Disadvantages of Panama Canal expansion in relation to supply chain management

Document Type:Essay

Subject Area:Management

Document 1

However, there are disadvantages that come with this expansion as far as supply chain management is concerned. Cargo routing is a function of the shippers’ optimization of the supply chain process and not entirely dependent on the economics of the carriers’ line haul. It is worth noting that the expansion of the canal will not provide any additional advantages to the shipper that is not in existence hence there will not be unfulfilled demands that required fulfilling at the south coast port. Disadvantages The expansion of the Panama Canal is significant because it will increase the frequency and the size of the vessels that will transit the United States and Gulf coast ports. With the expansions, an additional $1. The emergence of cracks that appeared during the testing phase is likely to negatively influence the preference to use the canal as a bridge to the other side of the sea.

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According to the New York Times, the cracks may be as a result of poor pouring methods leading to air gaps in the concrete and which affects the quality of the structure. In their view, this structure is unreliable and will require a complete reconstruction of the locks that are seemingly unstable because of the cracks (Bogdanich, Williams, and Méndez). There are risks that would lead to the disruption of the operations at the canal because of the potential industrial action by discontent workers working at the canal. Construction workers have over the past staged protests that paralyzed the operations at the canal including the strike by the Grupo Unido Po el Canal (GUPC) and another one by the National Union of workers in the construction industry.

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Introduction of draft restriction will most likely affect the cost-saving associated with the larger ships that transport goods through the Panama Canal. The Panama Canal Authority (ACP) imposed stringent draft restrictions on the vessels in 2015 and 2016 which significantly affected to flow of goods through the canal (Prince). Most of the ships had to cut down on their cargo size so as to meet the new restrictions that demanded a decrease in the permitted distance from the waterline to the hull bottom. Intruding such measure does not only cause a delay because of the inspection of the ships but also affects the flow of goods. Most companies were affected by the restrictions as this was a direct attack on their inventory management capacity and dynamism.

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