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Panama’s Maritime & Logistic Sector
Report by Netherlands Embassy in Panama Report by Netherlands Embassy in Panama Report by Netherlands
Embassy in Pa
Investment(Opportunities((
in(Hub(of(the(Americas(
2015!
1. Executive summary
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In 2016 the $5.25 billion expansion of the Panama Canal will triple its capacity and change the way shipping
lines ply their global shipping routes. It could dramatically boost container trade or disappoint expectations of
gaining container volume. But Panama is not leaving it to chance. From 2015-2019 the government plans to
invest $3.2 billion in the logistic sector to secure the incoming of extra cargo as larger vessels can carry nearly
three times more containers. The Canal Authority is also promoting economies of scale as their new toll
structure charges less on higher volumes.
Panama aims to be the most competitive transport route for which it is transforming itself into a maritime
and logistic hub of the Americas. Priority is diversification and the creation of an intermodal system
integrating the Panama Canal, five ports, multiple airports, railway and roads. The Inter-American
Development Bank (IDB) released a dense blueprint on how to organize such a national logistic system –
amplifying value added services and forming clusters. The development of a logistic subsystem to support the
agriculture sector is high on the agenda, as is a logistics subsystem to proliferate regional trade. The IDB is
willing to invest a total of $1 billion in foreseen projects.
Within the maritime opportunities that arise from these aspirations we identify three central themes:
1. port congestion
2. automation
3. sustainability
The Canal Authority is Panama’s frontrunner when it comes to diversification and project development. They
are planning the construction of the Port of Corozal, RoRo port and a Logistic Park. Port operators such as
PSA Panama and Carrix Inc. have concrete plans to expand their terminals and the Maritime Authority is also
eager to invest in its maritime services.
Panama’s main strategy is to not only improve and diversify its maritime services, but to expand its all-round
logistics. Therefor this administration is planning to invest $6,3 billion in:
" big infrastructural projects (4th bridge, waste water plant, metro lines)
" logistic centers and free trade zones
" border control center Panama-Costa Rica
" energy infrastructure (transmission line and electrical interconnection Panama-Colombia)
Furthermore, the CEO of Tocumen International Airport has recently presented the 10-year strategy in
which it announced huge investments as of 2015 for terminal expansion.
The creation of value adding logistic services ought to attract business to the expanded Canal and consolidate
Panama’s strategic position as transshipment hub. Panama does have challenges to tackle for which Dutch
expertise could provide solutions. Companies and the government seem eager for specialized know-how to
achieve sustainable development of their maritime and logistic sector.
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2. One Canal, Five Ports and Logistic Services
T he bigger picture
Panama’s economic model is primarily based on providing well-developed international services, accounting
for 85% of GDP. This includes the Panama Canal, banking and insurance, real estate business and the Colon
Free Trade Zone. All sectors whose growth is extremely dependent on external factors. Currently, the Colon
Free Trade zone is in crisis as a result of large pending debts and imposed tariffs from Colombia and
Venezuela, and in the future Panama will be subject to regulations from the OECD and GAFI.
Over the last decade transshipment through the Canal seems to have been highly dependent on shipping lines
who in turn act on changing international trade dynamics. In 2007 and 2010 container movement in Panama
increased significantly when shipping lines such as Maersk and MSC adjusted their routes. When we look at
Panama’s market share of principal container routes, though, we see that since 2009 Panama has been losing a
large proportion of its market share to the Suez Canal. Even though shipping from Asia to the Americas
through the Suez Canal takes more time, they compete on lower transshipment costs.
For Panama to be resilient to these external influences diversification of the Panamanian economy has become
a spearhead of policy. The result is Panama’s development towards a logistic hub of the Americas centered, of
course, around the Canal and its expansion. The new locks are planned to open in 2016 making way for
larger and more vessels promoting economies of scale. The creation of value adding logistics services is
foreseen to attract shipping lines (container volume) to Panama as their needs are catered to. Furthermore,
new markets are already being planned, such as LNG transshipment.
Panama%has%a%GDP%of%$40.3)billion%and%a%GDP%per%
capita%of%$10,838.%In%2014%Panama%was%ranked)48th%in%
the%Global%Competitive)Index.%The%credit%rating%
agency%Moody's%qualified%Panama%with%a)Baa2)rate%
and%a%stable%outlook%based%on%its%continued%economic)
growth%of%6.5%.%
th
The maritime and logistics cluster
accounts for 33.5% of the economy.
In this cluster the Canal & the ports
make up about 40% and logistics 60%.
Panama ranked 45 in the Logistics
Performance Indicator 2014.%
%
In%the%Logistics)Performance%Index%
Panama%scores%an%overall%3.2%on%a%scale%
from%1H5%(lowest%score%to%highest%score).%%
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Panama is planning to create an intermodal infrastructure system integrating the Panama Canal, five ports,
multiple airports, railway and roads. The development of a logistic subsystem to support the agriculture sector
is high on the agenda as well, as is a logistics subsystem to support regional trade. Panama seeks to be
competitive by amplifying services and forming clusters to improve the interconnectivity between all sectors.
