Home » Features » Cover Stories » Enhancing Global Trade

Enhancing Global Trade


The expansion of the Panama Canal will require excavation of 155 million cubic meters of material, 4.4 million cubic meters of concrete, and 292,000 tons of reinforced steel, but when fully operational in 2015, the project will represent more than the sum of its parts – it will affect global trade routes and open new markets for many businesses around the world.

Working with the Panama Canal Authority (ACP for its Spanish name Autoridad del Canal de Panama) as the project management partner for the $5.25 billion canal expansion is AGC of America member CH2M HILL, a global full-service engineering, construction and operations firm. Although the company is known worldwide for involvement in key, large-scale projects, there is a historical significance to this project that requires both respect for past accomplishments and a commitment to future achievements, ensuring the canal will enhance global trade during the next 100 years as much as it did in the last 100. CH2M HILL is up to the task.

When completed in 1914, the Panama Canal represented an engineering feat that was unmatched. Without the benefit of today’s technology, engineers and construction managers conquered jungle-borne diseases by eradicating mosquitoes, built the locks based upon hand-drawn blueprints, experimented with new types of cement and equipment, and oversaw a disjointed, multi-national work crew.

The United States was given control over the Panama Canal Zone after backing Panamanian rebels in their attempt to become independent of Colombia in 1903. The canal was seen as an important strategic military and financial asset, especially after the discovery of gold in California in the late 1800s. Construction on approach channels for a third set of locks began in 1940, but was abandoned as the U.S. entered World War II.

In 1999 total control of the Canal Zone was returned to Panama. In 2006, the ACP proposed a third set of locks that would use some of the abandoned approach channels from the 1940 construction. Today, the ACP, working with contractors from many different nations, is overseeing the expansion of the canal that is the largest employer and a key component of the country’s revenue.

“We work as a team with ACP to oversee all program management issues,” says Garry Higdem, lead executive for CH2M HILL on the Panama Canal Expansion Program. The company’s involvement with ACP began before the expansion program broke ground teaming with the University of Texas at Dallas to train ACP managers on the use of project management tools and systems that would be necessary for the seven- to eight-year construction project. After submitting a proposal for the program management contract, CH2M HILL was awarded the contract and serves, not as a contractor, but as a partner with ACP on the program.

The canal expansion involves the deepening and widening of the channels and the addition of a third lane, requiring an additional set of locks at both the Pacific and Atlantic sides of the canal. These changes will make it possible for post-Panamax ships to pass through the canal. These vessels can haul more than twice as many containers as the Panamax ships that currently squeeze through the existing locks. Each of the three sections of the existing locks are 1,000 ft. long, 42 ft. deep and 110 ft. wide, which means the 106 ft. wide ships have a mere two feet clearance on each side. The new locks will be 1,400 ft. long, 60 ft. deep and 180 ft. wide to accommodate the larger post-Panamax ships.

In an unusual move from an engineering perspective, ACP bid the construction of the locks as a design-build project that was awarded to one consortium. “The ACP had no experience designing locks and wanted to make sure the locks on both the Atlantic and Pacific sides of the canal were of uniform design,” explains Higdem.

“It was important that the contractor have expertise in the newest designs for both the locks and the water-saving basins.” The canal expansion has experienced some of the typical issues that are often seen on construction sites; however, according to Higdem, there are particular challenges that are amplified by the size, scope and location of the canal expansion.

Although every contractor deals with rain, Higdem counts weather as numbers one through 10 on his list of program challenges. “Panama has an eight-month rainy season and contractors have to develop methods of handling water without stopping construction,” he says. “We have very smart contractors who have built drainage systems around the perimeter of the construction site and around excavation sites to keep excess water from entering the sites.”

An unexpected challenge caused by the rain was solved with tents. “The contractor producing sand for concrete had no way to control the moisture level of the sand before going into the batch plant,” says Higdem. A large tent was constructed over the piles of sand to protect it from the rain – a simple solution to a problem created by a continuous rainy season.

There are significant differences in the geology between the Atlantic and Pacific sites of the lock construction. There is not suitable material on the Atlantic site to use as aggregate for concrete mixture so the Pacific site provides aggregate for both, says Higdem.

Coarse aggregate is loaded onto a ship on the Pacific side and then transported through the canal to the Atlantic site where it is further crushed into finer aggregate and sand.

Excavation for the Pacific locks required drilling and blasting as a result of the basaltic rock located in the construction site but no drilling or blasting was required on the Atlantic site, says Higdem.

Another difference that required additional attention on the Pacific lock is the seismic fault that runs through the area. “We knew the fault was there and that it runs diagonally through the lock,” says Higdem. Although the lock designs for the Pacific and Atlantic sides are the same, the Pacific lock is engineered differently to accommodate the potential seismic activity.

One of the ACP requirements for all contractors and subcontractors is that 90 percent of the construction workers hired for the project be Panamanian. “This means a lot of new employees for contractors but it is important to the ACP that jobs are given to the people who live in Panama,” explains Higdem. There have been a few labor disputes but nothing out of the normal for the construction industry, he adds.

