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The Panamanian maritime industry represents 20% of the Gross Domestic Product and is the fastest growing sector in the national economy.

Investment resulting from development and privatization of ports exceeds the sum of one billion dollars and continues with its expansion, privatization and concessions plans in the Panamanian port system in both oceans.

Panama has a network of seaports that provide a variety of services to containerized, bulk, liquid and general cargo, as well as to passengers in cruise terminals. Panamanian seaports in the National Port System (NPS) are divided into two groups: state ports and private ports. Private ports have been given to terminal operators after a privatization process of former state ports (concession). State ports are still operated by the government under the management of the Panama Maritime Authority (AMP), and basically provide dockage and other related services for local users and short-sea services.

In 2013, the container movement in the Panamanian ports decreased 4.3% compared to the previous year, due to internal and external factors that occurred during the year , as indicated by experts in the field. The year 2012, cargo throughput grew by only 3.4% compared to 2011 and 2013 there was a decline in this activity, according to experts, influenced largely the situation in the Free Zone with Venezuela and Colombia, as well as strikes in ports, among others.

Last year 6.6 million TEUs (20-foot) were moved while in 2012 a total of 6.9 million TEUs mobilized. The port of Balboa, managed by the Panama Ports Company (PPC), moved 3 million last year 063 000 579 TEU, indicating a decrease of 5.8%, compared to 2012, while in the port of Cristobal the activity decreased 15.1%. Manzanillo International Terminal (MIT), reported movements of 2,025,904 TEU, representing a decrease of 1.6%. Colon Container Terminal meanwhile moved 608,471 TEU, indicating a decrease of 0.1 % compared to 2012 when it registered 608.906 TEU. Bocas Fruit mobilized 17,949 TEU, a decrease of 47.9 % compared to 2012.

Things changed for the Panama International Terminal (PSA), which increased in cargo handling of 53,460 TEU in 2012 to 123,808 in 2013. This terminal, located in Rodman, in the Pacific side of Panama, is a public company of the Singapore government received iron and other supplies for the Panama Canal expansion.

The port terminals of Balboa and Cristobal are under the administration of the Panama Ports Company, member of the group Hutchison Port Holding (HPH). Likewise, there have been built new ports that are under the operation and administration of the private company such as Evergreen in Colon Container Terminal Charco Azul, in Chiriqui and Chiriqui­ Grande, in Bocas del Toro; Manzanillo International Terminal (MIT), operated by Stevedoring Services of America (SSA).
Panama is on its way to becoming the container trans-shipping center of Latin America and the Caribbean. Law 57 known as the Merchant Marine Shipping Act which came into effect on 8 January 2009 brought several benefits to the administration of the Panamanian Merchant Marine Register. As of 31 October 2008 Panama flag registration topped the list with 8159 vessels.

Panama has 144 routes in world trade. Port operators pay to the National Government nine dollars for movement of each TEU. Firms in this sector are gathered in the Maritime Chamber of Panama that was established in 1979 and in its inception it was formed only by shipping agents, currently, this body is made up 87 companies, ranging from shipping lines, ports, cargo, fuel suppliers representatives and others.

Panama Canal Developments

Since its inauguration in 1914 up to September of 2010 more than one million high draft ships have transited the waterway. Also impressive is the enormous amount of cargo that has transited the Panama Canal during these 96 years, summing up all the transits, the latter results in 9,000 million large tons of cargo.

On 22 October 2006 the citizens of Panama voted to expand the Panama Canal to allow more transit, specially of bigger ships. The cost of the project is USD 5.25 billion dollars, and it consists in the construction of two new sets of locks: one on the Pacific and one on the Atlantic side of the Canal. Each lock will have three chambers and each chamber will have three water reutilization basins.

The modernization process involves the widening and deepening the access channel in the Pacific and Atlantic, the depth of 13 kilometers from the Gaillard Cut is considered the closer of this waterway. The construction of a new cause of access that will connect the new locks on the Pacific, with an approximate area of 6.1 kilometers, just another new access into the Atlantic.

The largest segment of this multi-billion dollar mega-project is the construction of two new locks, which will be located at the entrance to both Pacific and Atlantic, to allow passage of the giant ships PostPanamax.

The corporation responsible for building these locks is the U.S. for the Grupo Unidos por el Canal (GUPC), which is led by Spanish company Sacyr and is accompanied by Italy's Impregilo, Constructora Urbana Panama and Belgium's Jan de Nul.

This business group was awarded the work by 3 000 and USD 118 million due to the magnitude of the locks expects to hire around 7,000 people over the next three years. ACP estimates that when the expansion works are completed in 2014, after 7 years of continuous work, the new Panama Canal will double its transport capacity from 300 million tons to 600 million.

