Interesting Engineering Event
THE NICARAGUAN CANAL: THE BEST RESPONSE TO
THE RISE IN GLOBAL TRADE
INTRODUCTION: THE EFFECT OF THE NICARAUAN CANAL
The rise in Global trade has made the need for an alternative trade route to the Panama Canal a definite necessity. Even with the expansions on the Panama Canal, it cannot support vessels with capacities over 150,000tons according to an article in the Business Daily update . An old idea for a canal that would go through the impoverished country of Nicaragua is now become a viable option to enhance global trade, as Nicaragua attempts to latch onto the back of this rise in trade and counter the monopoly of the Panama Canal.
I think that this is an important issue because the construction of the Nicaraguan Canal would benefit shale export from the United States. This would result in a better economic standing for our country, and give the United States a greater geopolitical leverage, according to an article in the Wall Street journal about the effect of oil and natural gas production on the country’s standing . A better economy stands to increase the well being of every citizen of the United States of America.
There are many issues that face this project, such as environmental impact on Lake Nicaragua, the financial expense, and alternative trade route plans to connect the Pacific and Atlantic oceans through other South American countries. However, the Nicaraguan Canal stands to be the best option for a trade route especially considering the revolution in shale gas exports from the United States. Currently the vessels used to export shale exceed the capacity allowable by the Panama Canal, so they are forces to go around South America instead of through Central America. The technology is there, and has been there since the construction of the Panama Canal in the early twentieth century.
BACKGROUND: THE CONSTRUCTORS AND THE COUNTRY
A Brief History and a Bright Outlook
Nicaragua has long been considered an excellent route for a canal between the Atlantic and Pacific oceans. It was considered at the same time as the Panama Canal, but did not make it to construction at that time because of political unrest in Nicaragua. Now Nicaragua is “the poorest country in Central America and second poorest in the Western Hemisphere” according to the CNN wire . In Nicaragua almost half of the population cannot afford enough food to meet the minimal necessary caloric intake to maintain good nutrition. The Washington Times stated that “According to the company�s projections, the canal would create some 40,000 construction jobs and virtually double Nicaragua’s per-capita gross domestic product ‘ . This means that if the Nicaraguan Canal is built, Nicaragua will be able to sustain its economy, and its population. By 2015, before the canal is even finished, employment could triple and over 700,000 people could be pulled from poverty or extreme poverty. The economy could double, reaching $24 billion . Nicaragua could be one of the fastest growing economies in history.
According to The Business Daily Update, the annual revenue of the canal is estimated to be $5.5 billion . The total cost of the canal is estimated at $40 billion, with a building period of six to ten years, and sustainable operation for over a century, according to an article in International Construction . This means that its total revenue would far exceed the cost of construction and maintenance for the next 100 years.
The project was granted to, and is being funded by, a Chinese businessman, Mr. Wang Jing, and the HKND Hong Kong based group. This past summer Mr. Jing was awarded a fifty-year concession for the project, with a possible fifty-year extension . Mr. Jing made a point that the project would be funded by private investors . Since Nicaragua still recognizes Taiwan and not mainland China, the two countries do not have diplomatic relations. Therefore, the Chinese government will not be investing in the project initially. An investment such as this might scare away private investors, but I would not be surprised if China offers some low interest loans further into the project, as they stand to gain from the construction of the Nicaraguan Canal as well, since the Nicaraguan Canal would make trade key trading partners like South Africa more cost effective .
CONSTRUCTION AND TECHNOLOGY
The Nicaraguan Canal is potentially the largest civil engineering project in the world. It would be about three times the size of the Panama Canal . The route of the canal has not yet been finalized, but over 100 kilometers of land will have to be excavated .
Figure 1 
Route Options for the Nicaraguan Canal
Figure 1 displays the route options for the canal. All of these routes go through Lake Nicaragua, the largest lake in South America. The simplest route would be route 6, along the San Juan River, but that has been ruled out due to some territorial discrepancies between Nicaragua and Costa Rica, the country that lies along the southern side of the San Juan River. This leaves several overland routes, which would require extensive excavation. In addition to the canal, HKND also has rights to build two deep water ports, two airports, an oil pipeline across the country, and a transoceanic railroad, all of which fits into the timeline and budget [2, 7].
Construction of the Panama Canal: a Comparison
The feasibility check and environmental impact study for the Nicaraguan Canal have not yet been completed, so the exact method as to how the Nicaraguan Canal will be constructed is not yet released to the public, but looking to the past, at the construction of the Panama Canal we can get a good idea of the process by which the Panama was built. The canals were dug into “V” shapes by several techniques of excavation. Pneumatic power drills were used to drill holes for explosives, steam shovels, steam powered cranes, dredges- devices for underwater excavation-, and hydraulic rock crushers were then used to further break down the rock which was then transported to dumping sites by way of railroads. The technology will have improved by now, but the general process remains the same.
