Summer start for Nicaragua Canal?

Malcolm Latarche
Malcolm Latarche

24 March 2016


Speak of November’s presidential elections and most will think you are referring to the battle to replace Barack Obama, but there is another presidential election in the same month in Nicaragua where Daniel Ortega will be seeking to be re-elected. The outcome of that contest may have a greater influence on shipping than the one in the US. Daniel Ortega is one of the driving forces behind the proposed Grand Nicaraguan Canal that is in the early stages of development under the leadership of Chinese entrepreneur KW Pang, Executive VP of the HKND Group that has been given a 50 year concession by Nicaragua to build and run the canal. Earlier this week, Bloomberg reported that HKND expects to start construction on a fuel terminal and a ship wharf as soon as August this year on the Pacific coast after a year of delays. The Bloomberg report said “The works will be part of a port facility for importing machinery needed for "major works" such as dredging, KW Pang said in an e-mailed response to questions, without specifying when digging would begin. Financing for the 170-mile (274-kilometer) long canal could come from debt and equity sales and a potential IPO, he said”. The possible impact of the canal was featured in the Autumn 2015 issue of ShipInsight Journal. Being able to accept the largest vessels afloat and beyond – in theory it would accommodate a 25,000teu box ship – the Nicaragua Canal would cut at least 2,000 miles off a voyage from Shanghai to New York. The distance between Asia and Northern Europe would be around 2,600 nautical miles longer via Nicaragua or Panama than it would be by Suez, but it would avoid areas where piracy is rife and while Suez has yet to be badly affected by terrorism the risk is there and perhaps growing due to current geopolitical circumstances in the Middle East. The project has a $50Bn price tag and is unlikely to be progressed if Ortega loses the election – his government is losing support but still retains a good lead over rivals – but Pang seems determined and while many in shipping question the need for an alternative to Panama, it is a fair bet that competition between the two will help keep down costs on some of the world’s main trade routes as well as opening up intriguing new possibilities.