Since 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. The canal rapidly becomes the dynamic driving axis of the logistics development of our country where an average of 14,000 ships transit through it annually by way of 144 routes to more than 80 countries worldwide, moving 12 million TEU’s and 300 thousand CPSUAB [Panama Canal Universal Ship Gauging System] 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.
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 98 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 for more transits and bigger ships. The Panama Canal Authority has started to execute the project and is following a comprehensive plan that will take eight years to complete at a cost of $5.25 billion dollars.
While this is a subject of tremendous importance to the Republic of Panama and its people, the international maritime industry will benefit directly from the expansion through lower shipping costs, and global consumers will eventually benefit from the greater capacity and efficiency of the Panama Canal. By the end of the 2012 the project of expansion reached more than 50% completion and according to ACP more than 11.000 workers contributed to the project during the years of construction.
The Canal in figures
The year 2012 was characterized by a global economic slowdown consequential of fiscal adjustments. The Panama Canal ended fiscal year 2012 with 14.544 transits, a 0.95% decrease from the previous year. Panamax vessel transits were 7.241, 56,3% of oceangoing vessels The PC/UMS tonnage at the end of fiscal year 2012 was 333,7 million, a 3,6% increase compared to 2011.
The total cargo through the Canal registered at 218,1 million long tons, a slight 1,9% decrease compared to the previous year. Toll revenues reached a record B/.1.852,4 million, a 7,1 % increase, as a result of larger vessel transits. It has been measured that the Panama Canal registered 333,7 million PC/UMS tons in 2012 year, 11,6 million tons more than for fiscal year 2011. This was accomplished at an operating cost of B/.1,22 per ton, less than the established goal of B/.1,29 per ton. This is the result of the improved quality service rendered to clients in terms of Canal waters time, the appropriate management of resources, and the effort and dedication of the more than 10,000 Panama Canal employees.
The economy of the USA, the main user of the Canal, showed signs of improvement, but at a less-than-optimal level. Retail and vehicle sales, as well as exports have improved significantly; however, the 7,8% unemployment rate recorded in September keeps the economy increase from developing to desired levels. On the other hand, China, the second most important user of the Panama Canal and the world’s foremost exporter, is affected by Europe and the US low demand for imports. From the beginning of 2012, economic indicators show a downward trend, which culminated in a decline of the increase projections by the Chinese government, from 8,5% to 7,5%.
Regardless of the measures taken by the Chinese government to stimulate economy, such as a more liberal credit policies and the development of massive construction projects, their sustainability may be put to test European and American economies do not improve. Nevertheless, China remained an important player in the maritime flow though the Canal during the year of 2012. If there is a recovery of the world trade in 2013, it is expected that China’s increase projections will be revitalized and the transportation of cargo through the Canal will rise again.
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.
Panama Canal Developments
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. 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. 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. 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. The current plan is for two new flights of locks to be built parallel to, and operated in addition to, the old locks: one east of the existing Gatun locks, and one southwest of the Miraflores locks, each supported by approach channels.
Each flight will ascend from sea level directly to the level of Gatun Lake; the existing two-stage ascent at Miraflores and Pedro Miguel locks will not be replicated. The new lock chambers will feature sliding gates, doubled for safety, and will be 1,400 ft (427 m) long, 180 ft (55 m) wide, and 60 ft (18.3 m) deep. This will allow the transit of vessels with a beam of up to 160 ft (49 m), an overall length of up to 1,200 ft (366 m) and a draft of up to 49 ft (15 m), equivalent to a container ship carrying around 12,000 containers, each 20 feet (6.1 m) in length (TEU). The new locks will be supported by new approach channels, including a 6.2 km (3.9 mi) channel at Miraflores from the locks to the Gaillard Cut, skirting Miraflores Lake.
Each of these channels will be 720 ft (218 m) wide, which will require post-Panamax vessels to navigate the channels in one direction at a time. The Gaillard Cut and the channel through Gatun Lake will be widened to at least 920 ft (280 m) on the straight portions and at least 1,200 ft (366 m) on the bends. The maximum level of Gatun Lake will be raised from 88 ft (26.7 m) to 89 ft (27.1 m).
