OMAHA (DTN) -- President-elect Donald Trump continues to have his eyes on Canada, Greenland and the Panama Canal, as he reiterated in a press conference Tuesday.
Asked if he would rule out the use of military force when looking at expansion, Trump said he couldn't commit to that. Instead, he emphasized the importance of the Panama Canal.
"Look, the Panama Canal is vital to our country, it's being operated by China, China. And we gave the Panama Canal to Panama, we didn't give it to China."
Responding to Trump, Panamanian officials said the canal's sovereignty is non-negotiable.
PANAMA: A VITAL SHIPPING LANE FOR COMMODITIES
Overall, more than 70% of all cargo passing through the Panama Canal is coming from U.S. ports or heading to U.S. ports. A Department of Transportation report last month highlighted that East Coast ports sent 124.6 million tons of cargo through the canal in 2023 with 64% of that cargo bound for Asia.
Along the Gulf Coast, at least $8.9 billion worth of agricultural products were shipped out of the Mississippi River ports through the canal in 2023.
In a typical year, about 600 million bushels (mb) of U.S. soybeans and 450 mb of corn move through the Panama Canal.
Those numbers fell off in late 2023 and most of 2024 because of drought conditions affecting water levels in Gatun Lake, the canal's main navigation channel. 2023 was one of the driest years on record for the canal, which primarily traverses a rainforest region.
The drought affected grain shipments throughout the region. In 2023, USDA's Grain Transportation Report detailed exports through the Panama Canal, highlighting the drought affecting Gatun Lake. Drought shifted grain exports to Asia in 2023. In the latter part of October 2022, more than 2 million tons of grain, or about 80%, moved through the Panama Canal. In the same two-week stretch in 2023, 2 million tons, or more than 90%, was rerouted through the Suez Canal.
Typically, going through the Panama Canal to Asian destinations such as Japan saves U.S. shippers 18 to 22 days versus going through the Suez Canal or around South Africa.
The drought reduced shipping traffic through the canal by as much as 40%. Shipping through Panama has rebounded in recent months as water levels have risen.
TURNING IT OVER
Former President Jimmy Carter signed an agreement in 1977 that officially turned over control of the Panama Canal to the government of Panama on Dec. 31, 1999. The treaty detailed a gradual transfer of operational control over time.
Trump, in his Tuesday press conference, said turning over the canal was a mistake by Carter and one of the reasons Carter lost the 1980 election. "It's a bad part of Carter's legacy," Trump said.
CHINESE OPERATIONS
Trump is correct in noting that Chinese companies have a large presence in Panama. Hutchinson Ports, which is a subsidiary of CK Hutchinson Holdings in Hong Kong, operates two of the canal's five main ports -- one on the Pacific and one on the Atlantic side.
Rep. Raja Krishnamoorthi, D-Ill., who served as ranking member of the House Select Committee on China, raised concerns in a hearing last year about China's control of ports on both sides of the canal.
A Chinese consortium also has the contract to build a $1.4 billion bridge across the canal as part of China's Belt and Road Initiative.
THIRD LOCK EFFECT
In 2016, Panama completed the third set of locks through the canal, widening and deepening navigation channels. That allowed larger, new Panamax container ships three times larger than ships that could move through the original locks. Those Panamax ships can hold 12,000 containers, as well as larger natural-gas and oil tankers.
Those ships struggled during the drought with draft restrictions and fewer ships were able to move through the canal at any time.
The third lock set off a wave of infrastructure demands by U.S. ports, especially on the East Coast, as they dredged to get to a 50-foot depth and expanded capacity to handle more containers as well. Ports from Texas to Maine spent a combined $4.7 billion to deepen their ports as a result.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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