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| Lake Nicaragua - Potential Pathway for New Canal Source: Yahoo News (AP Photo/Esteban Felix) |
This week, big news was announced in an area of
transportation often forgotten in conversation – maritime transport!
On
June 5, Nicaragua announced a proposal for a $40 billion canal project, in partnership
with HK Nicaragua Canal Development Investment Co. Ltd., a Chinese company (1).
Plans for this canal have been thrown around throughout history, given serious
consideration most recently in 2006. Since 2006, the canal size and cost
has expanded, from 18 to 40 billion dollars (1). This canal is slated to rival
the Panama Canal, given the proposed high capacity and size. Canal enthusiasts boast that the capacity could handle ships up to 250,000 deadweight
tons, and handle 4.5% of international shipping (1).
The project is expected to take 11 years and require the
dredging of 200 kilometers (130 miles) of waterway (2). Opponents to the
project cite concern regarding the destruction of Nicaragua’s ecosystems. Other
issues raised include the successfulness of the canal so close to the Panama
Canal. Eduardo Lugo, a Panamanian consultant who worked on traffic-demand
calculations for the Panama Canal expansion, feels that there is not enough
demand and trade flow to justify the project’s cost. Additionally, other
critics have found the Chinese company’s director listed on several failing
companies in Hong Kong, which certainly raises some red flags (2).
Proponents say that the canal project will create 40,000
construction jobs and double the gross domestic product of Nicaragua (2). Given
the country’s levels of poverty and tumultuous history, this opportunity for
economic and transportation development seems golden to many individuals,
including Nicaragua’s President, Daniel Ortega. In response to Lugo’s
criticisms, Jason Bittner, director of the Center for Urban Transportation
Research at the University of Southern Florida, states that the demand will
exist by the time the project is actually completed (2).
If China stays on board, this project gives the country a
solid opportunity to exercise its economic power on a global scale. The US continues to have a great deal of involvement in the Panama Canal. This new
opportunity in Nicaragua could give China quite a foothold in Central America.
The feasibility of the canal and its sustainability remain questionable; many
Nicaraguan leaders are calling for more transparency in the decision-making
process (3). As Ortega and Nicaragua move forward, the implications for global
freight and maritime transportation will unfold with more information in the
years to come.
Sources:
Thanks to John Dornoff for editing this post.
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