Posted on June 9, 2025
If you have time, don’t miss the 10 minute History Channel video about the engineering behind the construction of the canal and how leadership made the difference between failure and success. (Link shown in article.)
Background
The Panama Canal is a 51-mile-long waterway across the Isthmus of Panama in Central America. Each year, it allows as many as 14,000 vessels to travel between the Pacific and Atlantic oceans.
After its debut in 1914, it significantly shortened shipping times, and now accounts for about 5% of global seaborne trade. It remains one of the most ambitious engineering projects in history, requiring over three decades, 75,000 workers, and more than $5B in today’s dollars to build.
Origins
The idea to cut a waterway across the skinniest part of the American continent dates back at least as far as 1513, when Spanish conquistador Vasco Nuñez de Balboa led the first European expedition across the Isthmus of Panama to the Pacific.
Over three centuries later, France began construction on a canal led by engineer Ferdinand De Lesseps, who had recently overseen the construction of the Suez Canal. When political and economic problems caused France to leave the project, the US took over in 1904, overseeing the canal’s completion in 1914.
Construction and Operation
There were two ways to build a canal across the mountainous Continental Divide: one was to excavate the ridge down to sea level. But when French (and later, American) engineers tried, heavy rain caused landslides that buried months of work and thousands of workers.
If the mountains couldn’t be cut down, the ships would have to find a way to sail “uphill.” To accomplish this, American engineer John Frank Stevens proposed a different solution: a series of locks, or watertight chambers that can be filled or emptied as needed to raise and lower transiting ships. Vessels entering from the Atlantic side pass through a set of ascending locks, sail across a 15-mile artificial lake, then descend to the Pacific—a process that now takes 8 to 10 hours to complete.
It was grueling work for the estimated 75,000 workers. Over a decade, they moved almost 300 million cubic yards of earth—the equivalent of burying Manhattan to a depth of 12 feet—with the help of steam shovels and dynamite. Recruited from the Caribbean, Central America, and Asia, they battled torrential rains, venomous snakes, and malaria, in addition to the landslides, for either “gold” or “silver” salaries, depending on the laborer’s race.
Economic Impact
Building the Panama Canal cost US taxpayers $375M in 1914 dollars, a figure that doesn’t include more than $250M expended on the earlier French effort. But the investment paid dividends: Overnight, the Panama Canal shaved weeks off of global shipping times, helping to make the United States a global superpower.
In 1977, President Jimmy Carter signed a treaty pleading to hand over control of the canal to Panama, ensuring the vital waterway would remain neutral. The canal passed from American to Panamanian control on December 31, 1999. Fees from vessels that use the canal—mostly container ships, but also those carrying cars, gas, refrigerated goods, and cruise passengers—add around $5B per year to Panama’s economy.
Troubles Ahead
The Panama Canal has been a dominant global shipping route for over a century, but it is vulnerable to threats from climate change and regional competitors. When a severe drought in 2023 forced crossings to be cut by nearly a third, use fees went up and shippers began looking for alternatives. Honduras, Colombia, Mexico, and Nicaragua have all explored building their own canals or overland routes in hopes of getting a piece of the pie.
US leaders have sometimes threatened to retake control of the canal in order to gain lower fees to use it.