THE NICARAGUAN CANAL IS THE BEST TRADE ROUTE OPTION
Competitive Trade Routes
Nicaragua is not the only country with the intention to open up another trade route between the Pacific and Atlantic Ocean. In Honduras plans are being made to build Pacific and Atlantic ports connected by a series of rail lines. Guatemala is making similar plans to have ports connected by a high-speed rail line along gas and oil pipelines . This would be cheaper, but less efficient for trade in the long run. The additional time spent transferring goods to and from rail lines would add time to the shipping process and make the product more expensive.
US Shale Exports
From the perspective of the United States, the Nicaraguan Canal stands to be the best option. America has recently experienced a boon in shale gas production as well as shifts in trade policy to more exports . The vessels used to transport shale exceed the 150,000-ton capacity of the Panama Canal. These vessels then have to round Cape Horn on the southern tip of South America in order to export to China. Because of this, the price advantage of shale exports to China is very low. However, with the construction of the wider, deeper Nicaraguan Canal these vessels will no longer need to take such an extensive trade route. The Nicaraguan canal will be able to support vessels of 400,000 tons, vessels two and a half times the size of the largest vessels going through the Panama Canal.
CONCLUSION: A BRIGHT FUTURE
The Nicaraguan Canal will be the most efficient trade route from the Pacific to the Atlantic Ocean. It benefits the United States, particularly by increasing shale export efficiency, it benefits Nicaragua by allowing it to tap into the expanse of world maritime trade, and it benefits China by making their trade more cost effective as well. There are challenges that face the construction of the Nicaraguan Canal, as there were challenges that faced the construction of the Panama Canal. These challenges will be overcome by the advancement of technology, and motivation of the economic prosperity produced by this canal. The expense will most definitely be worth the outcome, and the future of world trade will be made brighter.
- (2013, June 26). “New canal a lifeline for energy. ” Business Daily Update.(Online article).http://go.galegroup.com/ps/i.do?action=interpret&id=GALE%7CA335278599&v=2.1&u=upitt_main&it=r&p=ITOF&sw=w&authCount=1
- A. Jaffe. (2013, March27). “Experts: How the U.S. Oil Boom Will Change the Markets and Geopolitics. ” Wall Street Journal.(Online article). http://online.wsj.com/article/SB10001424127887324105204578382690249436084.html
- C. Riley. (2013, June 26). “China canal project in Nicaragua has investors. ” CNN Wire. (Online article).http://ic.galegroup.com/ic/ovic/NewsDetailsPage/NewsDetailsWindow?failOverType=&query=&prodId=OVIC&windowstate=normal&contentModules=&mode=view&displayGroupName=News&limiter=&currPage=&disableHighlighting=false&displayGroups=&sortBy=&source=&search_within_results=&action=e&catId=&activityType=&scanId=&documentId=GALE%7CA335033445
- A. Yu. (2013, July 16). “Chinese tycoon maps out rival canal; Nicaragua OKs $40B waterway. ” The Washington Times.(Online article).http://ic.galegroup.com/ic/ovic/NewsDetailsPage/NewsDetailsWindow?failOverType=&query=&prodId=OVIC&windowstate=normal&contentModules=&mode=view&displayGroupName=News&limiter=&currPage=&disableHighlighting=false&displayGroups=&sortBy=&source=&search_within_results=&action=e&catId=&activityType=&scanId=&documentId=GALE%7CA336935740
- T. Rogers. (2013, July 24). “Can China finally make the Nicaragua canal dream happen? ” The Christian Science Monitor.(Online article).http://ic.galegroup.com/ic/ovic/NewsDetailsPage/NewsDetailsWindow?failOverType=&query=&prodId=OVIC&windowstate=normal&contentModules=&mode=view&displayGroupName=News&limiter=&currPage=&disableHighlighting=false&displayGroups=&sortBy=&source=&search_within_results=&action=e&catId=&activityType=&scanId=&documentId=GALE%7CA337749275
- C. Arduz, C. Sleight. (2013, June 24). “Nicaragua approves Panama Canal Alternative. ” International Construction. (Online article).http://www.khl.com/magazines/international-construction/detail/item86199/
- J. Hobson. (2013, July 22). “Chinese Company Attempts to Build Panama Canal Alternative.� “Here & Now. (Interview). http://hereandnow.wbur.org/2013/07/22/panama-canal-alternative
- (2013, June 14) “Living on Earth: Nicaraguan Canal. ” Living on Earth. (Interview). http://ic.galegroup.com/ic/ovic/AudioDetailsPage/AudioDetailsWindow?failOverType=&query=&prodId=OVIC&windowstate=normal&contentModules=&mode=view&displayGroupName=Audio&limiter=&currPage=&disableHighlighting=false&displayGroups=&sortBy=&source=&search_within_results=&action=e&catId=&activityType=&scanId=&documentId=GALE%7CA334434874
(2013). “The Nicaragua Canal and Development Project. ” HKND Group. (Website).http://hknd-group.com/the-project/
I would like to thank Dr. Dan Budny for the opportunity to do a research project that solidified my interest in civil engineering.
I would like to thank Judith Brink for assistance in research and refinement of sources through the University of Pittsburgh Library.
I would like to thank Heinz Langhorst for discussion on the construction and issues of building the Nicaraguan Canal.
I would like to thank Alexandra George for her advice on editing and refining the diction, content, and argument of my paper.