From these logistic subsystems many investment opportunities arise regarding maritime infrastructure, agrologistic services and process modernization. Moreover, these developments present challenges of congestion
and efficacy for which Dutch expertise can provide solutions.
For you to position these business opportunities we first present you with an introduction on the Panama
Canal and the ports located on both sides. Next you can read up on Panama’s logistic system. Following from
these developments and aspirations we distilled possible business opportunities for your company.
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T he Panama Canal
Due to its favorable geographic location the Panama
Canal facilitates a unique connection between
commercial maritime routes. Every day about 40
ships cross the 77 kilometers long waterway. Next to
facilitating a passage, its role in transshipment has
become increasingly important. Already the
container ports on the north and south side of the
Canal have become the biggest of Latin America.
As the movement of container cargo increased
globally, the Canal Authority (ACP) had decided to
focus on this segment. Thus in 2007 the expansion
of the Canal began with a third set of locks parallel
to the original locks located at the Pacific (Pedro
Miguel and the Miraflores locks) and Atlantic Ocean (Gatun Locks). Currently it has reached 85% of
completion. The water passages are also deepened and broadened and the water level of the Gatun Lake is set
to rise. In 2016 the new locks are expected to open allowing for 13,000 TEU vessels (Post-Panamax) to
transit the Canal. Today the largest container vessel to transit the canal carries 4,500 TEU (Panamax).
While some maritime analysts forecast the $5.25 billion expansion to spark a transshipment boom for the
U.S. its East and Gulf Coast container trade continued by an annual growth of 5%, others believe that the
development of value added logistic services is crucial to attract the extra influx of cargo.
To secure the Canal’s competitive position the ACP announced a proposal for a new toll structure to benefit
economies of scale and larger vessels. They argue that this structure reduces the current toll rate, as each
segment will be priced based upon different units of measurement. For instance, containers will be measured
and priced on TEUs, dry bulkers will be based on deadweight tonnage capacity and metric tons of cargo, and
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LNG will be based on cubic meters. The adjustments for all market segments, except for the new Intra
Maritime Cluster Segment, are scheduled to begin in April 2016.
This, together with the opening of much larger locks, is increasing prospects for more exports to Asia from
U.S. Gulf ports of LNG, coal and grain cargos. More importantly, within Panama a strong collective strife to
be the most competitive transport route is setting synergies between the maritime and logistic sector into
motion.
Panama’s Ports
In Panama the ports are operated and financed by private enterprises that received concessions from the
Maritime Authority (AMP). These concessions have resulted in an overall $3 billion investment in world-class
port infrastructure. Two ports operate on the Pacific side of the Canal (Panama City) and three ports operate
on the Atlantic side Canal (Colon).
Figure 1: Overview of Ports in Panama and container movement
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Port
Operator
TEU in 2014
1! Port!of!Balboa!!
Panama!Ports!Company!(member!of!the!
Hutchison!Port!Holdings,!HWL)!
3,200,000!! !
2! PSA!Panama!
Terminal!!
Port!of!Singapore!Authority!International!!
230,000!
3! Manzanillo!
International!
Terminal!(MIT)!
Carrix,!Inc.!and!the!Motta!and!Heilbron!
families!of!Panama!
2,000,000! !
4! Port!of!Cristóbal!
Panama!Ports!Company!(member!of!the!
Hutchison!Port!Holdings,!HWL)!
713,000!
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5! Colon!Container!
Terminal!
Colon!Container!Terminal,!S.A.!(a!subsidiary!
company!of!Evergreen!Group)!
502,000!
!
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Pacific!side!
!
Atlantic!side!
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The container port of Balboa, located on the Pacific entrance of the Canal, is with a container movement of
3,2 million TEUs in 2014 Panama’s biggest port by far. Panama Ports Company (PPC) operates Balboa –
and the Port of Cristobal making it the only operator to handle a port on both sides of the Canal. Balboa has
an ideal location to connect major liner services from Asia with the east coast of the United States, the west
coast of South America, Central America and the Caribbean. Currently, nearly all of the transshipment cargo
on the Pacific side is handled exclusively by Balboa terminal: 3,2 million TEUs in 2014.
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Only 230,000 TEUs passed through PSA Panama in 2014. This terminal is operated by the Port of Singapore
Authority International (world’s largest port operator) and is located on the former U.S. Marine base Rodman
opposite of the port of Balboa. PSA Panama hasn’t reached its full potential of handling 450,000 TEU yet. It
lacks a railroad and decent highway connection, which makes the port mostly useful for transshipment onto
other vessels. Especially the Pacific side of the Canal is in need of more terminals to handle cargo
transshipment.
On the Atlantic side, the biggest container terminal is Manzanillo International Terminals (MIT), moving 2
million TEUs in 2014. The port of MIT is a joint venture between Carrix, Inc. (world's largest privately held
marine and rail terminal operator) and the Motta and Heilbron families of Panama. These families form one
of the biggest industrial groups of Panama with investments in banks, telecommunication and aviation (Copa
Airlines).
The second biggest port on the Atlantic side is the Port of Cristóbal, operated by Panama Ports Company.
