After the discovery of the Pacific coast of Panama, visionaries dreamed of one day creating a great passageway from the Atlantic to the Pacific, thus avoiding the 12,000-mile journey around the tip of South America. That day finally came in August of 1914, after decades of planning and excavation. Although only 40 miles from shoreline to shoreline, the ingenuity and tenacity of the canal's creators are evident with each and every movement of this magnificent lake-and-lock-type canal. It's bound to be a voyage you will never forget.
The Panama Canal extends approximately 80 km. (50 miles) from Panama City on the Pacific Ocean to Colon on the Caribbean Sea. It is widely considered to be one of the world's great engineering achievements. The United States is the largest user of the Canal in terms of cargo tonnage, as either port of origin or destination, although Asian countries are beginning to close the gap. About 12% of U.S. sea-borne international trade, in terms of tonnage, passes through the Canal annually. Ships bound for Japan from the East Coast of the United States save about 3,000 miles by going through the Canal; ships sailing from Ecuador to Europe save about 5,000 miles.
Around 14,000 ships transit the Canal each year, hauling an estimated four- percent of the world's goods around the globe. About 70 percent of all trade through the Canal are coming from or heading to the U.S. Traffic is projected to increase two percent per year.
Fifty (50) million gallons of fresh water are needed to float one ship through the Canal and all of it is supplied free of charge by forests on the surrounding hillsides, which capture the abundant tropical rains and feed the Canal with rivers.
The Panama Canal Authority has implemented a $1 billion improvement program to maintain the Canal and keep it competitive. The program includes the widening of the narrow Gaillard Cut allowing two-way traffic for even the largest ships and increasing Canal capacity.
The Canal in figures
Revenues generated by this international waterway for the fiscal year 2008 rounded 2.000 million dollars, while in 2007 the amount was $ 760 million.
At the closing of fiscal year 2007, total transits totaled 14,721, an increase of 3.7% compared to 14,194 transits reported during fiscal year 2006. Transiting time trough Canal waters decreased 7.4% compared with fiscal year 2006 (from 30.5 to 27.84 hours), and usage of booking system increased registering 95.2%, an increase of 1.7% compared to fiscal year 2006 that was of 93.5%.
Panamanian registration as of October 31, 2008 topped the list of marine merchant flags in the world, with 8159 ships, according to the Maritime Authority of
Panamá (AMP). The Panamanian fleet has registered 180 .018.554 tons, representing 21.8% of the gross tonnage in the world, Liberia remains with 82,674,025 tons and the Bahamas with 47,637,360.
Treaties
In 1903, the Republic of Panama and the United States signed the original Panama Canal Treaty, which allowed the United States to build and operate a canal connecting the Pacific Ocean with the Caribbean Sea through the Isthmus of Panama. The Treaty granted the United States the use, occupation, and control of a Canal Zone, approximately 10 miles wide, in which the United States possessed full sovereign rights. In return, the United States guaranteed the independence of Panama and paid the government of Panama $10 million, as well as an annuity of $250,000, which each year increased at a rate far beyond that of inflation.
On September 7, 1977, a new Panama Canal Treaty was signed by President Torrijos of Panama and President Carter of the United States that transferred full control of the Canal to Panama on December 31, 1999. Under this Treaty, the Panama Canal Company, the Canal Zone, and its government were disenfranchised on October 1, 1979, and replaced by the Panama Canal Commission that operated the Canal during the 20-year transition period that began with the Treaty. The Panama Canal Commission has now been replaced by a new Panamanian entity, the Panama Canal Authority. The treaty guarantees permanent neutrality of the Canal. Control over U.S. military facilities in the former Panama Canal Zone has reverted to Panamanian authority. The U.S. Southern Command and U.S. Army South troops moved out of Panama at the end of 1999.
Panama Canal Developments
The Canal itself is undergoing a modernization and maintenance program of up to $1 billion, which includes finishing of the widening of Gaillard Cut as well as improvement of the locomotives (mulas) used to guide the ships through the locks, the docks, the tugs and all the machinery of the Canal operation. In 2006, the Panama Canal Authority announces the construction of a third set of locks. A multi-phase program includes building additional water reservoirs to increase water availability both for the Canal and the terminal cities; dredging the entrances to the Canal to allow the entrance of larger ships to the ports; similarly deepening Gaillard Cut and Gatun Lake; building the new locks and constructing two bridges over the next ten years.
