Panama Canal plays key role in global trade

The Panama Canal plays a key role in global trade, as it was built to accelerate transport and reduce logistics costs to meet the demands of increased intercontinental shipments across the world.

President-elect Donald Trump recently started a debate on the ownership of the canal, threatening to overtake the canal.

Trump said the Panama Canal's tariffs were too high and that the US is "getting ripped off."

Trump stated that China's influence on the canal is growing, while Panamanian President Jose Raul Mulino rejected the threat and Trump's claims, saying that the canal is not under any direct or indirect control or influence by any other country.

- HISTORY OF PANAMA CANAL

The 82-kilometer (51-mile) waterway faced many difficulties in its construction with the recorded casualties of over 20,000 people, and coinciding with two epidemics.

The Paris Canal Congress in 1879 is regarded as the first step towards the construction of the Panama Canal. French engineer and diplomat Ferdinand de Lesseps, who developed the Suez Canal project, told delegates from around the world that a canal connecting the Atlantic and Pacific oceans needed to be built.

Fieldwork on the Panama Canal Project began in February 1881, and despite the first few phases of surveying the gulf and rivers went smoothly, excavations proved to be difficult, coupled with the onset of rains, which created landslides and mud, rendering the ground work impossible.

In the summer of the same year, the mosquito crisis, which carried yellow fever and malaria, was coupled with an earthquake. As lives were lost to epidemics, the earthquake stopped excavations from continuing.

The main construction contractor for the Panama Canal project pulled out the next year and de Lesseps took over the project via his own company and appointed a new director, but the director lost his entire family to sickness in 1883.

As many problems in the Panama Canal's construction continued, a borrowing crisis also reared its head. De Lesseps used the same high-interest rate borrowing scheme he had used for the Suez Canal project for the Panama Canal, but the result was not the same.

De Lesseps finally agreed to an interim plan with a lock system and Alexandre Gustave Eiffel, the creator of the would-be Eiffel Tower, got involved with the project and designed the canal.

De Lesseps argued that the canal be built on sea level, akin to the Suez Canal, but some sources say that his failure to consider that Panama's terrain was different from that of Egypt's was the biggest mistake in the project.

The two oceans were not on the same level, as the Pacific Ocean was slightly higher, so ships crossing the terrain had to reach 26 meters (85.3 feet) above sea level to reach the other end of the canal.

After a few years, de Lesseps died before he could see the canal finished and the project was left unfinished after his death.

In 1904, the US got involved with the project as then-President Theodore Roosevelt handed over the control of the project to US managers, who then used the means they had developed in Cuba to combat the mosquito crises in Panama, improving roads and water areas to prevent further breeding.

The Chagres River in central Panama was overflowed and diverted to create a larger lake in the high and difficult areas to enable ships to be raised to the level of the lake with large locks, thereby significantly reducing excavation time.

The US completed the Panama Canal's construction and opened it on Aug. 15, 1914.

President Jimmy Carter and Panamanian leader Omar Torrijos signed a deal in 1977 to gradually transfer the control of the canal to Panama, which concluded in 1999 with the Central American country taking full control of the canal.

The Panama Canal was widened to accommodate the increasing volume of trade and the passing of larger vessels in 2016. For powerful countries like the US and China, the canal presents a great strategic advantage.

- PANAMA CANAL'S OPERATIONS

The transit fee for a vessel sailing through the Panama Canal can reach up to $300,000, depending on the weight and the type of cargo and the size of the vessel, and surcharges can be added in some cases, starting at $15,000.

Vessels seeking emergency transit through the canal can be millions of dollars. The Panama Canal Authority sets these fees every year.

Some 11,240 vessels passed through the Panama Canal since October 2023, down 25% compared to the previous period, according to data from the canal's website, compiled by Anadolu.

The US has the largest share in the canal's transports, accounting for 74.7% of the total cargo transportation. Analysts say that this figure shows that the canal is critical to the US due to cost, competition, and strategic importance. The US transported a total of 157,062 tons of cargo through the Panama Canal in 2024.

China's all-time transport through the Panama Canal was at 45 million tons, while Japan's figure was around 30 million tons—two of the largest users of the canal after the US.

A total of 2,773 container vessels, 1,808 chemical tankers, 1,561 liquefied natural gas tankers, 1,278 dry bulk carriers, 205 passenger ships, and 1,507 other types of vessels were recorded passing through the Panama Canal in 2024.