They moved 713,000 TEU in 2014. The third port on that side of the canal is the Colon Container Terminal
(CCT) - operated by the Colon Container Terminal, S.A. - which moved 500,000 TEUs in 2014.
Logistic infrastructure and Free T rade Z ones
Panama has one railroad connecting Panama City and the Port of Balboa (Pacific) to Colon (Atlantic)
operated by the Panama Canal Railway Company. Its port connection is fundamental to the intermodal
logistics system around the canal and to attract transshipment. The highway between Panama City and Colon
is very complementary in terms of facilitating container transshipments and to extend the connection between
the five ports and Tocumen International Airport. On the Atlantic side, the port of Cristóbal is connected to
MIT by Panama’s most congested highway Avenida Randolph, though only 6 kilometers long. Cristóbal has
one of the worst road connections to Colon. The Pan-American Highway is Panama’s main highway
stretching from Paso Canoas on the border with Costa Rica to the town of Yaviza in the Province of Darien,
on the east side of Panama. The Panamanian government owns the entire road network of Panama.
The Canal has three bridge crossings; one at the pacific side, Puente de las Americas, one in the middle,
Puente Centenario, and the construction of a third bridge on the Atlantic side by the ACP is expected to be
completed in 2016.
The Panama Canal expansion will open new opportunities that must be taken advantage of in the field of
logistics and in the value added supply chain area, according to Ricardo Muñoz Tejeira, president of the
Association of Free Zones in Panama (Azofrap). The Panamanian Government also announced its interest in
increasing the amount of free zones. The vice-minister of Foreign Trade, Néstor Gonzáles, perceives free
zones as an indispensable tool to attract international companies to Panama and therefor to cumulate the
development in becoming a global multimodal logistics center. Panama does already have 16 free zones, of
which only 5 are in operation in Panama City and Colon, and there are five Industrial/logistics parks.
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The Colon Free Trade Zone, world’s second largest Duty Free Zone, is a gigantic entity at the Atlantic
gateway to the Canal where an enormous variety of merchandise to Latin America and the Caribbean is reexported. With about 2.700 businesses settled here the Free Zone handles more than $16 billion in imports
and re-exports each year. Most imports originate from Asia, Europe and North America. Major markets
include South America, Central America and North America. As previously mentioned, the CFZ is currently
experiencing difficulties regarding large pending debts and imposed tariffs from Colombia and Venezuela.
Nethertheless the CFZ is starting to provide complementary logistic services for the three container ports
surrounding it.
On the Pacific side of the Canal you will find the special economic area Panama Pacifico, which hosts a
logistic park on the Atlantic side of the Canal. Here companies such as DELL, 3M and Caterpillar have
established themselves under a favorable fiscal, legal, migration regime. Though this new logistics park is a
positive development, many argue that the distance to the port terminals is too long, which makes its use quit
ineffective. The other logistics park, and free trade zone, on the Pacific side of the Canal can be found at
Tocumen International Airport.
In the following figure you’ll see an overview of cargo flow around the Canal and interconnectivity with the
ports, railway and logistic parks illustrated.
Figure 2: Panama’s maritime cargo flows
Panama’s national logistic system
In 2013 Panama reached out to the Inter-American Development Bank (IDB) for technical assistance to
elaborate a master program to transform Panama into a logistics and commercial hub. Through workshops
public and private stakeholders came together to integrate plans and reached consensus on strategic logistic
priorities. The result was the formulation of a National Logistics Plan; an in-depth blueprint to guide
government action on how Panama can best develop its logistics sector. The aim of the National Logistics
Plan is to improve the performance and integration of the national logistics system. Therefor they focused on
the efficacy and efficiency of the existing legal framework, the logistical processes and overall infrastructure.
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The core policy of the National Logistics Plan is based on the former Panama’s National Maritime Strategy
(2009), which main objective was to develop and strengthen maritime, logistic and economic activities in a
sustainable manner as to consolidate Panama as the maritime and logistics platform of the Americas.
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While Panama is focusing on modernization, the logistic infrastructure is still relatively unstructured and
slightly segregated from the urban area. The IDB identified the main factors that challenge the development
of the National Logistics System in Panama:
H lack of strong leadership from the government
H a scattered legal framework over various institutions, making it difficult to implement a
comprehensive plan for medium and long term
H a severe deficit in adequate work force
H part of the investment has to come from the private sector.
A short term risk to the national logistic system is congestion of the system, as short and long distance
transport flows are not enough separated. The overall challenge is to not merely correct persisting
inefficiencies - delays due to lack of capacity and personnel - but to transform the entire system towards an
international platform in which all junctions of international commerce are connected via protected fiscal
passages. In other words; move from a short-term to a long-term vision.
The image below gives an overview of Panama’s national logistics system illustrating the high level of
connectivity around the canal and near the border with Costa Rica. Within the big orange circle we find the
Canal and the ports and airports surrounding around it. The smaller orange circles close to the border with
Costa Rica represent logistic activity zones. The red lines represent the main highway connections. The blue
areas resemble agro activity.