The World Bank approved, within a 20 years term, a 300 million dollars loan to finance Panama Canal expansion. The European Investment Bank (EIB) announced its interest in financing the proposed expansion of the Panama Canal at a cost of $ 600 million, which is 28% of 2.3 billion dollars required for the works.
In addition, the Panamanian government announced that it has obtained from international banking institutions 2300 million dollars (1,688 million euros) on preferential terms and conditions to finance the construction of a third set of locks.
The expansion of the Panama Canal will ensure competitiveness in the global shipping sector. Funding for the waterway expansion is given without warranty or guarantee of the Panamanian State. The works for construction of the third set of locks began in 2007 and should conclude in 2014 at a cost of 5 thousand 250 million dollars.
To date, the Panama Canal Authority (ACP) awarded contracts for financial advisory services to the Mizuho Corporate Bank, environmental impact study to URS Holdings, legal counsel for international financial issues was awarded to Shearman Sterling, international legal advisory for construction contracts to Mayer, Brown, Rowe & Maw, and the first dry excavation of the Canal approaching path at Pacific side to Constructora Urbana, S.A.
340 million is the total amount of contracts awarded by the ACP for the expansion works of waterway, and this sum could rise to more than 370 million if awarded to Constructora Meca, S.A., which is the third dry excavation contract, offering 36.6 million, the lowest bid.
For 2009 remain: the biding for dredging of the Atlantic side, the fourth dry excavation and the design and construction of the third set of locks, the most important work of the expansion project at a cost of 2 m.
Expansion works have advanced between 7% and 10%.
Viewing these projects from another perspective, rental apartments in Panama have all their expectations focus on the Panama Canal expansion works. Following information from public and private agencies, we can say that the Panama Canal is and will be over the next 10 years the engine for public investment. To the estimated 5250 million dollars in investment, we must add other related investments arising from its construction, and particularly in sectors such as real estate and tourism. In addition, the Government is promoting the construction of a mega port at the western entrance of the Canal, in the Pacific side, which would make the country the main cargo center in Latin America.
Ports and Railroad
Additionally, Panama's ports are expanding their container transshipment capacity. Manzanillo International Terminal completed a $100 million expansion program, the port of Balboa is finishing a $130 million expansion program, and will, next year, start another $200 million phase three program. The Evergreen port at Colon will enter a second phase of expansion and a new port at Farfan, on the Pacific side, will be defined.
All this activity will allow Panama to transship over 3 million containers per year around year and continue growing over the years making Panama the No.1 container transshipment center in Latin America.
The Panama Canal Railway Company (PCRC) is in the process of implementing the Positive Train Control dispatch system "Train Sentinel (R)." which is a design of Quantum Engineering, Inc. that incorporates the latest in dispatch computer systems, providing location information by means of global positioning satellites. The technology allows the driver to be informed of different possible situations before they occur. Stopping the train if the operator fails to respond properly in order to prevent collisions between trains, giving speed restrictions and providing at the same time a high level of protection for field workers and their equipment.
An investment of $ 80 million offers from a new railroad system, with a highly efficient intermodal connection between the Pacific and Atlantic ports. Furthermore, it complements the transportation center infrastructure jointly provided by the Panama Canal, the Colon Free Zone, port terminals, highways and airports. PCRC also offers services to business executives who travel daily from Panama City and Colon. Also to tourists who come to the country from the cruise port in Colon to the capital.
The 47 miles railway which is operated by PCRC links the areas of Balboa and Colon, allowing a two-way traffic. Trains run continuously between the terminals of the Atlantic and Pacific. The system has a capacity of 10 trains in each direction every 24 hours. But it is also possible to increase to 32 trips per day. Plans include a maximum of 2 million TEUs per year, in terms of cargo transportation. Operated with type “Bulkhead” cars which are equipped with two sets of 6 cars each carrying an average of 75 containers.
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
Some of the multi-million dollar investment opportunities
include:
The development of major intermodal transportation and logistics centers at Colon and at the Howard/Farfan complex on the Pacific, including the construction of a new container port at Farfan.
