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The next Panama Canal could be on its way

A cargo ship is seen passing through the Miraflores Locks in the Panama Canal on April 15, 2012.

Jeremy Hobson: The government of Nicaragua is paying two Dutch companies about $750,000 to study the feasibility of
building a canal -- a canal that would rival the Panama Canal and create another link from the Pacific Ocean to the Caribbean Sea.

Richard Meade is editor of the shipping industry publication Lloyd's List, and he joins us now to discuss. Good morning.

Richard Meade: Good morning.

Hobson: So how does the shipping industry feel about this idea about building a new canal that would go through Nicaragua and Costa Rica?

Meade: I think the thing to remember is that this is a perennial story for the shipping industry. I mean, the idea of a Nicaragua canal has been floating around since the 16th century. So I don't think anyone's holding their breath. But broadly speaking, I think the shipping industry would welcome it. It would certainly supply a level of competition for global trade, and a sort of effervescence of vying between the two South American states for transporting and shipping that just doesn't exist at the moment.

Hobson: Which ships would decide to use that canal as opposed to the Panama Canal?

Meade: As far as I understand it, the Nicaragua canal is planning to sort of outbid the Panama Canal in terms of size. Now the Nicaragua canal -- if the plans ever came to fruition -- would be able to take some of the largest ships, but certainly not the largest ships. You wouldn't be able to get, for example, a very large cruise carrier, which is the biggest large oil tanker in existence.

Hobson: All right, so you say this has been talked about since the 1600s. What do you think -- do you think it'll happen this time? I mean, they've hired these Dutch companies to look into it...

Meade: Realistically, I doubt the economics are going to add up. I think you need to look more widely at the global economic trends in terms of shipping. I mean, we're seeing an increase in terms of the size of the ships, but at the same time, you're also seeing a massive increase in terms of the price of fuel that powers these ships. And, if you're looking at a global trade infrastructure that is more based in terms of reliability than in terms of speed, it's really just a question of how much it's going to cost to get goods from A to B. I don't necessarily see the shortcut of a Nicaragua canal being that much of a swing in terms of that decision.

Hobson: Richard Meade, editor of the shipping industry publication Lloyd's List, thank you so much.

Meade: Quite all right.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.
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Dear Mr. Meade, the debate about Mexico being part of Noth America or Central America is one thing, but having Nicaragua, Costa Rica or Panamá in South America is plainly wrong. Geographically the separation of the continets is done according to the continental plates and the Central American isthmus between North and South America is related as its own subdivision of the American Continent.
Thinking about the shipping industry in the future without changes as it is today seems to me as a very narrow minded view. It is true that ships use lots of fuel, but the loads they can carry is nowhere matched by any other transport means today. More fueld efficient and non-tradictional fuels will play an important role in the future for the freight industry, including sea vessels.
If the study shows that the channel will provide faster transit for those ships because of the geography of this part of the land, it may finally get the economical and governmets support it requires. It's just a matter of economics as you said.

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