries of Central and South America, are
proportionately more dependent on this vital artery to promote their economic development
and expand trade.
According with the data for the Panama Canal traffic along principal trade routes:
Table 2 – Panama Canal traffic along principal trade routes
Statistics and Models Administration Unit MEEM
Figure 4 – Schematic mainstream routes that cross Panama Canal
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2. Cases study
2.1 Sines Port – Portugal
Due to the shipping development and demand, Post-Panamax vessels are already crossing
waters. These new type of vessels can only access one port in Portugal, Sines Port. This
possibility brings hope for a positive impact in Portuguese shipping markets and companies,
raising the chances of better importing and exporting deal due to low prices of transportation.
The upgrade of the economical positioning of Portugal still difficult because the relations
between important markets of North America, Asia and Middle East with Rotterdam, Antwerp e
Algeciras ports.
Sines Port is the Atlantic gate for Europe, fitted for the receiving of the biggest vessels from
transoceanic routes that link Portugal to the big centers of production and consume. It is
connected by feeders to short distance ports (Leixões, Vigo, Gijon and Bilbau) and by highways
and railways to Iberic Hinterland. Has five specialized terminals – fisheries, petrochemical, liquid
bulk cargo, multipurpose, liquid natural gas and finally containers. With high level of
productivity this set of terminals are able to move any type of cargo.
Working 365 days a year and 24 hours a day, permanent services are available with high
security and productivity standards, namely loading and unloading operations at flat rate
regime. Shipments are managed by technological paperless solution.
Although the containerized cargo became more relevant in the last years, this is a multipurpose
and multiservice port, playing a major role in energy sector in what to concerns to providing
petroleum, LGN and coal. Furthermore there is a relevant continuous improvement of railwayport interface, allowing having an excellence service in this area. Sines have the biggest platform
of merchandise transportation in Portugal.
It is crucial for this analysis having opinions mostly from the principal agents. According to them
they strongly believe that the enlargement of Panama Canal will be a huge opportunity for the
growth of logistical and industrial zones and also on national and international exportations. For
that they consider the Sines Portuary community represent an important piece on the region
development. (Questionaries’ analysis Paulo Moreira thesis 1012)
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Figure 5 – Sines Port Map
Upcoming business in the south Atlantic, like oil and gas exploration, allied to the transportation
of goods and merchandise in Post-Panamax through Panama Canal, creates a scenario of
increasing maritime traffic and respective cargo. Sines Port is preparing itself for the changes by
expanding Terminal XXI, a modern containers terminal.
Table 2 – Terminal XXI current and final characterization
Facilities
Current
Final
Containers berths
2
3
Quay length (m)
730
940
Area (ha)
25
35
Max depth at Chart Datum (m)
16.5
16.5
Quay Cranes
6
9
Designed Capacity
(‘000 TEU)
1 100
1 700
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2.2 Sines Port and PSA SINES analysis
PSA is an entrepreneurial group dedicated to terminals of containerized cargo. PSA Sines
manage Terminal XXI. The PSA investment in Sines port was included in internationalization
strategy of PSA group. By the nineties a set of conditions were happening, globalization
phenomena, China’s rise up as an economical power and major world producer, the fast
increase in cargo capacity in vessels, so there was this need of construct new ports able to
receive this new bigger ships. Plus, Sines location gave PSA the possibility of having a HUB
covering South Atlantic markets and provided direct services to main world markets, changing
the Portugal dependency model of North-Europe and Spain feeders.
Promoting a new port without history in containers segment was a hard challenge to PSA Sines.
By definition maritime transportation industry is very conservative and not that open to
changes. In land, strategic partnership with CP granted the development of intermodal corridors
able to supply the main Iberic centers of consumption and production significant reduction of
time spended in traffic. Today, besides some railway restrictions, Sines is port leading
containers movement in Iberian Peninsula, high above Valencia, the main Iberic port.
By 2011, Terminal XXI was using almost the total capacity for containers, moving about 450 000
TEU, 90% of the 2011 operating capacity
Figure 6 – PSA Sines evolution of containers movement in thousands of TEU
Vision of PSA Sines
Sines want to reinforce its role of being HUB for the South Atlantic markets, mainly serving
