WEB EXCLUSIVE: Panama Canal expansion

By Richard High27 October 2008

The Inter-American Development Bank (IDB) has approved a US$ 400 million loan for the Panama Canal e

The Inter-American Development Bank (IDB) has approved a US$ 400 million loan for the Panama Canal expansion, the largest infrastructure project currently under construction in Latin America.

Complementing International Construction's November feature on Large Structures KHL.com looks at the expansion of the Panama Canal.

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The Panama Canal is without doubt one of the greatest feats of engineering ever undertaken, but with the present canal reaching its maximum capacity ambitious expansion plans are underway. Richard High reports.

The idea of finding a navigable route across the Isthmus of Panama fist occurred to Spanish conquistador and explorer Vasco Nunez de Balboa on September 27, 1513. Leading a small party of Spanish soldiers through the dense jungle in search of gold he climbed a small hill in Darien and was the first European to see the Pacific Ocean.

Although Balboa was eventually found guilty of treason and beheaded a trade route across the Isthmus was quickly established. However, the route was rudimentary.

It was not until the start of the Panama Railway in 1850, a result of the California Gold Rush of 1849, that thoughts of a canal across the 77 km-wide strip of land were given serious consideration. Construction of the Panama Canal finally started in January 1882 when a group of French investors succeeded in raising the money needed to undertake this Herculean task.

By the time their efforts petered out in ignominious failure in May 1889, 22000 men had died and almost 23 million m3 of earth and rock had been excavated.

But such was the demand for a shorter trading route between the Atlantic and Pacific Oceans - a trip around Cape Horn could take about 70 days - that in 1904 the US government took up the cudgels. Finally finished in 1914 its construction saw almost 183 million m3 of earth and rock moved in total. (See Related Articles for a full history of the Canal.)

Today the canal handles 5% of the world's seaborne freight annually, with the canal's locks able to handle container ships with a maximum capacity of 4500 TEU (20-foot equivalent units). But with larger, faster 12600 TEU (post-Panamax) container ships now increasingly common on the world's oceans expansion of the canal and locks is needed.

Expansion started in 2007 and includes four main components:

  • construction of a third set of locks, including two lock complexes and water-saving basins at each end of the canal,
  • dredging of the canal entrances on the Atlantic and the Pacific,
  • deepening and widening of the existing navigation channels,
  • raising Gatun Lake, which provides fresh water for the waterway, to its maximum operational level.

Expansion is expected to cost US$ 5.25 billion, with the Autoridad del Canal de Panamá (ACP), the autonomous government-owned entity that manages and operates the 77 km canal, planning to raise about US$ 2.3 billion in loans. The remainder will be covered with money generated by the operation of the canal.

Digging in

This huge task has been divided up into five packages and moving earth is again the name of the game. To date 60 contracts worth more than US$ 296 million have been awarded for services, consultants, and construction, creating over 2000 jobs. The Mexican-Panama joint venture (JV) of CILSA Panama - Minera Maria was awarded Package 2 (PAC 2).

Originally there were five packages of work, but the complexity and scale of the project means there are now seven, and this is before construction of the locks begins next year.

Starting in March this year, and due to finish in late 2009, the JV will move over 7.5 million m3 of earth and construct 3.6 km of canal-way deviation, plus a 1.2 km highway. Excavation, at the time of KHL.com's visit was on two fronts - North and South.

The North will see the largest excavation as the planned route crosses a point 77 m above sea level. This will be reduced to 17 m.

Spoil is dumped in two places. These are situated where it will be easy to re-use the material without long haul distances.

"Moving this much earth requires the biggest machines, with the highest availability," said Mexican-born Daniel Hernan Gutierrez, the JV's head of machine maintenance. There were 40 pieces of "heavy equipment" on site at the time of KHL.com's visit - Caterpillar, Volvo, Terex, Atlas Copco and Tamrock being the main suppliers - and machine availability was 80%.

Arduous conditions

Working in Panama means coping with arduous conditions, said Mr Gutierrez, who cited "the hardest things" as the rain, humidity and the clay. We're now removing far more clay than the original survey predicted which causes problems with carry-back in the haulers and clogs the wheeled loaders' buckets, and dozer and excavator tracks," he said.

