Amid exploding fireworks and waving flags, a Chinese ship carrying more than 9,000 containers on Sunday entered the newly expanded locks that will double the Panama Canal's capacity in a multibillion-dollar bet on a bright economic future despite tough times for international shipping.
Several tug boats pulled "Cosco Shipping Panama" into the new locks at Agua Clara under a cloudy sky in Colon province, about about 50 miles north of the capital.
"This is the route that unites the world," said Panamanian President Juan Carlos Varela.
Thousands of Panamanians who began gathering before dawn to witness the inauguration of the canal's expansion waved the national flag as the band struck up a song.
"It's a one-time experience, a great achievement," said Felicia Penuela, a housewife from Colon province. "Panama is showing the world that even though it is a small country it can do great things."
Nearly two years late due to construction delays and labor strife, the $5.25 billion project formally launched with the transit of the 158-foot-wide, 984-foot-long, Chinese-owned container ship. It's one of the modern class of mega-vessels that will now be able to use the canal.
With 30,000 people and eight foreign heads of state expected to attend the daylong festivities, officials are bullish.
"There is evidence that the Panama Canal, with this expansion, is an important player not only for regional maritime commerce but worldwide," said Oscar Bazan, the Panama Canal Authority's executive vice president for planning and commercial development. "The canal is a winning bet. (Clients) will benefit from saving not only time but also money, because the canal is a route that shortens distance."
However, the party comes amid a lull in global shipping due to the drop in oil prices, an economic slowdown in China, which is the canal's second-largest customer, and other factors that have hit the waterway's traffic and income.
While authorities anticipate increasing commerce between Asia and ports on the U.S. East Coast, doubts remain that not all those ports are ready to handle the huge New Panamex-class cargo ships. Net cargo volume through the canal from the U.S. East Coast toward Asia fell 10.2 percent in 2015, according to official statistics. Meanwhile the Suez Canal in Egypt recently lowered tariffs by up to 65 percent on large container carriers in an attempt to keep its traffic.
"It's important to remember that the canal does not create demand," said Antonio Dominguez, a general manager for global shipping leader Maersk Line, which moves about 14.2 percent of world commerce. "The canal opens the route."
Since the canal was handed over from U.S. control at the end of 1999, the waterway has generated about $10 billion in direct income for the Central American nation and is responsible for about 40 percent of its GDP, factoring in related economic activity. Some 35 to 40 vessels transit the waterway each day, and the canal is estimated to handle about 6 percent of world maritime commerce.
Panama began the expansion nearly a decade ago. Originally planned to open in late 2014 around the waterway's centennial, the new locks can accommodate ships that carry up to three times the cargo of those previously able to use the canal.