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By: IBISWorld Analyst, Ashley Cruz
For 103 years, the Panama Canal has been a crucial conduit of international cargo transportation, saving shippers up to two weeks in transit times and thousands of dollars in transportation costs, compared to other routes. However, in the past decade, rising globalization has pushed shipping volumes upward, creating a need for bigger, more fuel-efficient vessels. The ensuing rise of so-called “megaships” has necessitated larger port and canal infrastructure to handle larger ship sizes and capacities. Thus, in June of 2016, a $5.3-billion Panama Canal expansion project was finally completed, adding a third set of locks that are deep and wide enough to accommodate megaships of up to 14,000 twenty-foot equivalent units (TEUs). As a result, these newly termed “neo-Panamax” ships can now travel to ports that were previously inaccessible, creating a ripple effect of downstream changes at both the ports of entry and throughout the shipping supply chain.