Up until December 2013, the project of expansion had advanced approximately 73%. Due to financial disputes with the ACP, the consortium Grupo Unidos por el Canal (GUPC) decided to stop the expansion works, situation that had the world in alert since several transnational companies have invested millions of dollars  to expand their operations when the third set of locks project is fully completed and ready for use. After several attempts to reach to an agreement, on Wednesday, 20 February 2014, both, the ACP and GUPC have issued separate statements to say that works will be resumed on Thursday, 21 February 2014 on the construction sites of the third set of locks. The ACP said that it would proceed on Friday, 22 February 2014 to pay GUPC the USD 36.8m due for December invoices. This preliminary agreement to resume works does not imply that it would negotiate on the alleged cost overruns claimed by the contractor, said the ACP.

Ports and Railroad

The 57% of the ports that make up the National Port System are divided in foreign and coastal trade. In this category, there are classified fruit, sugar and fishing ports, and the petroleum terminals.

The first two months of the Panamanian port system shows a positive performance compared to 2013, when for the same period was in decline; however, growth is lower than the growth rates recorded in the same period in 2012 and 2011. According to official figures from the Panama Maritime Authority (AMP), the Panamanian port system moved in the first two months of this year the sum of 1,046,336 versus 1,028,038 TEUs in the same period of 2013, which meant up 1.8%.

However, the vast majority of transshipment ports both the Pacific and Atlantic Panamanian posted declines compared with the first quarter of 2013. Such is the case of Balboa, Pacific , operated by Panama Ports Company (PPC) , which recorded a decrease of 4.1%, although the fall was lower compared to the same period in 2013 when those two months had registered a decline of 17.7%.

Balboa is the main transshipment port of Panama and Latin America and in the last two years has shown declines in their movements. Over 90 % of the cargo handled is classified as the transfer port.

The Panama Canal Railway Company (PCRC) is a joint venture between Kansas City Southern and Mi-Jack Products that provides railroad transportation for passengers and containerized cargo between Panama City and Colon City under a 50-year concession. The primary role of the railroad is to serve as a transshipment link for container shipments between Atlantic and Pacific seaports. However, the passenger service allows travelers to enjoy a journey through the lush jungles of Panama flanking the scenic Panama Canal.

The PCRC operational model aims to provide an efficient high-volume transshipment system between Panama's ports at the Atlantic and Pacific.  The trains use double-stack cars divided in seven groups, each group have 10 double stack cars.

Trains operate continuously between the intermodal terminals at the Atlantic and Pacific with a capacity of 10 trains in each direction (North and South) every 24 hours. Each trip takes about 1 hour and 15 minutes. The loading and unloading of a train at the terminals takes about 2 hours. The schedules vary depending on port operations and demand from shippers who use Panama as a liaison to other parts of the world.

PCRC also has a passenger service between the cities of Panama and Colon for senior executives and businessmen who travel to work between these two cities and for tourists in general. This service has a fixed schedule Monday to Friday departing from Panama City to Colon at 7:45 am and returning to Panama City from Colon 5:15 pm.

The railway system consists of a 47-mile single-line track linking Balboa and Colon with track for two-way traffic at strategic locations. Trains can operate continuously between the Atlantic and Pacific intermodal terminals with capacity for 10 trains each direction every 24 hours, and the possibility to increase to 32 daily train runs.

The handling capacity of the railway in Phase I is estimated to be around 500,000 container moves a year. The PCRC plans to increase this in stages of around 250,000 moves a year, to reach a maximum of 2 million TEU a year. PCRC operates the double-stack bulkhead-type rail cars in two sets of six. Each set accommodating an average of 75 containers. A typical mix would comprise 60 X 40' containers and 15 X 20' containers.

This port and railroad activity will require additional services from the local economy such as financing, insurance, specialized maintenance and repair, electricity and water, telecommunications, trained manpower and other services, and it will create new business opportunities for logistics and cargo industries.

Panama is the only place in the world where it is possible to move containers in a customs zone from the Atlantic to the Pacific in less than four hours. This is an extremely attractive feature for shipping companies and shippers, as it represents significant opportunities for expanding services, improving the use of their assets, increasing routes possibilities and re-positioning, further easing restrictions of the Panama Canal regarding draft and size of vessels. The main objective is to complement the services offered by the Panama Canal, and the movement of large volumes of cargo.

Investment Opportunities

The maritime development of Coco Solo Norte, a former navy base of the armed forces off the United States in the province of Colon, is due to the fact that there is a complete infrastructure of transportation, interconnected through the ports, airports, railway and roads. Next to the Colon Free Zone, the greater commercial area of the western hemisphere, where there have been installed the main exporting and importing companies, as well as embarcaderos and ship builders.

The Panamanian ports represent a good option for investment due to its own and collateral advantages that characterize the same:

  • Storage and transhipping
  • Facilities to load and unload
  • Consolidation
  • Storage and distribution of loose cargo
  • Lease, repair and storage of containers
  • Insurances for the cargo
  • Cleaning and repair of containers
  • Port, financial and cruise ship management,
  • Management of container terminals and processing zones.
  • Credit notes, cargo expertise by way of drawn work

Rodman and Farfan have been identified as possible port and industrial development zones, as well as for the operations of cargo transfer. Rodman, the studies performed considered the possibility of building a petroleum refining plant and in Farfan a new container terminal.