Figure 3: Overview Panama’s logistics system
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Developing three logistic subsystems
To improve the development of the national logistics system the IDB focuses on three logistic subsystems in
the National Logistics Plan to turn Panama into a global logistics hub:
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Subsystem
Vision
1. Value-Added Logistics Services (VALS)
Hub of Canal conglomerate
Panama is an adding value logistics hub, a leader in
innovation and global connectivity
2. Logistic support for agricultural sector
Panama’s efficient logistics create economies of scale
making Panamanian agricultural products more competitive
in domestic and international market
3. Logistics support for regional trade
Panama is the most competitive and efficient logistics hub
in air, sea and land distribution of the region.
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Within each subsystem the National Logistics Plan strategy is to improve Panama’s (1) infrastructure, (2)
services, (3) processes, (4) human recourses and (5) legal framework and regulation. Though high aspirations
resound, the amount of recommendations for feasibility studies signal the transformation still needed.
Therefore we present you a short overview of the potential of each subsystem as identified by the IDB.
Subsystem: Value-Added Logistics Services
The National Logistics Plan identifies 8 segments of Value Added Logistics Services that have potential for
Panama:
1.
2.
3.
4.
5.
6.
7.
8.
Regional!distribution!and!consumer!product!postponement!
Postponement!of!consumer!goods
Maritime services
Distribution!of!fuels
Regional!Pharmaceutical!distribution
Distribution!of!perishable!goods
Bulk!distribution
Postponement!and!distribution!of!vehicles!and!heavy!equipment.
%
To stimulate these 8 segments key improvements need to be made such as improving cold chain and land
connectivity between nodes, simplifying customs procedures 24/7 and develop specialized port infrastructure.
Regarding these developments
What stands out from the IDB analysis is that the groundwork of big infrastructure in Panama is already
developed. Priority now is to integrate the Panama Canal, its multiple ports and its airport to improve
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efficiency and extend VALS capacity. For this to happen the National Logistics Plan identified the following
actions:
! work towards an intermodal infrastructure system to optimize cargo flows
! improve human resources to provide high-level services
! optimize technical processes
! streamline regulation
! provide legal security for investors to attract FDI
! enhance public-private collaboration.
Subsystem: Logistic support to agricultural sector
The second subsystem in which the IDB sees great potential focuses on the development of the infrastructure
needed to support Panama’s agricultural sector. This will provide opportunities for economies of scale, which
will make Panamanian agricultural products more competitive in the domestic and international market.
The IDB analysis concludes that room for improvement regarding the agro sector is plentiful. Overall we see a
lack in basic infrastructure and limited connection between the production chain, which causes inefficiencies,
high costs and loss in competitiveness.
Panama’s direct priorities in logistical support for agriculture are the following:
! increase large-scale production through partnership and proper logistics
! connect production centers
! increase regular market data to optimize product marketing
! simplify external commerce processes
! reduce costs of supplies
Complementary to these priorities, the IDB identified two more focus points, namely:
! necessity for incentive, financing and a legal framework
! elaborate plans for more agro development to improve potential of export products
Subsystem: Logistics support to regional trade
The third subsystem envisions Panama as the most competitive regional logistic hub in air, sea and land
distribution. Whereas the first subsystem concentrates on the zone around the Panama Canal, this subsystem
focuses on integrating all nationwide logistics into a multimodal system to facilitate commerce regionally.
Panama wants to be the entry and exit point of the Americas, adding value to products and services as a
world-class distribution hub.
These are confident aspirations. For a country located at the heart of the Americas that has served for over a
hundred years as the only passage between the Atlantic and the Pacific, it might not be such a wild idea to
build on these advantages and to step up its game.
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To achieve a competitive multimodal system the following priorities have arisen:
! development of specific services
! efficient customs, prioritizing movement of goods
! traceability of goods
! private - public cooperation
! infrastructure at the borders
! modernization of technology and equipment for logistics services, standardization of fleets
! business promotion
! multimodal connectivity, door to door
! adequate workforce
! customs union
! logistics observatory
! high quality information systems
For more information about Panama’s logistic sector – its strengths and weaknesses – we recommend you to
read our special Logistic report that can be found on our website.
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3. Opportunities in the maritime sector
As a result of the canal expansion transshipment activity in the wider Central America and Caribbean region
will also increase leading to more competition. Therefore Panama’s ports are planning to expand their
terminals to ensure they are able to capture the container volume increase. The amplification of maritime and
logistics services around the canal should consolidate the competitive position of Panama’s port. Moreover,
the development of logistic services on a national level supporting the agro sector and regional trade should
transform the country into the Hub of the Americas.
Within Panama’s maritime developments three central themes can be identified:
1. Port congestion
2. Automation
3. Sustainability.
1. Port congestion
As the Canal expansion will allow for Post-Panamax ships to dock with more containers ports want to
increase their capability of handling the extra cargo by improving efficiency. Avoiding port congestion is
crucial to avoid congestion at the entrances of the canal, which could affect canal transit activity. Thus this
concerns both the Canal Authority (ACP) as all private port operators.
2. Automation
Enhancing terminal productivity to capture extra cargo flows is foreseen through terminal expansion and the
automation of port processes. The need for automation is becoming especially relevant and pressing as
Panama is dealing with a severe lack of skilled (technical) work force.
