Optimizing the Panama Canal’s Operations

The Panama Canal is quite the engineering feat, described by some as the eighth wonder of the world. It is especially interesting to those in supply chain and logistics, as it is a critical resource in support of today’s vast international trade. It is also a complex operation subject to high levels of traffic with numerous constraints that can impact many company’s supply chain schedule. Modern supply chain planning applications model complex planning and scheduling problems with optimization engines that utilize various methods to arrive at “optimal” solutions. Although linear programming models and engines such as the iLog Solver are widely available, not all problems can be accurately modeled in a linear fashion. These complex problems require a combination of methods to arrive at “optimal” solutions. It is these types of problems that allow supply chain technology providers to differentiate themselves from other solutions providers. Earlier this month, I had the opportunity to speak with Quintiq about how it was chosen as the provider for the Panama Canal’s forthcoming state-of-the-art vessel scheduling and resource management system.

The Complexity of the Panama Canal

The Locks

Prior to 2016, the Panama Canal had two lanes, each with 3 sets of locks. The locks have consecutive chambers that lift (or lower) the ships a portion of the 85 feet of elevation change from sea level to the manmade Gatun Lake. The size of the ships that can transit the canal are constrained by the size of these locks and have been internationally known as “Panamax.” The ongoing increase in shipping loads and volumes have created demand for larger locks and increased canal capacity. In response, the Panama Canal Authority developed a third set of locks that began operation in 2016. The third set of locks increased the maximum vessel size the canal can accommodate to what is referred to as “New Panamax” and increased the volume of ships that can traverse the canal. Subsequently, the expansion increased the number and range of ships that are utilizing the canal, leading to increased complexity.

The Culebra Cut (Gaillard Cut)

An area of the canal that cuts through hills in central Panama, and was especially difficult to excavate, is known as the Culebra Cut. This portion of the canal is a capacity constraint due to its limited width and amount of navigable waters. Due to these constraints, the Cut requires the scheduling of single direction ship convoys, where ships on one side wait while those entering from the other side traverse the Cut. Of course, the addition of a new set of locks increased the transit capacity of the locks, thereby making the Cut a more critical (binding) constraint than it was previously. Optimal sequencing of ships through the Cut is an area where complex modeling and optimization can increase transit reliability and overall throughput. However, the scheduling is complex due to other considerations such as trade-offs with time to fill locks, ship types and unique time constraints such as those placed on LNG tankers, and numerous other vessel-specific constraints. In fact, the locks use fresh water from a higher elevation and this makes the lock water itself another resource that must be taken into consideration to assure efficient and reliable Canal operation.

Maritime Resource Management

The vessel scheduling and the physical constraints of the Canal are far from the entire picture when it comes to scheduling Canal operations. There are numerous supporting resources that must be planned and scheduled to assure proper execution of the Canal’s operation. Vessels in the canal are required to be piloted by a canal pilot that must be authorized for the given category of vessel. Also, a fleet of tug boats must be scheduled to support the vessel traffic traversing the Canal. On top of this, line handlers and other members of the work crew are required to keep the operation running. I’m not an operations research guru, but the Canal’s operations are clearly too dynamic to be properly modeled using linear programming alone.

The Quintiq Solution

Quintiq was recently awarded the contract to develop the Panama Canal’s integrated vessel scheduling and maritime resource management system. During the proof-of-concept phase, Quintiq demonstrated the feasibility of extending out the scheduling horizon from 48 to 96 hours, while also incorporating the ability to run alternative scenarios to determine the effects on various elements of the process. The system will have access to Quintiq’s multiple available optimization technologies, such as local search, mathematical programming, graph algorithms, path optimization and constraint programming to develop optimal integrated plans for the canal’s critical resources. The Panama Canal Authority will be able to leverage historical operational data for planning within the new system. For example, historical transit times can be used to develop more accurate timing and slotting information for customers, including the rate at which lockages can occur.

The module responsible for managing the Canal’s vessel scheduling is expected to be operational toward the end of 2017. It will be directly used by the Panama Canal Authority’s planning team, while the system’s results will be propagated to the downstream systems and subsequently utilized by many others.  Overall, the system is expected to enable better sequencing, efficiency improvements at the locks, vessel travel time improvements, and shorter wait times.