Q: The Panama Canal is considered an engineering marvel. Give us a little history.
HIGGINS: Records of interest in an interoceanic canal through the Central American isthmus date back to the 16th-century reign of Charles V, king of Spain, who commissioned a survey for a route through Panama to expedite the journey for ships laden with riches from the Americas. Since its completion in 1914, the canal greatly shortened the transit for vessels from the Atlantic to the Pacific and vice versa. Later, the invention of the steel box container dramatically revolutionized the global supply chain, and as the number of goods moving around the world in these container ships exploded, the Panama Canal became the standard by which cargo ships are built.
Q: The extreme drought in Panama is affecting the canal, limiting the number of ships passing through. What’s being done to address this problem?
HIGGINS: The Panama Canal Authority has proactively adjusted the permissible draft for vessels that transit the canal each day. Some vessels are unloading their cargo and using the Panama Canal Railway, which runs 47 miles along the canal, to get containers to the other side of the country, then loaded onto another vessel.
Q: What about shoring up the canal water?
HIGGINS: There are ongoing hydrological studies to figure out ways to recover and retain water. One of these measures is the proposed Rio Indio reservoir, and there are shorter-term tactics such as using water-saving basins and cross-filling lock chambers to raise and lower the vessels in ways that recover a large amount of water. This year, some are hoping for a strong La Niña that would hopefully bring lots of rain and alleviate the situation.
Q: How important is the canal to Panama itself?
HIGGINS: The Panama Canal contributes significantly to the nation’s GDP. Panama also imports semi-finished goods that are finished in the country and strategically distributed globally, boosting this initiative by offering tax incentives to attract foreign investment, generate employment, and transform the country into a competitive hub for light manufacturing and logistics operations.
Q: You recently took students to Panama, where you’re originally from. What did they learn?
HIGGINS: Of course, they studied the nuts and bolts of logistics, met with port operators, with warehousing and distribution companies, and got to see firsthand the wonder of the Panama Canal. However, I loved most how the students embraced the people, the food, the music, and the culture of Panama.
Felisa D. Higgins is associate dean for undergraduate education and clinical professor of supply chain management in the Smeal College of Business.
