Date of Defense

5-23-2025

Date of Graduation

12-2024

Department

Marketing

First Advisor

Sime Curkovic

Second Advisor

Gerardo Rincon

Abstract

The Panama Canal, a critical artery of global trade, is under mounting threat from prolonged droughts, water scarcity, and evolving geopolitical dynamics, casting doubt on its long-term viability. This thesis investigates the continuity of the Panama Canal’s operations amid intensifying climate change, and assesses the broader implications for the global supply chain. As the canal facilitates approximately 5% of global maritime trade and provides billions in annual cost savings to shipping companies, any disruption poses severe consequences for global commerce, economic stability, and trade logistics.

The analysis begins by situating the canal within its historical and geopolitical context, emphasizing its legacy as a U.S.-built infrastructure asset and its transformation into a symbol of Panamanian sovereignty. It then examines the canal’s environmental vulnerabilities, especially its dependence on freshwater resources from Lake Gatun and Lake Alhajuela. The increasing frequency and severity of droughts threaten to reduce the canal’s operational reliability, potentially triggering long-term constraints on shipping capacity.

The thesis also quantifies the economic risks of canal disruptions, emphasizing the impact on just-in-time supply chains, rising freight costs, and inflationary pressures. Case studies, such as the 2021 Suez Canal blockage and 2023–2024 Panama Canal draft restrictions, illustrate the cascade effect of chokepoint disruptions on global value chains. Moreover, industry-specific analyses show that several sectors face disproportionate risks. These include agriculture, automotive, energy, and consumer goods, all of which depend heavily on timely maritime deliveries through the canal.

In response to these challenges, the study evaluates a range of technological, infrastructural, and geopolitical alternatives. Environmental mitigation strategies like desalination, water recycling, and the proposed Rio Indio reservoir are explored for their technical feasibility and fiscal sustainability. Concurrently, the thesis analyzes five prominent alternative trade corridors: (1) the Arctic Northern Sea Route, (2) Mexico’s Interoceanic Corridor, (3) the proposed Nicaraguan Canal, (4) Colombia’s Bi-Oceanic Corridor, and (5) the Chile–Argentina–Paraguay–Brazil Bi-Oceanic Corridor. Each route is assessed through a comparative SWOT framework considering environmental impact, political feasibility, infrastructure readiness, and long-term trade efficiency.

Among these, Mexico’s corridor emerges as the most sustainable near-term alternative, leveraging existing infrastructure and lower ecological risk. Meanwhile, the Chile–Brazil corridor is identified as the most geopolitically and economically viable long-term alternative, due to strong multinational backing and significant ongoing construction. In contrast, the Arctic route and the Nicaraguan Canal, despite offering theoretical logistical advantages, remain constrained by political volatility and environmental opposition.

The study concludes by offering a tiered policy recommendation: immediate investments in Panama’s water infrastructure, medium-term development of alternative Latin American corridors, and long-term diversification through Arctic governance and trade resilience frameworks. Global institutions are urged to finance adaptive infrastructure and enforce sustainability standards for all emerging corridors. Finally, a scenario analysis outlines three plausible futures, from canal stabilization through climate adaptation to a worst-case collapse prompting global rerouting.

This thesis asserts that while the Panama Canal remains irreplaceable in the short term, a multipolar trade infrastructure model, incorporating land and sea routes, public-private partnerships, and environmental stewardship is essential for securing the future of global supply chains. The continuity of the canal is no longer guaranteed, and the global trade community must prepare to operate in a world where resilience, redundancy, and sustainability define maritime logistics.

Access Setting

Honors Thesis-Open Access

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