The biggest traffic jam in the world

The captain of a British oil tanker who recently got fed up waiting to enter the Panama Canal has already become something of a legend among his peers. Facing a delay of a week, and the subsequent delivery penalties, the frustrated captain entered a high-stakes bidding war with other ships, trying to jump a queue of 83 vessels.

The BP skipper's record bid of $220,300 (£116,155), made during a frantic session on the Panama Canal Authority's website, won him pole position but he also had to pay the routine transit fees, bringing BP's total outlay to $400,000 for the 48-mile passage.

Now other captains, and their shipping line bosses, fear the spiralling auction bids have upped the ante in canal transit costs and will make the cost of sailing between the Atlantic and Pacific oceans via the canal prohibitive. Industry experts say more and more Asian shippers will opt to use the Suez Canal to reach the eastern US seaboard, or ship to the West Coast.

The Panama Canal, often listed as one of the "Seven Wonders of the Modern World" but now pushing 100 years old, has seen better days. A national referendum in the Central American nation last week overwhelmingly approved a $5bn upgrade to add wider locks, relieve chronic congestion and accommodate more of the world's increasingly large container ships. Traffic jams are the norm at both the Atlantic and Pacific entrances to the canal, with more than 100 waiting ships common on each side, delays that can cost shippers $50,000 a day. Once inside the waterway, larger vessels sometimes have only 18 inches to spare on either side in the 108-feet wide locks .

But even once the widening has been completed the canal will struggle to take the vessels being built during the current shipping boom. That's where another Central American nation a little to the north sees its chance. Nicaragua has proposed a bigger, better, deeper and wider waterway, the $18bn Grand Inter-Oceanic Nicaragua Canal, cutting through 173 miles of its territory to link the Atlantic and Pacific by 2020 and accommodate super-ships of up to 275,000 tons.

The idea was proposed by outgoing Nicaraguan President Enrique Bolaños, but the feasibility of the projectcould depend greatly on next weekend's elections, in which former Marxist president Daniel Ortega leads the polls: a neo-Sandinista regime would be bound to make investors jittery.

Meanwhile, President Martin Torrijos, son of the Panamanian military strongman Omar,continues to push for expansion of his country's canal. Critics say he, the Panamanian elite and big business are the main beneficiaries and that the expansion could cost four times as much as foreseen - up to $20bn - leading to even greater poverty in the small Central American nation of three million people.