Iberic hinterland. Madrid is the mains Iberian Peninsula consumer but uses preferably Valencia
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Port, which is geographically closer but not the most efficient. Sines is at the same distance as
Barcelona or Algecira, from Madrid, and offers advantages in time for Atlantic traffic which
these two Spanish ports don’t. The construction of new transportation infrastructures, IP8 and
new railway accessibilities (Sines – Elvas – Madrid) connecting Sines to the center of Spain
hinterland, assume a major role in what concerns development and growth of Sines Port and in
its capacity to face Valencia or Barcelona Ports.
When the expansion of Panama Canal is complete, Post-Panamax will start to do Asia – Pacific Atlantic routes. It’s a great opportunity for Sines port development towards its goals and to
become one port of the world elite.
Figure 7 -New Post-Panamax route with Sines as merchandise gate for Europe
Figure 8 - Perspectives analysis for Sines Port resumed in a SWOT matrix
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2.3 Suape Port - Brazil
The Suape Industrial Port Complex, located between the cities of Ipojuca and Cabo de Santo
Agostinho, 40 km south of Recife, State of Pernambuco on the Brazilian Northeast coast.
Is a port and industrial complex (textiles, chemicals, distribution centers and ongoing projects
for a refinery and shipbuilding yard and among others).
It has an area of 140 square kilometers and 13.5 thousand hectares in extension divided into
Port, Industrial, and Administrative, Ecological Preservation and Cultural Preservation zones.
With more than 30 years of existence, the Suape Complex contains about 100 companies in
operation and further 35 in the phase of implementation. For all of that it was necessary an
investment of 18 000 million US$.
Suape is one of the most important harbour and container terminals in northeast of Brazil which
is an important role in the economy of the state of Pernambuco. The port has started during the
21st Century and it is Pernambuco's motive power toward development. Huge national and
international investments are being attracted by its logistic qualities.
The complex was designed by the state Governor Francisco de Moura. Its name originates from
Suape beach, the most southern beach of Cabo de Santo Agostinho. However, the port is
actually in the municipality of Ipojuca. The design was based on Port-Industry integrated system
used in countries such as France and Japan. Since the beginning the port was scheduled to
operate fuels and bulk cereals, replacing the Recife port. On 1978, 7 of November, a law state
created the company Suape Industrial Port Complex to manage the development of the project
and the port itself. Today, it is one of the largest ports in Brazil and has been considered the
most technologically advanced as well. It has influence on whole state of Pernambuco and
larges parts of Alagoas and Paraibastates.
Port structure
The port can serve ships of up to 170,000 DWT and operational draft of 14.50 m. With 27 km²
of backport, the internal and external ports offer the necessary conditions for serving larger
ships.
The access canal has 5000 m extension, 300 m width and 15.5 m depth. More than 96
companies from almost all industries are already installed or trying to get installed in Suape,
including a Petrobras Refinary, the largest Ship builder in south Atlantic and a large
Petrochemical Company.
It is open 365 days a year without any restriction and also they offers a monitoring system and
laser ship docking as the most important ports across the word.
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The port moved over than 8.4 million tons in 2008 of cargo a year (has increased 7 times since
1992). The liquid transfer (petroleum by-products, chemical products, ethanol, vegetable oils,
etc.) constitutes more than 80% of the movement. The accessibility is really good it is fully
covert with highways, airways (Guararapes international airport from recife -25 km North) and
railways (new trans-northest railroad measuring 1718 km will connect the ports of Pecém,
Suape and Eliseu Martins). “With this railroad Suape will be connected to all the neighbouring
states so improving the flow of cargo and reducing operational costs” said Suape President
Fernando Coelho. The railroad has capacity to transport 30 million tonnes of cargo per year
(soy, biodiesel, fruit, ethanol and mineral ore, …)
Suape Global Program
Created in 2008, the Suape Global project aims at consolidating Pernambuco as a distribution
centre of goods and services of the oil, gas, offshore and shipping industry. The construction of
ships, the refining of oil and its extensive productive chain, now represent the new profile of the
local industry.
The confirmation of investments of around US$ 1.54 billion by 20 companies connected with