CH2M HILL has approximately 30 employees on site in Panama handling engineering, construction management, quality and safety, and program management responsibilities. The opportunity to work in Panama on a significant project means no shortage of available workers for the positions, points out Higdem. The difference in this project, as with many other international projects, is the length of time. “Most international assignments last two to four years, and then you’re ready to come home,” he explains. “ACP would like a stable team that is there from the beginning to the end, so we work with employees to keep a stable team but we will rotate employees when they want to return to the United States.”

Even with the rotation, there are several people who have been in Panama since the first day and there is a group who have been there three years, says Higdem. “We also recently recognized several people with five-year anniversary awards.”

Although Panama has lengthy rainy seasons, fresh water is a scarce resource in the country. The biggest user of water in the country is the canal, as water is used to lift or lower ships from one lock to another. Over 50 million gallons of fresh water are flushed into the oceans with each transit through the existing locks. The new locks will be 65 percent larger than the existing locks but water-saving basins recycle water used in each transit, which reduces the amount of water needed for each ship by 7 percent.

Part of CH2M HILL’s responsibility is to train its Panamanian counterparts as they move through the program. “The Panama Canal and its success is a point of pride for this country and they want to make sure they are prepared to continue operating a successful venture,” explains Higdem. When Higdem and his team leave, the skills and knowledge they have imparted will stay in place at ACP. He adds, “Our goal from the start is to work ourselves out of a job.”

Construction related to the Panama Canal expansion project is not limited to Panama. Ports throughout the Gulf and the East Coast of the U.S. are evaluating increases in the number of post Panamax ships traveling to their harbors, and construction projects related to increased traffic are underway.

While the actual impact related to the Panama Canal expansion is hard to predict, the state of Florida expects to see some increases, which will generate jobs and revenue in and around the ports, says David Denslow Jr., Ph.D., research economist for the Bureau of Economic and Business Research and distinguished service professor in the Department of Economics at University of Florida. Increased traffic into ports can result in more jobs at businesses congregated around the port, such as warehouses and manufacturing companies.

“Container shipping is a growth opportunity so the ability to dock the larger ships, offload the cargo and store the cargo until it is transported by another boat, train or truck, is important,” says Eve Irwin, coordinator of research program services at the Bureau of Economic and Business Research at University of Florida. An article co-authored by Irwin and Denslow points out that the ports of Miami, Everglades, Jacksonville and Palm Beach rank among the nation’s top 20 container ports and Florida accounts for 7 percent of the total U.S. container movement.1

With container traffic, storage space is critical, so in addition to deepening harbors to handle larger ships that are fully loaded, infrastructure to handle storage of containers is needed, points out Irwin. “Miami is already working on the rail yard to handle more traffic and a tunnel under the downtown area will enable port traffic to bypass city traffic.” The Port of Jacksonville handles post Panamax ships that travel through the Suez Canal today, but with a harbor channel depth of 40 feet, the ships cannot be fully loaded, says Chris Kauffmann, chief operating officer of the Jacksonville Port Authority.

A Presidential Executive Order issued in August 2012 has expedited the review and permitting process for key infrastructure improvement projects, including port-related ventures such as those planned for Jacksonville. “We are hoping the expedited channel deepening to between 45 and 50 feet will be completed by the Army Corps of Engineers by 2018,” he says. In the meantime, Jacksonville Port Authority is overseeing a number of major construction projects to improve the capability of handling larger numbers of containers as ships come in fully loaded, including a new Intermodal Container Transfer Facility (ICTF) that will reduce truck traffic on local and regional roads. The ICTF will include a five-track rail yard, two wide-span electric cranes, and a paved area for stacking containers. Over the next several years, the authority is looking to invest more than $1.25 billion in infrastructure.

More cargo means more truck traffic on the roads so Jacksonville Port Authority is working closely with the Florida Department of Transportation to identify and prioritize road construction, such as expanding on and off ramps to handle additional vehicles. There is also a close working relationship between the Texas Department of Transportation (TXDOT) and state port authorities. TXDOT has created a Panama Canal Stakeholders Group comprised of a number of entities with an interest in expanded port capabilities and is asking their input on transportation issues that must be addressed.

“One advantage Texas has over ports in other states is our ability to handle imports and exports,” says Marc Williams, director of planning for TXDOT. Trucks and trains can easily travel to Houston or other Texas ports to load cargo onto outgoing ships and stay to reload cargo from incoming ships, saving time and money for transportation companies, he explains. “Agricultural and energy products represent growing sectors of our state’s export business.”

The proposed I-69 corridor in Texas will serve as the backbone to a highway system serving the ports, explains Williams. I-69 is a combination of existing highways and new construction to enhance the route’s ability to handle increasing traffic in and around port cities. A list of other road construction projects throughout the state includes bridge and interchange improvements and upgrades to interstate highways.

TXDOT’s road and rail construction is not a specific reaction to the Panama Canal expansion, points out Williams. “It is in response to a number of factors that have increased traffic congestion and need for enhancements driven by port activities and increasing trade.” The Panama Canal Stakeholders Group is an effort to identify potential needs now, he says. “We want to take a holistic view for planning, rather than react to one need at a time.”

1. Irwin E, Denslow D. Intermodalism, Panama Canal Expansion, and Florida’s Ports. http://www.bebr.ufl.edu/articles/economic-analysis/intermodalismpanama-canal-expansion-and-florida-s-ports. Accessed September 15, 2012.