To reduce the amount of carry back, explained Mr Gutierrez the Volvo and Cat hauler [A40Es, A30Es and 740s respectively] use heated bodies to help over-come the problem of carry back. "This makes a big difference to productivity," added Mr Gutierrez.

Keeping the haulers, dozers, graders and excavators working in these conditions is a team of eight mechanics, plus three Cat and one Volvo technician. Mr Gutierrez told KHL.com that the JV only needs eight mechanics because most of the equipment is still under guarantee. However, 40 maintenance staff handle tire and oil changes.

"All the mechanics are trained to work on any piece of equipment, while Cat and Volvo technicians handle their own maintenance requirements. Volvo's ADTs are rented from, and maintained by AMECO, to our schedule," explained Mr Gutierrez.

The machines being used by the JV are a mix of new, rented and Reman (remanufactured) said Mr Gutierrez. However, he added that he, and the JV, prefers to buy or rent new equipment.

"There is more to go wrong on used or Reman equipment, plus with new or rented equipment they are replaced very quickly, whereas with used or Reman machines we can wait a long time to get parts," he added.

Tight time frame

With completion of PAC 2 scheduled for late 2009 time is of the essence. "The contract is on time but the margins are very tight. If anything major happens it could be a problem," explained Mr Gutierrez.

In reality this means the construction team and equipment at PAC 2 work an average of 25 days a month, 16 hours a day. Mr Gutierrez said he would ideally like to see all the equipment working seven days a week.

What can stop progress, or at least slow it considerably, is the rain. "When the haulers are moving heavy clay a ‘medium' downpour can bring things to a complete standstill, but if it's rock they can cope with even a torrential downpour," said Mr Gutierrez. "However, an electrical storm means everything and everyone stops!"

What can make a difference to progress and what the JV has to do on the maintenance side, is finding the right person for the job. "A skilled operator makes a very big difference," explained Mr Gutierrez. He estimates about 10% of machine failures are down to poor operators, particularly those that lack proper training.

To combat this, the JV's new Volvo's are being supplied with extensive operator training programs and "we have put the most skilled operators in them to start with", he added. (See the Box Story - Smooth operator on the right for more information.)

Finding the right operator and giving them the right training means the machines in use can be more productive, said Mr Gutierrez. There's less down time, he added, which also cuts down on cost.

While the machines themselves seem able to withstand the rigors of the site, the wet conditions create other problems too, particularly with the haulers' tires. "They are the things we need to replace the most," said Mr Gutierrez, "because they spin on the clay, hit ‘small' rocks concealed inside and wear the tread and grip, down very quickly."

Concerns

While maintenance at the PAC 2 means average machine availability is 80% the JV has seen fuel costs sky rocket. When the project started in 2007 fuel cost US$ 3.29 per gallon. It's now US$ 4.50.

"Fuel efficiency is another big worry. We look at the most fuel efficient machines, but it's not the deciding factor when it comes to buying. New equipment is always more fuel efficient than old equipment, which is another reason I prefer to buy new, rather than used or Reman," explained Mr Gutierrez.

The high demand for commodities has also meant a knock-on effect for tire availability for the larger sizes, he added, "But it's a global problem so we are all suffering."

There are other concerns too. The area in which the expansion is taking place was a nature reserve; however the government changed its status, much to the annoyance of environmental groups, so construction could go ahead.

"Panama's Environmental Agency conducted an Environmental Impact Assessment (EIA) on the area, which saw us clear and move all the animals we could find, plus many species of flora to a new site. We also preserved as much of the jungle as we could and used biodegradable oil where possible," explained Mr Gutierrez.

"We found a lot of African honey bees, poisonous snakes and spiders when we started clearing the site, although there have been no fatalities or serious accidents," stressed Mr Gutierrez.

But overcoming such obstacles is something Mr Gutierrez seems to take in his stride.

"The hardest part has been construction of the deviation canal. It's intensive, the dimensions and measurements have to be very precise, while the ground conditions are not easy. However, there's nothing unusual about this job. It's big but it's just another earthmoving project."

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