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Javier Carrillo Koo International Trade Specialist
Panama Canal Authority September 1, 2015
1
Panama Canal Overview
Panama Canal Expansion Program Update
Implications and Opportunities
Agenda
What’s next
2
THE PANAMA CANAL
1903 - 1914 Construction
of a Locks type Canal by
the U.S.
ATLANTIC OCEAN COLON
GATUN LAKE
PANAMA CITY
MADDEN
CHAGRES RIVER
PACIFIC OCEAN
GATUN LOCKS
P.MIGUEL
LOCKS MIRAFLORES
LOCKS
3
0
50
100
150
200
250
300
350
400
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1914
1916
1918
1920
1922
1924
1926
1928
1930
1932
1934
1936
1938
1940
1942
1944
1946
1948
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
326.8
FY 1955 FY 1975
27,286 3,947 9,902 15,899
Tran
sits
PC
/UM
S t
on
nag
e in
mill
ion
s
FY 2014 FY 1995
13,482
Fiscal Year
Transits vs PC/UMS Tonnage FY 1914 – FY 2014
4
AN IMPORTANT CHANGE IN PERSPECTIVE
Differentiation by size
Identified segments
A more structure pricing proposal
One price for all vessel types.
No segmentation
MODERNIZATION
5
* Measured in Million of Long Tons
Total Cargo Movement FY 2014
USERS FY 2013* FY 2014* 2014 (%)
United States 136.5 154.1 68.5
China 46.4 51.5 22.8
Chile 29.0 29.5 13.1
Japan 20.0 21.7 9.5
Colombia 17.5 19.2 9.6
South Korea 16.8 19.1 8.5
THE PANAMA CANAL TRADE
AND MAIN USERS
Total Cargo
Movements 224.9
Million Long Tons
6
Main Routes - FY 2014
Asia - East Coast US 86.2M
West Coast South America - Europe 12.6M
Total: 224.9 M (long tons)
South America Intercoastal 10.9M
West Coast South America - East Coast US 33.4M
West Coast Central America – East Coast US 12.0M 7
It’s all about Connectivity
1914 - 2014 Transits: 1,057,332
Cargo: 9,660,377,591 LT
Container Cargo 44.5M
Grains 48.6M
FY 2014 Total: 224.8 M LT
Top 5 Commodities
Metals and Ores 15.0M
Petroleum & Petroleum products 40.7M
Coal and Coke 14.3M
• 144 trade routes
• 1700 ports
• 160 countries 8
• 3.0% of world maritime trade
• 10.6% of grains
• 5.8% of chemicals
• 6.2% of containers
PANAMA CANAL’S SHARE OF
GLOBAL SEABORNE TRADE
9
10
• Opens 24 hours a day, 7 days a week, 365 days a year
• Safe and secure • 98% customer satisfaction • Strikes not allowed by law; only two
closures in its history • Predictability: Published tariffs and
fixed transit date with reservation
Reliability
11
Sustainability
102 211
350 463
600 750
912 1,027
1,194 1,262 1,360
1,548
1,869
2,232 2,403
2,914
102 109 139 113 137 150 162 115 167
68 98 188
321 363 171
511
FY2000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Bud
get
Accumulated Investment – Capex
(USD millions)
Fuel Pipeline and Tank Farm Tugboats Ground dams
Bridge over Atlantic side
Dredging
Launches
12
Liner Services Connectivity of Panama
Source: ACP MEMN, Compair Data, July 2015
Commercial Route No. Of
Services Annual
Capacity No. of
Vessels Average Vessel
Size
Asia – USEC / Gulf 14 3,303,521 139 4,549
Rotterdam Antwerp
Dunkirk
Hamburg
Bilbao Marin
Guayaquil
Callao
San Antonio
Mejillones Antofagasta
Manta
Cartagena
Ensenada
Kingston
P. Caucedo
Manzanillo
Port of Spain
P. Cabello
Chiwan
Shanghai
Busan
Ningbo
Kaohsiung
Qingdao
Hong Kong
Jacksonville Houston
Miami
Savannah Charleston
New York
Tangier
Napier
Lautoka
Noumea
Tilbury
Le Havre
San Juan PR
Iquique
Ilo
Taipei
Pyongtaek
Yokohama Tokyo
Los Angeles
Oakland
Norfolk
Melbourne Tauranga
Sidney
Auckland
Vancouver
Seattle
Lázaro Cardenas
La Spezia Naples
Valencia Gioia Tauro
Seattle Vancouver
Buenaventura
Cristobal Balboa
Manzanillo
WCSA – Europe 7 1,213,667 55 3,556
Pendulum 2 481,406 30 4,629
WCUS – Europe 3 660,381 29 4,288
WCSA – ECUS 2 438,919 13 4,245
Asia – Caribbean 1 242,805 12 4,669
Australia – Europe 1 55,085 6 2,421