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 another $200 million phase three program. The Evergreen port at Colon will enter a second phase of expansion and a new port on the Pacific side, will be defined.
The large container ports, the bulk terminals, the cruise and the fuel storage parks are located on both sides of the oceanic region, for all these activities are related to the Canal. It is observed that the container transshipment ports movement has been tripled in less than a decade. Containers movement rose from about 1 million of TEU’s in 1998 to about 6.6 million in 2011. Together with the ports, the restored railroad by Kansas City Southern Railways already operational connect the ports creating a land bridge to complement the Canal.
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 4 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. This port and railroad activity requires 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
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 future 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.
Plans to expand the Panama Canal will be developed before 2015.
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 2012 numbered 327,908 and 2,221,401 respectively.
Rodman and Farfan are identified as potential centers of port development
The relocation of approximately 8 to 10 thousand persons, as a result of Canal expansion, requiring housing and infrastructure.
Cruise ship reception and tourism.
Panamanian ports are a good option for investment by the inherent advantages that characterize and collateral, including:
Facilities for loading and unloading.
Warehousing, transshipment.
Consolidation.
Storage and distribution of loose cargo.
Repair and storage containers.
Secure the load. o Cleaning and repair of containers.
Port management, financial and cruises. o Management of container terminals and processing zones.
Letters of Credit, through expert loading draft.
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 redevelopment of the Tocumen International Airport wills double the number of passengers transiting through the airport annually from the current apprx. 5 to 10 million. 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.
Business Opportunities of the Howard Project
Panama Pacifico, a mixed-use, business, residential and recreational center, will be created over 40 years by renowned developer London & Regional Panama in conjunction with the government of Panama.
For those expanding business overseas, retiring in Latin America or simply visiting this beautiful locale, our sustainable, mixed-use business center and residential hub provides a balance of world-class amenities, infrastructure and services. 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 $ 150 million, by 2015 the company will have invested $ 400 million, according to the schedule agreed with the Panamanian state.
Currently 3,000 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.
Panama-Pacific Special Economic Area
Once reverted to Panama the former Canal Zone is created a historic opportunity for this country, generating in the area a lot of investments, jobs and a full economic recovery, for this, the Republic of Panama has established an ambitious economic program and legal reforms, which includes laws relating to production, labor, maritime, tourism, which allow comprehensive development in the national territory.
In this regard, the Panama - Pacifico Special Economic Area Agency has begun developing the former Howard Air Force Base with private sector participation. With this defined goal, Panama is investing the necessary resources to develop the former Howard Air Force Base, in addition to long-term agreements with foreign and local investors in order to increase chances of success in the economic activities generated, thereby creating new jobs for Panamanians and turning the area of Howard into a economic development generator. 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 S.A. 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. The area is designed to flexible construction of warehouses, office buildings, houses, apartments, commercial areas and parks which are contemplated to generate about 40,000 new jobs in 40 years. Among the opportunities and challenges that are generated are attracting new companies both local and large corporations, encouraged by the benefits provided by Law 41, as well as the possibility of developing a new area in the city to benefit the sector of Panama West and the possibility of recruiting manpower that these companies need for their operations in the area.
Investment Opportunities
Panama Pacific has a large number of industrial, commercial, residential, sports and entertaining properties, besides transportation assets such as airports, hangars and other facilities, excellent communications logistic infrastructure and basic services, such as a supply system fuel, hospital complex, schools, others. For the foregoing Panama-Pacific represents to investors an excellent opportunity of world class business, and for the Panamanians a big step to turn the country into the Business Center of the Americas, increasing its competitiveness and position in the globalized world.
Connectivity (Data and Call Centers)
Incentives and taxes o Center and commerce
Information, communications and technology
Services and trade
Maintenance, repair and aircraft reconversion
Logistic center of manufacturing and distribution
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
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.
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.
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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. The Panama Canal Commission has now been replaced by a new Panamanian entity, the Panama Canal Authority.