Political tensions have periodically caused the canal

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Chapter 1 / Exercise 5
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political tensions have periodically caused the canal to be closed to commercial traffic. The Panama Canal, a 50-mile facility designed to link the Atlantic and Pacific Oceans and avoid long ocean trips around Cape Horn in South America, was opened to traffic in 1914. Once completed, the canal cut nearly 8,000 miles, and many days of transit time, off the existing water route from New York to San Francisco. Politically, the Panama Canal represented an example of the global reach of the United States, in the sense that the United States was largely responsible for its construction and funding. Moreover, the United States controlled operations of the Panama Canal from 1914 until late 1999, at which time Panama took con- trol of the Canal. Despite some apprehension about this transfer of power, the transition on December 31, 1999, appears to have gone smoothly: “. . . a week later, the sky hadn’t fallen, the canal hadn’t caved in, and no foreign troops had seized it. It was business as usual . . .” 25 The changing nature of international supply chains, particularly in terms of in- creased north–south trade and the emergence of larger container ships, has im- portant implications for the Suez and Panama Canals. While the Suez Canal cur- rently can handle the world’s largest ships—albeit not fully loaded—it is only operating at about 50 percent of its potential capacity. One reason for this un- derutilization is not physical constraints, but rather, that the Suez “. . . Suez is a victim of world trade patterns.” 26 For example, the so-called North–South Seaports, Airports, Canals, and Tunnels / 241 25 Journal of Commerce, Business as Usual. January 10, 2000. 26 J. Drummond and H. Saleh, Too Big for World Trade Demands. Financial Times, May 9, 2001, p. 11.
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Corridor between Central Asia and Russia would bypass the Suez Canal and link India, Iran, and Russia by rail, highway, and water. When fully operational, this corridor is expected to result in at least a 10 percent drop in Suez traffic. 27 The Panama Canal, by contrast, continues to be challenged by physical con- straints. Currently, the largest vessels that can traverse the canal are so-called Panamax ships, with a width of approximately 106 feet, a length approaching 900 feet, and carrying capacities of about 65,000 tons. As this edition is being prepared, there is talk of building a bypass that could accommodate container ships capable of carrying up to 10,000 TEUs. Bridges and Tunnels Some of the world’s most prominent international bridges are those involved in facilitating movements between the North American Free Trade Agreement (NAFTA) countries of Canada, Mexico, and the United States. Since implemen- tation of NAFTA, cross-border trade volumes have skyrocketed; this increased volume has put tremendous pressure on the existing infrastructure. In 2000, for example, a fourth bridge linking Laredo, Texas and Nuevo Laredo, Mexico was opened—and this new bridge is a cargo-only facility. Likewise, in 2000, a bridge was completed between Sweden and Denmark that connects the northern Scan-

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