Two ocean hub
Panama Canal Authority's chief executive discusses his nation's true potential with Felicity Landon
December 31 marked the tenth anniversary of Panama taking over control of the Panama Canal from the US. But the big date on Alberto Alemán Zubieta's calendar is in 2014, when the expanded canal is due to open after seven years of construction work.
In January, the Panama Canal Authority (ACP) announced that it had awarded the fourth and final expansion excavation contract, to complete the Pacific access channel, to FCC-ICA-Meco.
The expansion is "really happening, really exciting, and so far every project has been completed on time", says ACP chief executive Mr Alemán. And he predicts that when the expansion is complete, it will create huge changes in global logistics patterns.
"We see Panama becoming the most important transhipment and shipping facility in all the Americas," he says. "Panama is the only port in the world that has a terminal in two oceans and communication between the oceans," he says. "Our position allows a lot of logistics possibilities - and it is already happening.
"A lot of companies are moving corporate offices into Panama, and not only from the shipping industry."
There are many reasons for companies to base their operations in Panama and for the country to continue developing as a logistics hub, he says. The country has the largest free trade zone in the region; new distribution centres are being developed; a new highway connecting the Pacific and the Atlantic was opened in 2009; rail connections are good and offer a double stacking option; Panama's ports offer more container cranes than any other country in Latin America. And the expansion project will enable container ships of up to 12,600 teu to transit the canal - compared with today's maximum of 4,400 teu.
"By being able to have more capacity in your ships, you can do more movements through here and change your logistics," says Mr Alemán. "Also, there are some trades that we don't move through the canal today, which will be able to use this route - for example, liquefied natural gas tankers. The size of bulkers and tankers that can use the canal will go up from 60,000 to 150,000 dwt and that will address the dynamics of trade connecting the two oceans."
Shipping lines would love to have all of this in place today and are already considering optimum ship sizes for their routes and how they are going to position themselves post-expansion, he says. And, crucially, "they know it is happening. It isn't on the drawing board - it is actually on time and on budget. We have finished contracting and all the major components of the programme are in place. We have already finished two canal excavation contracts. And the industry is reacting."
Other ports are also getting ready, and Mr Alemán believes that the "winners" will be those that can offer the best transhipment and logistics facilities, and the best rail and road connections into the hinterland.
He foresees a slow but steady recovery from the economic downturn, "and people will be more focused on doing things better - sometimes you need a crisis to do things better".
For the canal itself, last year remarkably saw a drop of only 2% in traffic compared with 2008. There was a downturn in container traffic and plenty of consolidation of services there, and the car carrier sector was also dramatically down. However, other segments were either on a level with or even higher than 2008 - notably bulk carriers, including grain shipments, and tankers.
Apart from the ongoing expansion, the ACP invested a total of $1.5bn in modernisation works along the canal in the past year - including opening two new standing areas, upgrading signalling and installing lighting in the lock chambers. As a result, average transit was reduced from 33 hours to 23 hours. Lighting the locks was a key element in this - larger ships that previously had to queue up and wait for daylight can now use the locks at night.
"This reduction of 30% in transit time has been very positive for the industry, improving the value of the canal and the service we offer," says Mr Alemán. "It was very good timing, making the canal very reliable and very competitive - allowing users to plan better and save costs."
In 2009, Mr Alemán, who has led the ACP since 2000, was awarded the International Maritime Prize at the IMO for his longstanding and invaluable contribution to the industry.
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