Australia – ECUS 1 178,142 10 3,426
WCSA – Caribbean 2 134,560 7 1,282
Total 33 6,708,486 301 4,186
Feeder Services Atlantic 25 2,456,006 88 2,490
Commercial Route No. Of
Services Annual
Capacity No. of
Vessels Average Vessel
Size
Feeder Services Pacific 14 3,106,958 84 6,314
Total 39 5,562,964 172
13
Economies of Scale
14
Dimensions of Locks and Vessels
32.3 m (106’)
Beam 49 m (160’)
18.3 m (60’)
12.04 m (39.5’)
15.2 m (50’)
Maximum size of vessels in existing Locks:
Maximum size of vessels in new Locks:
33.5 m (110’)
15
Panama Canal Overview
Panama Canal Expansion Program Update
Implications and Opportunities
Agenda
What’s next
17
Neopanamax Locks Pacific
Deepening and widening of Atlantic
Entrance
17.66 M m3
Deepening and widening of
Pacific Entrance
8.7 M m3
Increase the maximum operating level of Gatun Lake
26.7 m 27.1 m
Deepening and widening of the Gatun Lake channels and deepening of the Culebra Cut
Pacific Access Channel to the new Locks 49 M m3
New Pacific Locks ►
Access Channel ►
Present Locks
▼
Neopanamax Locks - Atlantic
Present Locks
▼
Expansion Program Components
18
Excavation and Dredge Volume
200
155
0 50 100 150 200 250
New Locks
Current Locks
1886 1909
2008 2007
Million Cubic meters
78%
Expansion Program Components – Concrete Volume
3.4
4.4 0 1 2 3 4 5 6
New Locks
Current Locks
In million cubic meters
129%
New Locks Existing Locks
PANAMA CANAL EXPANSION UPDATE
21
Panama Canal Expansion Milestone: FILLING OF THE ATLANTIC LOCKS COMPLEX
June 11, 2015 During an initial phase of filling, which will take approximately five days, the Canal will gradually raise the water level within the lower chambers of the new locks, pumping in approximately 50 thousand cubic meters of water per hour from Gatun Lake. This will allow for the testing of the first gates.
22
Successful tests of the gate operation in the Atlantic Side
June 23, 2015 The gates have buoyancy tanks that allow them to weigh 15% of their actual weight inside the water-filled new locks.
23
Panama Canal Expansion Moves Ahead with Filling of New Pacific Locks
June 22, 2015 The intricate filling process will make use of powerful electric and diesel pumps, designed specifically for the job. The electric pumps are expected to provide 30,000 gallons of water per minute each, while an added network of 13 diesel pumps will work to pump 7,000 gallons of water per minute each, filling the lower chamber at a rate of nine inches per hour. The filling and subsequent testing of the new Pacific locks is expected to take approximately 90 days to complete.
24
Panama Canal Overview
Panama Canal Expansion Program Update
Implications and Opportunities
Agenda
What’s next
25
Reduces transport cost
Improves productivity
and flexibility of carrier
Reduces CO2 emissions
Improves the competitive-ness of the
Panama route
Improves carrier´s network
performance
Impacts development on ports and
land infrastructure
26
It ’s all about Connectivity
144 trade routes 1,700 ports 160 countries 27
Panama provides easy and direct access to markets in Latin America,
Caribbean, North America and Europe
The expansion will increase the area of
influence of the Panama Canal
28
PANAMA´s COMPETITIVE ADVANTAGE
• Land availability
• Sea-air connectivity (for parts)
• Sea: All major carriers have weekly
services through Panama
• Air: DHL, COPA, UPS, FEDEX,
Avianca
• Skilled labor to provide value added
services (final detailing, refurbishing,
reverse logistics, etc.)
• Panama offers Legal and Financial tax
incentives to Multinational Companies
that establish their regional
headquarters in Panama.
• Panama offers a place to keep stock
near final regional markets.