3. Sustainability
The process of attracting cargo in a sustainable manner has given way to a larger mindset of sustainability.
The Canal Authority (ACP), for example, has already integrated sustainability as important pillar in its future
plans. Recently the Maritime Authority (AMP) adopted a resolution that obliges maritime businesses to invest
a percentage (varying from 4%-1%, depending on the amount of investment) in AMP selected charity
projects.
In the table below you find an overview of all foreseen maritime projects with our best estimation of when the
tender would be released. This is merely meant to give you an indication of what to expect in the coming
years. As the ACP is Panama’s frontrunner when it comes to diversification and project development, you first
get insight into their plans. Then we present you the expansion plans of several terminal operators follow by
the developments plans of the Maritime Authority (AMP).
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Figure 4: overview maritime investments
ACP
Terminal
operators
AMP
Project
Investment in
USD
Estimated tender
release
Port of Corozal
750 mln
2016
Logistic Park
-
2015
RoRo Port
-
2017
LNG Terminal
-
2017
Container Barging
-
2016
Dredging projects
-
2015 October
Shipyard
-
2016
PSA expansion
350 mln
2015 April
MIT expansion
270 mln
2015
PPC automation
-
2016
Port of Armuelles
24.5 mln
2016
Marine in Amador
91,2 mln
2018
Two extra berths
23 mln
2016
Port of Aguadulce
19 mln
2016
Port of Vacamonte
-
2017
Atlantic Port & LNG
-
2018
Cruise terminal
-
2018
Panama Colon
Container Terminal
600 mln
2020
Green Port Panama
Atlantic
7.97 bln
2020
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3.1 T he Canal Authority
The Canal Authority is initiating three major logistic projects in 2016 to ensure they can cater value added
logistic services to their clients, the shipping lines. By introducing a new toll structure to transit the Canal the
ACP aspires to reduce costs on large volumes, supporting economies of scale.
Port of Corozal
The $750 million development of a new port, called Corozal, on the Pacific entrance of the Canal must be
their biggest project. The ACP plans to lease the ground situated right next to the port of Balboa and the
development will take place in two stages; first a 1350-meter dock and a container terminal will be build, then
another 731-meter dock will be constructed. The ACP is said to do the dredging for the port of Corozal
themselves. The port will also have railroad access, and thus direct connection to the ports on the Atlantic side
of the canal.
MIT, PPC, Dubai Ports World are among those who have already shown interest in the development of
Corozal. For the ACP it would be interesting to work with a shipping operator that can bring new shipping
lines with them. The bidding will process will most likely start mid or end 2015.
Rumors are that the contract for Corozal will include a construction performance bond to ensure the port will
be build within two years. The contractor will have to present its business plan with details on how it will
move 3 million TEU a year. This guaranty on transshipment (on which the ACP places a fee) asks for port
simulation and consultancy for which Dutch companies can offer solutions.
The second rumor entails that the ACP would prefer this port to become a green port. The ACP is very keen
on integrating sustainability into their maritime and logistic activities. For the future operator this means the
ACP will request for Corozal to be developed as a green port. Though this won’t be a demand, they are likely
to stress the use of electrical cranes for example.
Currently there are more ships willing to dock than that there are berths on the Pacific side of the Canal, so
the need for an extra port is very high. But several maritime experts do question whether the location of this
new port is the most suited. Building an extra port at the entrance of the Canal can intensify congestion
problems, both for the Canal as for the three ports. A delay in port access and operational capability might
decrease when the traffic of the vessels is not perfectly coordinated. The ACP commented that it will hold a
first-in first-out policy regarding the entry to the canal, but it will most likely give priory to vessels that will
transit the Canal as those are ACP’s clients. These queuing challenges could translate into longer waiting
periods for vessels, hence increasing costs for shipping lines, and a loss in competitiveness for Panama. To
counter this line of reasoning it is first of all important not to underestimate Panama’s convenient
geographical location and its indispensable hub function as transshipment port. On the Pacific side of North,
Central and South America there is no port that can replace or take over Panama’s natural role. Secondly, the
arrival of a new port owned by a different player than the AMP, and staged within a different legal
environment, can fiercely increase competitiveness among the ports leading to more efficiency and
productivity.
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Interesting opportunities arise form this discussion, namely port and canal congestion and the need for
queuing-solving expertise. Furthermore, the ACP has indicated its board approved a 300m3-dredging project
to enhance Panama Canal access.
Logistics Park
In 2015 the ACP will release a tender for the construction of a Logistics Park on the Pacific side of the Canal.
It will be build near the new locks, right next to the port of PSA, and will initially occupy 286 hectares and
eventually be expended to 1200 hectares. ACP commented that this project is still in its initial fase, noting
that it will take about 2 years for it to be fully developed.
RoRo port
The ACP will release a third tender end of 2015 for a RoRo port, to be located along side the Logistics Park.
This project still has to be approved by the board of directors. The ACP will invest in the dredging necessary
for the construction of the RoRo port themselves. With the construction of such a RoRo port they give
response to changes in international trade dynamics, which is favoring near-sourcing.
