The Panama Canal is critical for U.S. soybean exports because the canal serves as a shortcut between Gulf of Mexico ports, where many U.S. soybeans get loaded onto ships, and important export customers in Asia.
An ongoing expansion of the canal, scheduled to be complete in 2015, could make soybean exports even more cost-efficient and beneficial to farmers’ bottom lines since soybeans are the No. 1 ag commodity that utilizes the Panama Canal.
Here are five more things U.S. soybean farmers should know about the expansion.
- The $5.2 billion investment to expand the canal will greatly increase the canal’s transit capacity and create more room for longer ships with deeper drafts, allowing U.S. farmers to move more of their products at once.
- The larger ships that will be able to use the expanded canal will improve the economy of scale for soybean exports. Taking into account fuel, charter fees and port and canal fees, 95,000-ton ships can save $7.59 per metric ton, or about $650,000 a trip compared with ships that can carry 55,000 deadweight tons.
- Grain represents the second-biggest category of shipments through the canal. In fact, 35 million tons of grain passed through the canal in 2012. Included in that are 560 million bushels of U.S. soybean exports, which represent 52 percent of the shipments of grain between the Gulf of Mexico and Asia.
- During the peak months following harvest, it typically takes between two and three days for a dry bulk ship to be able to pass through the canal. That includes the time a ship spends waiting in line. Last October, every day a ship spent waiting to cross the canal cost the owner of that ship more than $8,000.
- Nearly 500 ships that will fit through the new canal and can carry up to 180,000 deadweight tons have been delivered to shippers, and nearly 200 more are on order.