29
PANAMA and the WORLD RANKING
Quality of port
infrastructure
1. Netherlands
2. Singapore
3. Hong Kong
4. Panama
5. UAE
6. Belgium
7. Finland
8. Iceland
9. Germany
10. Bahrain
11. Sweden
12. United Kingdom
13. Denmark
14. Spain
15. Malta
Affordability of
financial services
1. Hong Kong
2. Panama
3. Luxembourg
4. Taiwan, China
5. Singapore
6. Qatar
7. Bahrain
8. Switzerland
9. Finland
10. Norway
11. Malaysia
12. Puerto Rico
13. United States
14. Saudi Arabia
15. United Kingdom
Soundness of banks
1. Canada
2. South Africa
3. New Zealand
4. Panama
5. Australia
6. Finland
7. Hong Kong
8. Singapore
9. Norway
10. Barbados
11. Chile
12. Lebanon
13. Malta
14. Brazil
15. Mauritius
FDI and technology
transfer
Foreign direct
investment (FDI) bring
new technology
1. Ireland
2. Qatar
3. Panama
4. Singapore
5. Costa Rica
6. UAE
7. Luxembourg
8. Saudi Arabia
9. Slovak Republic
10. Hong Kong
11. Bahrain
12. Hungary
13. Uruguay
14. Israel
15. Mexico
Business impact of
rules on FDI
1. Ireland
2. Singapore
3. Bahrain
4. Hong Kong
5. Panama
6. Luxembourg
7. Uruguay
8. Slovak Republic
9. Mauritius
10. Malaysia
11. Taiwan, China
12. Chile
13. United Kingdom
14. UAE
15. Estonia
Well developed and
efficient by international
standards
Ensure the provision of
financial services at
affordable prices
Generally healthy with
sound balance sheets
Rules governing foreign
direct investment (FD)
30
Multinational Regional Headquarters
Prove of reliable connectivity 31
Network Economies
Neo Panamax Long Distance
Bigger Volume
Buques Feeders Short Distance
Lower Volume
32
EXPORTERS SHIPPING LINES IMPORTERS CONSUMERS
Economies of scale - Efficiencies in the supply chain – Connectivity New Opportunities for business
Benefits from Transportation Cost Savings
33
Northeast
NH, MA, RI, CT, NY , NJ
+4% Pop: 43M
Southeast
DE, VA, NC, SC, GA,
FL
+34% Pop: 68M GULF
LA, TX, OK, KS
+26% Pop: 45M
Great Lakes
IL, IN, MI, PA, OH
+2.5% Pop: 55M
Northwest
WA, OR, CA, AK
+28.0% Pop: 70M
Population
+21%, 353M (Selected States)
US CENSUS: Interim Projections of the total population for the United States
Urban Population Growth Projection 2010-2030
34
Top United States Ports /Navigational Channel Depths*
Baltimore: 50-foot channel
Deepening completed in 2012
770K TEUs (2014)
Norfolk: Current depth 50’
Authorized to dredge to 55’
2.4M TEUs (2014)
Charleston: Current depth 45’. Deepening of
Charleston harbor to 52’
Project completion by 2019
1.8M TEUs (2014)
Savannah: Current depth 42’
Deepening to 47’
Scheduled for completion in 2017.
3.3M TEUs (2014)
Jacksonville: Current depth of St. Johns River
channel 40’. Deepening to 47’ with completion
TBD
922K TEUs (2014)
Miami: Current depth 42’
Deepening to 52’
Estimated completion in 2015
877K TEUs (2014)
Houston: Current Ship Channel depth 45’
Projected deepening (TBD)
1.95M TEUs (2014)
Los Angeles - Long Beach:
Current depth 50’
8.3M TEUs (2014 )
Oakland:
Current depth 50’
2.4M TEUs (2014)
Seattle: Current depth 50’
Tacoma: Current depth 51’
3.4M TEUs (Seaport Alliance – 2014)
Philadelphia: Current depth 40’
Deepening of main channel of the Delaware
River to 45’; completion by 2017
449K TEUs (2014)
NY/NJ: Current depth 45’
Harbor Deepening Project to 50’ Estimated
completion in 2015/2016
5.7M TEUs (2014)
*Sources: U.S. Army Corps of Engineers, channel depth at Mean Low Water
Individual port authorities
American Association of Port Authorities: Western Hemisphere Port Container Traffic through January 2015 35
Source: «US CENSUS: International Database»
Urban Population Growth Projection 2010-2030
Mexico +18.9%
Pop: 135M
Guatemala, El Salvador, Belice,
Honduras, Nicaragua. +28.0%
Pop: 39M
Costa Rica, Panama
+23.0%
Pop: 11M Colombia, Venezuela +22.0%
Pop: 88M
Ecuador, Peru,
Bolivia, Chile +20.0%
Pop: 85M
Uruguay, Paraguay, Brazil,
+18.0%
Pop: 251M
Argentina,+17.0%
Pop: 48M
Caribe, Cuba, Puerto Rico, Dominican Republic,
Jamaica, Haití +11.0%
Pop: 42M
36
Panama Canal Overview
Panama Canal Expansion Program Update
Implications and Opportunities
Agenda
What’s next
37
Panama Canal Diversification Strategy
There is a close relationship between the Canal and other maritime and logistic activities that have proven to add value to
the users of Panama as a Trade Route.
Our diversification strategy focuses on related activities that are profitable and enhance the Canal’s core business.
Logistics Park Services
LNG Terminal Vessel Repair
Ro-Ro Terminal
Top-Off
Container Barge Services
Bunkering
Corozal Container Terminal
38
Panama: The Transportation and Logistics Hub of the Americas
50 MILES OCEAN TO OCEAN
BUNKER
TERMINAL
PACIFIC
BUNKER TERMINAL
ATLANTIC
Panama
39
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