LNG
The ACP signed a cooperation agreement with the Port of Lake Charles in Louisiana, the United States. This
is part of a strategy to attract players of the Natural Liquefied Gas (LNG) market as the expansion of the
Canal route allows for more and bigger LNG vessels. Partnerships with Maryland and Texas are also in
preparation, to further facilitate LNG transport between the U.S. and Asia.
The construction of a LNG terminal is also part of ACP’s foreseen diversified future.
Container barging & tugboat services
The new toll structure also proposes a special tariff on inland water transport, making container barging a
possible lucrative business. Facilitating an extra route to move cargo from the Pacific to the Atlantic side and
visa versa might be very appealing as a special tariff for such practices exits. The ACP has announced its
interest in developing such a shipping service, which could be extended into a tugboat service supporting the
container transport.
Dredging projects
While the ACP is capable and has decided to do the dredging for several of their coming projects themselves,
they did note that maintenance dredging (hoper dredging) on both sides of the Canal will be tendered in
2015. Dredging should start in 2016. Currently the Gatun Lake is being dredged.
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Shipyard development
The construction of another shipyard is also part of ACP’s diversification plans. The need for a shipyard on
the Atlantic side is very high. Details have not yet been released.
3.2 T erminal Operators
PSA International
Last year the PSA Panama terminal moved the relative small amount of 230,000 TEUs. Since 2013 PSA
International has had plans to expend its terminal and finally in February 2015 they announced that the
design and financial plan for new terminal is in place and that they will invest $350 million.
Indicative timeline for tenders:
H Quay deck: ongoing with shortlisted parties. Expected to award in end April 2015
H Dredging: ongoing with shortlisted parties. Expected to award in end April 2015
H Equipment: Completed. Expected to close in April 2015
H Container Yard: to start in May 2015. Expected to award in June 2015
The expansion will cover 40 hectares, and 1100 meters of berth. They will install 11 more cranes (currently
they hold 3) and the expansion should create 500 new jobs. When finished PSA should be able to move 2
million TEUs.
Carrix Inc. and the Motta en Heilbron families
The Carrix Inc. and the Motta en Heilbron families will invest $270 million in expanding MIT’s capacity
over the coming 20 years. They want to double its capacity to move 4 million TEUs. The first phase of the
expansion of MIT involves
H constructing a pier 395 meters equipped with 4 super-Post Panamax cranes
H automating the container yard
H dredging to 16.5 m of depth around the Post-Panamax berths.
Yard automation is achieved with the implementation of six automatic yard cranes (Automatic Stacking
Cranes - ASCs). These cranes, the first in Latin America, are controlled remotely and use RFID technology to
improve the timeliness of receipt and delivery of containers, and maximize the use of space in the container
yard.
The first phase of expansion will be completed by the third quarter of 2015, after which a second PostPanamax berth is foreseen.
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PPC
The port of Balboa, operated by the Panama Ports Company, has almost reached its maximal capacity of 5
million TEU of which it is currently using 3,5 million - a bit more than the average 65% of port usage. There
are only two small lots of land left within the port that can be developed, but PPC has nowhere left to expand
to.
Improving the efficiency of Balboa through automation and lobbying for a nearby logistics park are their
main concerns. In the long term, when Balboa and Corozal could move 10 million TEUs together, the
transformation of Albrook Airport into a logistics park could a viable plan. In this scenario Howard airport,
located just on the other side of the Canal, could then take on the function of Albrook. This idea is
momentarily placed on hold and will be further developed when the oncoming fourth bridge that will be
build next to the Bridge of the Americas has come into use in about 5 years from now.
3.3 AMP
The Maritime Authority of Panama (AMP) also announced they are planning new investments and are
interested in (re-)developing various ports. First let’s have a look at future port developments, and then we
will give you an overview of the maritime and logistics developments around the Canal.
Port of Armuelles & dry canal
Together with the Latin American Development Bank CAF the AMP wants to redevelop the Port of
Armuelles, known as a deep-sea port and for its former banana transport. The port is located in the province
of Chiriquí on the Pacific, bordering with Costa Rica. The Ministry of Finance (MEF) recently announced it
is allocating $24.5 million to the construction of the new multimodal dock. China has shown to invest as
well. The port rehabilitation would also include connecting the port to the Atlantic via an intermodal dry
canal, most probably a railroad connection. The development of Armuelles could also serve to boost the agro
sector, facilitating its transport.
Marine in Amador
The $91,2 million project to build a big marine along side the Amador in Panama City is also taking form.
Studies for the design for the marine have already been drafted. The marine, with a water surface of 44
hectares, will be build on the bay side of the Amador, facing Panama City. A dyke of 6.4 hectares will protect
a total of 1,500 berth spaces divided over three marines. An area of 12,500m2 is reserved as a commercial
area.
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Two docks for auxiliary maritime services
Regarding the Canal the AMP will invest $23 million in two docks for auxiliary maritime services, one near
Colon and one near Panama City. Maritime companies have claimed that there is a need for these docks in
order to better facilitate the handling of goods and personnel to serve the maritime industry. The Maritime
Chamber (CMP), an organization that brings together 190 companies, is having meetings with the AMP to
locate areas on the Pacific and Atlantic coast.
