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Invest in Logistics in Panama

The Panama Canal: dynamic driving axis of the Logistics Assets.

With the construction of the Panama Canal, the importance of the country becomes evident turning into a principal axis of international commerce and a sole strategic partner for the foreign trade of the countries for which the route is relevant upon providing benefits in the reduction of transportation costs.

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.

At the present time, the ships that go through the Panama Canal have capacity for barely four-thousand containers; however, once the inter-oceanic waterway is enlarged, the vessels that will go through it will have a capacity for 12 thousand containers. This passage generates to the Panamanian Treasury approximately 2,000 million dollars and with the expansion it is expected that the resources duplicate.

A larger ship capacity will generate a reduction of the freightage and will allow the assets that are currently produced in Latin America and are not competitive due to the transportation costs, will have better options.

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.

Logistics Platform of Value Added Activities.

The creation of a “High Value Added Logistics Services” (SLVA, for initials in Spanish) would take advantage of the volume of the Canal for capturing a larger value and improving the domestic employment. The opportunity of the value added logistics services could be in the order of US$1.0 and US$ 1.6 billions of the nominal GNP, with the creation of over 30,000 jobs in the industries related with the logistics as of the year 2020.

The SLVA’s are made up of from a variety of activities related with the shipping, including traditional storage, cold storage, selection, canning and packing, labeling, personalization, and finishing and final assembly. These activities usually occur at the end of the value chain and can be located near a factory, consumers, or in any place within the transportation chain.

Development of Container Ports.

As of the present date, the four container terminals that operate in Panama are administered by three of the ten most important container terminal operators worldwide.

The container ports in the Atlantic and in the Pacific that function as transshipping and redistribution of merchandise, moving over 4.25 million TEU’s annually are considered among the most modern of Latin America and currently conform the largest logistics center of the region.

It comprises mainly: Manzanillo International Terminal (MIT), Colon Container Terminal (CCT) and Panama Ports Company (PPC) HPH. 

Manzanillo International Terminal: Reported Movement 1.4 million TEU’s per year. Colon Container Terminal (CCT): Reported movement of 448 thousand TEU’s per year. Panama Ports Company (PPC): Reported movement 2.4 millons TEU's per year.

At the present time a fifth port container terminal is under construction at a cost of 70 million dollars in the Pacific side of Panama, in front of the PPC’s Balboa terminal. This terminal will be operated by Ports Singapure Authority (PSA).

This port comes in to strengthen the development policy of our country, from the point of view of selling the country as a Logistics Center and generate hundreds of jobs to our nationals.

The port terminal of PSA will have a capacity to move close to half a million TEU’s.

Actually Panama has assured a position in a privileged rank in regards to the movement of container cargo at a worldwide level, becoming one of the first in Latin America and the Caribbean with a market participation of 14.1% of the total traffic of the region and generates 25.6% of the total container ports movement in Central America and the Caribbean.

Panama Railroad: from the Atlantic to the Pacific in one hour.

With the construction of the first inter-oceanic railroad, in 1855, a great migratory movement was initiated across the Isthmus of Panama, however it is not until1998 when the Government of Panama grants in concession this railroad to the Kansas City Southern company which, with an investment of over 200 million dollars begins as of the year 2001 the cargo transshipping services between the Atlantic and Pacific oceans. Presently our railroad has moved more than one (1) million containers and accounts for a moving capacity of 350,000 containers per year. 

Connections between the current logistics assets of Panama.

The Government is determined to strengthen the sectors that are motors for the growth and development of the national economy.

The approach making the value added logistics possible in Panama is in fact the necessary strategy for reducing the actual cost of doing business in Panama upon the generation of solutions for the factors that increment this cost:

  1. Reduce the time of the merchandise in transit
  2. Reduce the time volatility of the merchandise in transit
  3. Reduce the cost of direct inputs of the logistics activities

The Government of Panama has programmed an investment of approximately US$ 1,000.0 millions for stimulating to a great extent the value added logistics activity.
For this purpose consideration has been given to the construction of five highways which are fundamental for the development of the existing logistics industries such as the Tocumen Airport:

  • Extension of the Panama-Colon highway
  • Connectivity between the Corridors of the City of Panama
  • Solution for the Intra-Colón congestion
  • Loop from Howard the CentenarioBridge
  • Extension of the North Corridor for getting to Tocumen International Airport
  • Direct connection to the cargo transportation installations in Tocumen
  • Better tariffs of the truck transportation and world class service
  • Create a master plan for the cargo transport center in Tocumen

Air Transport Service.

At the present time the Tocumen Intl. Airport attends over 5 million passengers annually with over 54 destinations by way of 14 international airlines. Nevertheless, the new master development plan of the international airport considers four (4) phases that will allow its growth throughout the year 2025. This growth will enable to handle the transit of 30 million passengers and also contemplates the development of 20 cargo terminals.