For more details click here

In terms of related air transport opportunities, Tocumen International Airport already is an international and regional hub for both passenger traffic and cargo; the former Howard air force base should become an aviation industrial center, making use of its modern airport facilities; and construction of the cargo airport at France Field in the Atlantic must be completed.

Land of the Panama Pacific area is ideal for mega projects. The isthmus has important objectives such as Mega ports at Palo Seco at the Pacific entrance to the Canal, the Panama-Pacific Special Economic Area located at the former Howard Air Force Base (USA) and the exploitation of new tourist destinations.

Howard Multimodal Project

In 2004, the Government of Panama established the Panama Pacifico Special Economic Area (SEA) to drive direct foreign investment, to provide Panamanians with better-paying jobs and to attract new growth industries to the country. Inspired by special economic areas with similar characteristics around the globe, the Panama Pacifico SEA is the most comprehensive and advantageous to date in the region (and similar in nature to a Special Economic Zone). More than constructing businesses, the SEA is constructing a whole new way to conduct business.

Advantages include the on-site, one-stop shop with access to 11 government branches; special labor incentives; simplified on-site immigration benefits; legal incentives; tax incentives, including exemptions for 12 Specific Business Activities; and access to the on-site workforce training center. 

The project is divided into industrial and commercial sector, including international business park and corporate center, which will have more than 300,000 square meters of warehouses. Also includes an airport and the residential area, which is the heart of this development, which will include commercial, office and three hotels (one green, one executive and a luxury).

At the end of this year is estimated to be completed investment of the first USD 150 million, by 2015 the company will have invested USD 400 million, according to the schedule agreed with the Panamanian state. Currently 2,700 people work at Howard and by 2015 that figure will rise to 9,500.

The studies made for the development of this sector clearly indicate that their location at the entrance and west shore of the Panama Canal is ideal for the establishment of a multimodal center for industry and the commerce. The existing airport infrastructure, and advance telecommunications facilities and the integration of the just in time manufacture with the multimodal transport will provide fast and flexible connections between users, suppliers and clients.

These areas and facilities that reverted to Panama at the end of 1999 have a total area of 2,628 hectares, and are one of the most important sites based on the opportunities for the development in the shores of the Canal in the Pacific.

A New Opportunity: Container Port in Farfan

Located at the Panama Canal's entrance, near to the bridge of the Americas, the 253 hectares of Farfan are part of the former air base of Howard, the biggest military airport that the EE.UU Armed Forces had outside of the United States.

The Japanese government through its Agency for the Development (JICA), prepared a feasibility study that reveals that after occurring the maximum development of the Balboa port and after its modernization, Farfan can become the second great port of containers in the Pacific.

This port will be part of the multimodal and intermodal center of transport that Panama promotes. With a view to integrate itself more indeed to the system of international transport its proximity to the port of Balboa and the airport of Howard makes this site especially attractive for the predicted development.

PSA International Terminal 

The Panama Canal, approximately 80km long, joins the Atlantic and Pacific Oceans, and serves as the crossroad between East/West and North/South Americas. With the boom in China-US trade and strong container volumes in Latin America, the Panama Canal has grown in strategic importance in providing a Far East-US East Coast all-water service and as a transshipment point for the region. The Panama Government’s bold investment in the Canal expansion will facilitate the further growth of its ports.

PSA Panama International Terminal (PPIT) is located at the entrance of the Panama Canal, on the pacific side at the former US Rodman Naval Base. It is well-positioned to participate in the growth of this strategic hub, and provides an important port of call for shipping lines handling container and Ro-Ro cargo.

PPIT started operations in December 2010.

The contract between the state and PSA, with an initial investment of USD100 million, included development, construction, operation and management of a container terminal and bulk cargo on the perimeter of the former Rodman Naval Station. The investment doubled the port capacity installed which would put the country at the forefront regionally. The terminal has the ability to move about half a million containers.

Currently develop buildings that will be the second deepwater port facility in the Panamanian Pacific will add to the four major ports has Panama: Balboa, Manzanillo International Terminal, Colon Container Terminal and Cristobal.
The full Howard complex was awarded in May 2007 to London & Regional Properties, a consortium that will develop directly or issue long term concession to third parties for the development of this Port as well as other areas within Howard. The Business Panama Group will be working closely with this consortium in developing investment opportunities for Howard.

If you are interested in any of the opportunities listed below within the Howard project, the Business Panama has a team of top experts to help you with:

  • Center of repair and maintenance of airplanes and helicopters
  • Development of a container port complex in Farfan
  • Logistic center for manufacturing and distribution
  • Industrial parks and processing zones for export
  • Call centers
  • Development of residential areas
  • Establishment of educative and institutional centers
  • Recreational parks, sports, tourist and recreational facilities.

If you are a developer or promoter, the Business Panama Group team of realtors, lawyers and other professionals will provide you a variety of services from the purchase of the property to all phases of development including structuring, subdivision, financing, contractual, design, environmental, construction, permitting and more. After beginning a relationship, we will be glad to provide you access to our “List of Recommended Professionals” formed by first class architects, environmental consultants, builders and others.

For more information, please click here to contact us.

       
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