the petroleum productive chain and the generation of approximately 24 thousand direct jobs
and 33 thousand indirect ones within the strategic territory of the Suape Complex are the first
results of the Suape Global project.
After the Panama Canal Expansion
“Brazil’s international trade is growing strongly, expanding at an average of 20% a year, and we
have to discuss to prospect for Brazilian ports to be able to handle that”, said Suape president
Fernando Bezerra Coelho.
Suape port is one of the Brazilian ports that will have benefits after the expansion because of
the localization. That’s why they are expanding the port and improve the accessibility.
Emerging markets trade has dropped off this year after several years of impressive growth. It is
giving the ports across Latin America, and Africa too, for that matter, some breathing space to
sort out the considerable infrastructural shortcomings ports across the developing world share.
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Figure 9 - Perspectives analysis for Suape Port resumed in a SWOT matrix
15
3. Conclusions
Comparing the two ports and its respective analysis
As one port is from Brazil and the other from Portugal, we approached briefly their LPI, Logistic
and performance Index. Portugal in 26th place from 160, is far above Brazil, witch stays with in
65th place. These results are based on the score both countries got in six different parameters
and in all the six, Portugal takes the lead when comparing to Brazil as it is shown in the figure
below.
Figure 10 – LPI 2014 radar chart for Brazil and Portugal
The location of both ports is good. Yet, Sines location is more relevant than Suape, because it is
located in the coastline of Western Europe (Atlantic border) which is quite smaller than Eastern
South America (Atlantic border). And if Brazil covers a huge portion of that coastline, Portugal
does not. Even being the most Western European country, has to compete with the
surrounding countries.
While Suape Port has already huge industries settlement, Sines Port doesn’t. Nevertheless Sines
port also has the proper space for this industries settlement.
In concern of weaknesses, they diverge much more. Suape struggles with lack of employees
with qualification, logistical companies and public financing, while Sines depend on incipient
railways to compete with hinterland shipment by reducing the total time of transportation.
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Suape Port opportunities are related to the expansion of the port by itself followed by the
increasing nearby industries. In the other hand, Sines situation is more likely to evolve in an
important HUB for Europe, and not that much relevant in industries development, as it is being
very difficult to settle down industries nearby. Maybe in a next phase.
Risks
Besides all the general risks that every ports have to deal with, like explosions, piracy,
terrorisms, cyber-attacks, natural catastrophes, there are other types of risks that can
compromise the future of Ports. In that sense focused our work to no development risks that
depend more directly on industries, markets and economies than in hazards.
For Suape, the no development risk after the new possibilities derived from Panama Canal
expansion is linked to its public financial dependency associated to the delay in the trans
northeast railroad.
For Sines the no development risk after the new possibilities derived from Panama Canal
expansion, results from a mix of conditions, mainly three, the high competition with Northern
Europe and Mediterranean HUB’s, the incipient railways to Spain and the difficulties of
industrial settlement nearby.
Anyway the expansion of Panama Canal represents a huge opportunity for development of
ports, regions and economy.
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4. Bibliography

“Brazil - a Brand of Excellence - Brazilian Ports - a Safe Haven for International
Investment.” Ministry of external relations, n.d.

“PORTO DE SUAPE.” PE Desenvolvimento.
http://pedesenvolvimento.com/suape-2/.

“Suape Port.” Wikipedia, the Free Encyclopedia,
http://en.wikipedia.org/w/index.php?title=Suape_port&oldid=554955231.

http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=37693168

http://www.clusterdomar.com/index.php/temas/case-study/5-psa-sines

http://www.portugalglobal.pt/PT/Internacionalizar/Paraonde/Conhecimento/Doc
uments/DOCs%202012/TESEPauloJorgePiresMoreira.pdf

http://lpi.worldbank.org/international/global

http://www.ppc.com.pa/balboa.php

http://www.ppc.com.pa/cristobal.php

http://www.businesspanama.com/investing/opportunities/ports_maritime.php

http://www.sines.pt/PT/Negocios/zils/Paginas/default.aspx

http://www.portodesines.pt/pls/portal/go

http://www.worldportsource.com/

http://www.internationalpsa.com/factsheet/pdf/Sines.pdf

https://www.marinetraffic.com

http://micanaldepanama.com/

http://panamacanalfacts.com/

http://www.pancanal.com/
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