The opening of the Panama Canal in 1914 was destined to change the world. The expansion of the canal, with works completed in June 2016, was in response to a changing world. The expansion project, which took almost a decade to complete, cost roughly US $5 billion. In its first year of new operations, an extra 25 million vessels sailed through. This achievement is undoubtedly notable but what does this upgrade ultimately mean in the context of the Caribbean?
When it first opened‚ the Panama Canal sliced travel times, allowing ships travelling from the Atlantic to the Pacific to forgo a far longer journey along the South American coast‚ and especially the nautical dangers of sailing around the Cape of Good Horn. It was a revolution in global business. Today‚ global business is in a state of perpetual revolution.
The ever-growing globalisation of our economy‚ the digitisation of industry‚ and the ongoing impacts of disruption across the board mean that the pace and scale of change are greater than ever before. And all this with artificial intelligence, blockchain, and self-driving vehicles on the horizon. These changes don’t mean that the canal is less valuable‚ but it does hold a different value.
THEN AND NOW
Everybody recognizes that the world was very different 100 years ago. Yet, it’s only when one contrasts 1914 with now, that the immense growth and scale of change is apparent.
When the Panama Canal opened, the first Model T Ford had been out for less than a decade.
It was not until over a decade later, in 1926, that the first international telephone call was made, and not until the 1950s that the TV began to find widespread adoption around the world.
It took until the 1990s for the internet to shift from being used largely among military, scientific and academic circles to something that was mainstream, and would forever change our personal lives‚ and business. These changes illustrate why the canal’s opening was significant in its time.
It will be important to watch the future use of the canal. Expanding the canal’s capacity as a tool of economic productivity is, at its core, an effort to ‘future proof’ it, amidst a period of immense global change.
WHAT THIS MEANS FOR THE CARIBBEAN
The Caribbean is a completely different region to what it was 100 years ago. In 1914, many nations of our region were still governed out of European capitals; the sense of certainty, confidence, and pride surrounding our own unique national identities that would come decades ahead with campaigns for independence, was still being formed and established.
Today, our region in the New World is still young and growing but already boasts a rich mix of history, peoples and cultures. More growth and diversity here is surely always welcome, but certainly the Caribbean has a great foundation in this already. Ultimately, it’s in the economic field that the region will need diversity, especially as the shape of the seas around us is changing.
Precise estimates and annual GDP may vary slightly but it’s clear that the Asian region will be the economic engine room of the 21st century. Asia holds the already huge economies of Japan, China and India. Beyond this, the future growth of Australia, South Korea, Indonesia and Taiwan – all in the top 25 economies of the world – will shift the balance further. The Caribbean holds historic links to Europe but its economic future will increasingly reside in Asia.
A STORY OF THE AMERICAS
When the Panama Canal was created last century, it was conceived for the Atlantic to meet the Pacific. Soon the world’s economic power will be driving trade from the Pacific to the Atlantic.
It is not only the country of Panama that has prepared for this eventuality. Recent years have seen a new momentum surge in Nicaragua, one that would finally see the creation of its own canal.
Beyond this, in the far north of the Americas, the Northwest Passage has begun to open. The potential for it long-term is unclear, especially given the territorial dispute between the Canadian government which seeks to claim it, and all other nations which seek to sail through it. Whatever the case, ships are now sailing faster through it, and its viability is growing.
HOW MUCH WILL THIS MATTER?
We remain a world of material goods and products. That is unlikely to change any time soon, especially as – for all the new growth and shifts that the rise of a digital economy will bring – construction materials, machinery, and consumer goods will always need to be transported.
Nonetheless, the balance between traditional ‘bricks and mortar’ businesses, and online-only digital offerings, is only set to shift further, and to do so away from Europe, towards Asia, as eCommerce is set to grow rapidly. The Panama Canal’s expansion is a story of building on the economic growth of the 20th century, but also represents a clear break from it.
WHAT MATTERS MOST TO THE CARIBBEAN
The Caribbean region is one of unique challenges and opportunities for the future. As a region with a relatively small population, small land mass, and huge bodies of water between our people, the potential to compete with a nation like Japan or Taiwan in manufacturing would not be possible. Nor could we outpace the United States in agriculture, or Germany in pharmaceuticals.
Increasingly though, these factors are of diminishing importance to the future of the global economy. The need for effective administration of digital goods and assets is growing.
The Caribbean is already a recognised global destination for travel and finance and, some of the controversies with the latter notwithstanding, has central proximity between East and West, and also two existing industries to take advantage of it.
A focus on building skills over growing shipping may ultimately be the order of the day for the future, then. People of the Caribbean who embrace what the expanded canal signifies about the region’s future, as opposed to turning from it, will sail strong into the future.