With an investment in the order of 4 million dollars and an infrastructure of 3,500 M2, the company Gulf Coast International Cargo has foreseen the establishment of a logistics handling center in the Tocumen Intl. Airport. This will account for a storing and reception center of the Cold Chain; in the said airport installation it will carry out the pre-certification for both the agriculture export products of our country, such as those that transit through the center.

This project shall be an area of aerial transfer of refrigerated products only and it will have the services for the pre-certification which will be a means for attracting cargo through Panama.

As an additional complement, the government of panama is initiating substantial improvements to the airports in key sites of the country such as colon, David, Bocas del Toro, and the construction of an airport in the central provinces that will allow direct access to the coasts and beaches from the interior of the country.

The HUB of the Americas operated by Copa.

It is considered the worlds eighth largest and offers more than 45 destinations to 24 countries in the Americas with excellent connections, in some cases, with a frequency of up to three flights daily to the most important cities of Latin America.

MULTIMODAL TRANSPORT AND LOGISTICS CENTER CLUSTER

In Panama there is interaction between private ports in both oceans, interconnected by the panama Railroad, highways and international airports, with capacity of offering all types of services for handling the cargo and the attention to passengers. During the past recent years millionaire investments have taken place in the construction and modernization of the ports system by some of the world’s most important operating companies such as Hutchinson Port Holdings and Evergreen Corporation, bringing about as consequence the capacity of moving over 4.25 million containers in the year 2009. Nowadays the government of Panama develops a plan to convert the country into a logistics platform of America and it is sending out clear messages through the large public investments in this sector.

Connectivity through fiber optics.   

The United Nation’s Conference on commerce and development has classified Panama as the country with the best connectivity in Latin America. As a result of our strategic geographical position, our country is connected to the world by means of five fiber optics submarine cables and a great amount of maritime trade routes. These conditions have allowed Panama to be classified by UNCTAD as the country with most connectivity in Latin America.

Panama projects itself this way as an ideal location for companies of telecommunications and data centers connected to North and South America, Europe, Asia and the Caribbean, as it is demonstrated by the ample presence of cellular telecommunications companies and Internet services at a domestic and international level.

Cold Chain.

A cold chain that allows the producers for aggregating product level and transport theses to final destinations with the highest and the minimum loss is a key factor in the strategy of the Government of Panama. Nowadays, the annual post harvest losses in perishable goods are in the order US$ 16 millions.

The cold chain also promotes safety of the food and domestically reduces the cost of the family´s basic shopping basket.

In addition to the above, globalization has intensified the commercial interchange among the countries, increasing the imports and exports and the requirements of the cold chain. In the developed countries, the cold storages have turned into real centers for the logistic distribution designed with the best installations and technologies of the market.

The Brazilian company Galores Group is investing US$ 45 millions in a center for handling the refrigerated and frozen products in the vicinity of Tocumen International Airport. Its objective its for Panama to become a distribution center of frozen products throughout the countries of the region.

In this same order, with an investment of approximately US$ 8 millions, FrigoService Inc., a company with Venezuelan capital, specializes logistics services for storage and distribution of frozen, refrigerated and dry products, and develops 6,000 M2 of roofed warehouses for sheltering the refrigerated containers, and accounts for 850,000 Ft3 of refrigerated volume and a storage capacity of 6 million pounds of products.

With the construction and development of cold chain projects we would increase the national production and reduce the high percentage of losses that presently results in 60%. Therefore, this generates the reduction of prices in the of the family’s basic shopping basket

Additionally, Panama could materialize by way of this project, an increase in exports of perishable goods by air and sea. Countries such as Chile, Ecuador, Perú, Mexico, and Brazil have already expressed their interest in using the cold chain services of Panama with the purpose of converting this country into a Distribution Center for the exports to the United States and Europe.

Panama’s efforts for attracting investments.

The Government of Panama decides to create an organization that specializes in the attraction of investments so recently it has created PROINVEX, the agency specialized in the promotion and attraction of investments and exportations in Panama and which the main objectives are centered in:

  • Implement an Integrated Information system (One-Stop-Shop) that allows the investors to identify and take advantage of the diverse instruments and facilities that panama has for the attraction of Direct Foreign Investment, with emphasis on the four sectors identified as strategic areas: logistics, agriculture export, tourism and financial services.
  • Facilitate the necessary tools to the exporters for successfully materializing the businesses in the global market, focusing on those goods and services in which the country has competitive sustained advantages (agriculture exports).
  • Involve the principal stakeholders, investors and the top directors of local and multinational companies, in making decisions linked to the dynamics of the transformation and promotion of Panama as the logistics, commercial and financial Hub of the region.
  • Maintain the feedbacks to all the government entities that afect the business climate (ex. education, migration, security, infrastructure, etc.) systematically recommending the measures considered necessary, providing follow up thereto, for achieving the fundamentals of the agency.
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