The Nicaragua Canal

In July, the Chinese company HK Nicaragua Canal Development Investment Co. Ltd. (HKND Group), released a finalized route for the canal they have been contracted to build across the Central American country of Nicaragua. The Hong Kong based investment group plans to break ground on this project in December, however there is still a great deal of speculation on whether or not this canal, which has been dubbed the biggest engineering project in human history, will ever come to fruition. If this ambitious project is in fact completed, it will have a major impact on both the global freight industry, and the economy in Central America, specifically in Nicaragua.

The canal, as it is planned now, will stretch 173 miles, which is over three times as long as the Panama Canal. The cost of this project is estimated at $40 billion, almost four times the GDP of Nicaragua. The canal is slated to be much wider and deeper than the Panama Canal and will be able to move supertankers too large for the Panama Canal. The Nicaragua Canal will transport ships from Punta Gorda on the Caribbean through Lake Nicaragua to the mouth of the Brito river in the Pacific.

This project will drastically impact the downtrodden economy of Nicaragua, where a large portion of citizens are either unemployed or underemployed and living below the poverty line.  Nicaraguan officials are optimistic that this project will help bring the nation out of poverty.  Paul Oquist, a senior adviser to the Nicaraguan president Daniel Ortega, said in an interview that he expects the formal employment of Nicaragua to double due to the building of the canal and the multiplier effect that would subsequently follow.

On a global scale the Nicaragua Canal would have a major impact on the global shipping industry. First of all, it would allow more ships to travel between oceans, as during certain times of the year the Panama Canal becomes completely booked up, preventing some ships from passing through the canal. Secondly, the Nicaragua Canal would also end the monopoly that the Panama Canal currently enjoys. This could cause the price of traveling between the oceans to drop. Overall, if the Nicaragua Canal were to be completed, it would make it both cheaper and more efficient for companies to ship their freight around the world by way of the oceans.