Ship owners services, servicing of vessels, ship repair and maintenance, container repair, intermodal cargo services.
The construction of the third set of locks, which will include the necessity for additional water resources, expanded hydroelectric power generation, the expansion of the entrances to the Canal and the deepening of Gatun Lake and Culebra Cut.
Contracts related to the Panama Canal operation (provisions, equipment, material, construction, consulting etc.).
Provision of concessionary services to the ports (power, water, fuel, material, food, banking services, telecommunications, maintenance and repair, dredging) estimated at between $47 and $60 million annually.
Services to passengers and crewmembers transiting the Canal, which in 2000 numbered 255,571 and 458,134 respectively.
Services to smaller ships, such as yachts and motor cruisers, which totaled 1,748 in 2001.
The relocation of approximately 8 to 10 thousand persons, as a result of Canal expansion, requiring housing and infrastructure.
Cruise ship reception and tourism.
Others
In terms of related air transport opportunities, Tocumen International Airport should be developed as an international and regional hub for both passenger traffic and cargo; the former Howard airforce 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.
For awarding the contract of design and construction of the new set of locks, four consortiums participated in the project’s must important bidding. Among them were Spanish companies such as Acciona and ACS. According to the ACP, dry excavation works in land areas are progressing smoothly.
According to a report prepared by the institution quarterly, in February 2008, the Rijkswaterstaat (RWS) from the Netherlands initiated a review of models for the new locks. RWS has experts in the areas of hydraulics and navigation to analyze the physical and mathematical models for the filling and emptying system of the locks, in addition to the basin model.
Another work done during this quarter is the construction of the field offices at the Pacific and Atlantic sides. Those will be used by the ACP staff and consultants who will manage the construction of the locks. These works have a 40% advance in the Pacific and 18% in the Atlantic.
Howard/Farfan Multimodal Project
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 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.
Business Opportunities of the Howard Project
Center of repair and maintenance of airplanes and helicopters.
Development of a harbor complex in Farfan
Logistic center of manufacturing and distribution
Call Centers
Industrial parks and processing zones for export
Development of residential areas
Establishment of educative and institutional centers
Recreational parks, of sports and tourist and recreational activities
Howard/Farfan has an estimated value of US$1 billion that will require participation from major developers or consortiums.
The Panama Canal plays a significant role in the country's economy and has contributed an average of six percent of Panama's GDP since the 1980s.
Panama-Pacific Special Economic Area
On July 11, 2007, by signing a contract with the Panama-Pacific Special Economic Area (AEP), the company London & Regional Panama SA officially became the master developer for the Panama-Pacific Special Economic Area.
The British consortium London & Regional Properties is one of the largest of the world on private properties. Its value amounts to 20 billion in properties in Europe and Africa. Apart from the Panama Pacific area, it is developing approximately 20 million square feet of new international projects. In the isthmus, its subsidiary is London & Regional Panama SA
Resolution of the bidding that awarded the project to this company provides a breakdown of total investment to be carried out reaching an amount of $ 405 million during the first eight years that is in the first phase of construction. After signing the contract, the sum of 20 million dollars, which is to be invested in public infrastructure for the district of Arraijan. In the second year, the minimum investment is of 60 million, 80 million in the fourth year, another 80 million in the sixth year and in the eighth year, an investment of 185 million. Over the next thirty-two years, the investment will be of $ 300 million, totaling 705 million.
The master developer is tasked to manage, promote (including internationally) and provide maintenance to 1410 hectares. It also has the authority to initiate commercial practices (within the legal framework and exercising high efficiency) such as the sale or leasing processes. One of its main goals is to turn the area into a new urban and commercial district, creating a big impact at an international level.
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The Canal itself is undergoing a modernization and maintenance program of up to $1 billion, which includes finishing of the widening of Gaillard Cut as well as improvement of the locomotives (mulas) used to guide the ships through the locks, the docks, the tugs and all the machinery of the Canal operation. In 2006, the Panama Canal Authority announces the construction of a third set of locks. A multi-phase program includes building additional water reservoirs to increase water availability both for the Canal and the terminal cities; dredging the entrances to the Canal to allow the entrance of larger ships to the ports; similarly deepening Gaillard Cut and Gatun Lake; building the new locks and constructing two bridges over the next ten years.