Furthermore the MEF has allocated - for the AMP – $14 million to invest in a boat control system and $6.5
million in new port equipment, mainly cranes. For the rehabilitation of port infrastructure a $33 million
investment is planned. About $8 million is destined to monitor Panamanian flagging of vessels.
Port of Aguadulce
The MEF allocated $19 million for the rehabilitation of the port of Aguadulce. This port is located on the
Pacific. Further details have not yet been released.
Port of Vacamonte
The Development Bank of Latin America CAF and the Ministry of Finance will also invest to initiate a new
type of maritime industry for the Port of Vacamonte, known for its former fishery glory. This is a relatively
small port located on the Pacific side, just outside of Panama City. The possibility to initiate a new type of
maritime industry in order for Vacamonte to regain its former status will be examined. The redevelopment
plans focus on the management and restructuring of the harbor. Improving the ordering of waste collection is
one of their focus points. The port areas will first have to be remodeled after which they will be granted for
concession.
Port & LNG development
On the Atlantic entrance of the canal, in Bahia de Limon, there is an area between Punta Pulpit and Punta
Limon reserved for the development of a new port in the foreseen future. Across from it the construction of a
LNG terminal is planned.
Cruise terminal
The government has shown interest in developing a cruise terminal in the area of Amador, a project left by
the former government. Last year, the then director of the Tourism Authority of Panama (ATP), Salomón
Shamah, announced that the construction of such a terminal in Amador was not feasible as the required
navigable depth of 10 meters implied high costs. New studies showed that the area with most potential to
construct a cruise terminal is the area of the Balboa Yacht Club. The necessary investment is recommended to
come from both the private and public sector. Jesus Sierra, minister of Tourism, stated that currently an
agreement is negotiated amongst the Cruise Association of Florida and the Caribbean (FCCA) to include
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Panama in their routes. Whether this will happen, or if this is dependent on the construction of such a cruise
terminal - and thus the adequate infrastructure - remains unclear.
Panama Colon Container Terminal
Panama Colon Container Terminal (PCCP) is a project approved by the (AMP) in 2012 that will be located
at the Atlantic entrance of the Panama Canal. A consortium of private Asian developers is going to construct
it. This new terminal will be built in Isla Margarita at the Coco Solo area, a former US Nave base known as
Fort Randolph. With an expected total area of 37 hectares, four berths and able to receive 18,000 TEUs
vessels, the terminal will have a capacity to handle around 2 million TEUs per year after an investment of
$600 million.
Preliminary information indicates that PCCP will have a draft of 52 feet allowing 2 berths to accommodate
Super Post Panamax vessels, a 3450-foot berth for Post Panamax and a 522-foot berth for multipurpose and
breakbulk vessels. It will have a storing capacity of 36,000 TEUs, 800 reefer slots, and a set of 10 quay
cranes: 8 super post-Panamax and 2 Panamax. So far the project has not really taken shape.
Green Port Panama Atlantic
The "Green Port Panama Atlantic" project will consist of a mega-port with approximately 127 hectares on
Largo Remo Island in Cristobal, province of Colon. It was officially approved on April 10, 2014 with a total
investment of USD$ 7.97 billion, which includes direct and indirect costs, as well as management,
construction, testing, environmental mitigation and execution. The project is scheduled to be completed
within seven years by its promoter Linden Partners, a Spanish company.
The primary objective of this marine terminal will be to offer shipping services and supply fuel to future postpanamax ships moving through the expanded Canal. Additionally, it will serve as a complementary port for
docking vessels too large for the Canal, known as super post-Panamax. This terminal seeks to become a world
class logistics platform for consolidating and distributing international cargo (including passengers and cargo
throughout the Americas) as well as provide shipyards and promote trade at a national and international level.
The master plan includes a multimodal port with industrial, fishing, and cruise zones, terminals for fuel, bulk
and liquid cargo, logistics zones, commercial and
tourist zones, five buildings, a power plant, an
eco-park, and others.
Among the mitigation measures, it considers the
restoration or reforestation of 2,500 hectares of
mangrove near the project or in other areas, in
conjunction with the ARAP, local authorities and
neighboring communities. So far the project has
not really taken shape.
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4. Opportunities in the logistic sector
In the government’s five-year plan of 2015-2019 a public investment of $3,2 billion in the logistics sector has
been indicated. Transport and logistics have been named key sectors by this administration, receiving a total
public investment of $6,3 billion of which $2,9 billion will be invested in road infrastructure.
Below you find an overview of the logistic opportunities with our best estimation of when the tender would
be released. This is merely meant to give you an indication of what to expect in the coming years.
Figure 5: overview logistic opportunities
Project
Investment
in USD
Estimated
tender release
Government
Multiple infrastructure
projects
$6.3 bln
2015 - 2019
Government
Energy infrastructure
$1.2 bln
2016
Tocumen Airport
Tocumen Airport
$400 mln
2015-2020
Government
Border control
$24 mln
2016
Government
Panama Pacifico
$18.6 mln
2016
Multiple infrastructure projects
Regarding the state budget of 2015-2019 president Juan Carlos Varela announced:
1. construction of a 4th bridge over the Canal (next to Bridge of the Americas)
2. construction of a waste water treatment plant
3. expansion of the Inter-American highway between Arraiján and the Bridge of the Americas
(connecting the port of PSA with Balboa and Colon)
4. modernization of the public transport system and expansion to Panama Oeste
5. expansion of the 1st metro line
6. construction of a 2 metro line
Energy infrastructure
There are three possible opportunities when it comes to safeguarding Panama’s energy supply and offer.
