"Trade Logistics in the Greater Caribbean"

Panamá, Marzo 2007 Edgar Urrutia Delgado

Trade Logistics in the Greater Caribbean

Panama as area HUB

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Panamá…Hub de las Américas

A look at Panalpina

• # 3 worldwide in air freight

• # 4 worldwide in sea freight

• 500 offices in 80 countries

• 13,000 employees

• Net income of CHF 6.1 million in 2004

• EBITDA earnings of CHF 212 million in 2004

• Net profit of CHF 111.4 million in 2004

• Listed on the SWX Swiss Exchange since 22 September 2005

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Panalpina officeCompany / partner agent

Asia-Pacific2,100

Employees

North America2,000 Employees

Latin America (LA)2,000 Employees

Global Network Europe / Africa /Middle East / CIS

7,200Employees

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A P A S S I O N F O R S O L U T I O N S

Main Activities

Air Freight

Net Operations in 2004:

CHF 3.086 m (50.4%)

• Central development and capacity management (CPC)

• Strategic alliances with leading airlines

• 24/7 Center of operations and charter activities

Sea Freight

• Central development and capacity management (CPC)

• Strategic alliances with leading shipping companies

• NVOCC Pantainer Express Line

• Intermodal Services


CHF 2.102 m (34.4%)

Supply Chain Management

• Leader in logistics supply (LLP) • Competence in key industries• Implementation of innovative

technology• PAN projects


CHF 932 m (15.2%)

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Hubs, the backbone of the air freight system

Panama

Los Angeles

Miami

Chicago

HuntsvilleNew York

LondonAmsterdam

Paris FrankfurtLuxembourg

Linz

Milan

Zurich

DubaiSeoulShanghai

TaipeiHongkong

Bangkok

Singapore

Sao Paulo

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Controlled Hub network

GDL

MEX

HSV

PTY

JNB

KRT

EBBNBO

ABJ

LUX

MOW

ALA

FRU

DXB

PVG

LOS/PHC

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Solutions

Global Organization and multi-hub

network Advanced IT

implementation

Strong and long-term relationship with associated

carriers

Global administration of

supply and capacity

Varied capabilities

geared towards the customer

Innovative freight solutions

for key industries

Exceptional charter and emergency

services

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What is a hub?

In commercial aviation, hub means a large airport that caters for long-distance flights using large-capacity planes.

These large airports also have links to smaller cities, which use smaller aircraft. With this system, airlines can fill their large planes that fly long-distance routes. Ideally, short flight schedules are coordinated with long-distance flights so that passengers only have to wait the exact length of time to take the next flight.

Also translated as “distribution center”.

Wikipedia

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The Importance of Panama in LA Freight Management

Panama offers regular service to destinations within the U.S., Mexico, Central America and the Caribbean. We also fly to South America, with daily direct flights or with the best and fastest connections in the market.

Tocumen offers alternatives and several connections with established companies such as Copa, DHL (area HUB), Girag, Arrow, Panavia…

Panalpina operates an exclusive, direct flight on a weekly basis from Luxembourg in B747-400 freighters with the best cargo airlines in Europe, Cargolux. This service guarantees travel time and capacity from Central Europe to the center of Latin America.

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Panama - Strengths

• Unique geographical location in the middle of the continent • Technological Park for education, research and innovation, organized to promote synergy among universities, scientific research centers, companies in the new economy and international agencies • Inter-oceanic railway with the capacity to move 500,000 containers• Updated port infrastructure in both oceans • A must for the world’s main shipping routes• One of the most efficient ports in the world• Second largest customs-free area in the world• Multimodal center par excellence• 2-runway airport open all day, year-round • Extensive insurance options against all risks• Fiber optic networks • Reorganization and improvement of public finances• Modern international banking sector• Establishment of corporative regional offices

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Panama - Strengths

Uruguay, Costa Rica, Panama and Chile are listed among the best 40 countries in the world with the highest Trade and Development index (ICD in Spanish), according to new information released by the United Nations Conference on

Trade and Development (Unctad).The best-rated countries in Latin America were Uruguay, ranked 33, Costa Rica

ranked 35, Panama, 37 and Chile, 40. This indicator measures the degree of integration of trade and development

policies in the 110 countries involved.

Panama among the best in trade and development 03 November 2005

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According to a UN report, Panama is the Latin American nation that offers the highest level of

connectivity

Panama - Strengths

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Air ConnectionsAir Connections

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Sea ConnectionsSea Connections

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Guatemala Airport

Managua

San José

Panamá CityTocumen (Airport)

Colón

Tegucigalpa

San Pedro Sula

San Salvador

C. Hidalgo

Land ConnectionsLand Connections

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Panama – OpportunitiesPanama – Opportunities

• Development of Panama Canal expansion plan

• Effective plan to remodel the cargo area in Tocumen

• Development of the Panama-Pacific Special Economic Area (Howard)

• Mega port in the Pacific

• Trans-systemic expressway

• Regional refinery project

• Development of the international cargo airport for the FTZ

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Panama – WeaknessesPanama – Weaknesses

• Limited air freight for intra-regional imports

• Few airlines in the region specializing in freight

• Restrictions in freight management by customs

• High cost of handling/internal transfer both in Panama and in the FTZ

• Integrated land distribution to Central America

• No land connectivity to South America

• Communication

• Security

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Panama – ThreatsPanama – Threats

• Adaptation of restrictions in U.S. airports

• Improvement of multimodal transportation supply between the East and West coasts of the U.S.

• New developments in area airports such as San José, Salvador, Bogotá or in ports such as Caucedo, Cartagena, Kingston…

• Greater customs restrictions on neighboring markets (Colombia)

• Freight loss due to traffic restrictions in non-member countries through free trade agreements with markets in the region

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Estimated Annual Growth per region (2003-2023)

World average 6.2%

Source: Boeing

4.1%

4.7%

5.2%

5.3%

5.6%

5.9%

6.0%

6.4%

6.7%

7.2%

8.5%

10.6%

0% 2% 4% 6% 8% 10% 12%

North America

Europe-Middle East

Europe-Africa

Intra-Europe

Europe-North America

Latin America-North America

Europe-Latin America

Europe-Southwest Asia

Europe-Asia

Asia-North America

Intra-Asia

Domestic China

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Freighter capacity could be doubled!

3530

1760

2004 2024

+ 101%

World freighter fleet Composition of freighter fleet

LargeMedium

Standard

20%

56%

24%

20%24%

2003

Large

Medium

Standard

56%

31%

40%

29%

2023

Standard

+30%

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A good example…. (video)

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Investment USD 130 million

Annual capacity 750,000 tons

Total loading/unloading time (B-747F)

120 minutes

Number of loading bays

90

Average freight travel time

8 hours

Luxair airline staff (national airline)

1,000 on staff

Truck movement

2,000/weekly

B-747 movement

190/weekly

Movement of other aircraft

20/weekly

• Source Luxair

Luxembourg Hub

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LUX

FRA

LYS

LNZ

BCN

MIL

AGH

LHR

CDG

More than 1 connection daily

Daily connection

Regular connection

Food service in Europe (on land)

Europe NORTH

Europe EAST

Europe SOUTH/WEST

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Various Panalpina ClientsLATAM VideoCorporate PanalpinaHome

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Thank you for your attention!!

Documents

"Trade Logistics in the Greater Caribbean"