First of all, president Varela reiterated several times his interest to develop a pipeline from Howard, Panama
city, for a direct oil transport from vessels to Tocumen Airport. Secondly, a plan to build a coal plant on the
Pacific side of the Canal is circulating.
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The government is planning to invest $1,2 billion in transmission and the electrical interconnection PanamaColombia (IPC). For Panama’s own energy supply it has been investigating the construction of a 3rd and 4th
energy transmission line within Panama. The establishment of an interconnection of energy grids between
Panama and Colombia is subject to investigation. Currently, an environmental impact study is being carried
out and it still has to be decided whether it would be build on- or off- shore.
Tocumen Airport
The CEO of Panama’s Tocumen International Airport, Joseph Fidanque III, recently presented the 10-year
strategy for Tocumen Airport:
Between 2015-2017 they plan to invest
H $50.8 million to connect the first and second passenger terminal, which is currently being built
H $30 million improve the luggage handling system.
Between 2016-2020 they plan to invest
H $15.3 million to develop a new control tower
H $85.5 million to construct a new cargo terminal
H $211 million to build a third runway.
Furthermore, Tocumen International Airport is analyzing the feasibility to create a free trade zone located at
the cargo terminal. The government has allocated $500 million for this expansion project. The plan to
develop a new cargo terminal with value added logistic services is foreseen to crystalize in the next 6 months.
Tocumen Airport will release tenders to increase the number of shops at the airport as they’ve planned to
increase their capacity from 8.5 million to 10 million passengers. Airplane maintenance services and private
jet services will be moved to Howard Airport, located on the on west side of the Panama Canal.
!
Panama’s border
The improvement of the Panama - Costa Rican border is a high priority for the coordinator of the logistic
secretariat, Ana Reyes. Panama’s Customs Authority and the IDB will probably (re)initiate and update a
design for an integrated control center at the border of Paso Canoas, which was presented a few years ago.
This includes the development of infrastructure, control equipment and system technology. The IDB
estimates that to turn Paso Canoas into a logistic zone an investment of about $24 million in needed.
Panama Pacifico
The government will also invest $18.6 million in Panama Pacifico, a mixed-used real estate development, to
expand their logistic park. This gives way to even more possibilities to locate distribution centers around the
Panama Canal.
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Investment possibilities foreseen by IDB
The study conducted by the IDB regarding the Panama’s logistics allows for the concretization of investment
projects. As the institutional capacity of the logistic sector is accumulating the prospect of those plans to be
initiated by the public and private sector is (already) becoming reality. Below you find an overview of
investment possibilities recommended by the IDB, which are or might be picked up on in the coming years.
Infrastructure
I.
Investments in ports, interoceanic (logistics) route, road and rail investments, Logistics
Activity Zone along the Canal to support the value added services. Investments are specified
in the Interoceanic Zone master plan of the Logistics Cabinet
II.
Road investments on the west bank of the Canal and a 4th canal bridge
III.
Greenfield development of a 3 million container terminal in Corozal
IV.
Project to modernize Tocumen Cargo Centre
V.
Logistic Activity Zone in Paso Canoas (Panama- Costa Rica), Logistic Activity Zone
distribution in urban Panama
VI.
Logistic Activity Zones supporting production in the west of Panama, in the areas of David,
Chiriquí, Torti, Metitis
VII.
Consolidation of the Pacific Logistic Corridor, most likely a railroad, and the border crossing
of Paso Canoas (Panama-Costa Rica)
VIII.
Consolidation of logistic corridor (highway) between David-Guabito, and the border
crossing of Guabito with Costa Rica
IX.
Cargo Traffic Management plans in Panama and Colon
X.
Road network to improve large scale agricultural production and transport in the areas of
Darien, David, Azuero, Chepo and Santa Fe
XI.
Road maintenance system
Logistic Services
XII.
Incentives to develop value added services to support all subsystems
XIII.
Freight exchange and systems to support the logistics of agriculture export
XIV.
Other ICT to support the business sector
XV.
Strategic plan to promote the value added services
Processes
XVI.
System modernization of customs and computerization of Ventanilla Única de Comercio
Exterior (VUCE) ; an online platform to speed up export transactions
XVII.
Process modernization and integration of national systems
XVIII.
Traceability systems for goods in Pacific Logistic Corridor
XIX.
Training of operating staff
Additional
XX.
Legal Framework Cargo Logistics
XXI.
Formulation of HR Plan
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XXII.
XXIII.
XXIV.
XXV.
Regulation Act Port and Customs
Establishment of Logistics Secretariat and Monitoring Body of Cargo Logistics
Legal Framework on Public/Private financing
Urban Plans, agricultural plans, city plans/port of Colon.
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