The Panama Canal Expansion - Factors Influencing Trade to the US

The Panama Canal Expansion - Factors Influencing
Trade to the U.S. East Coast
Manuel Benítez
Deputy Administrator
Georgia Foreign Trade Conference
February 3, 2014
Panama Canal Traffic
Factors influencing trade to the U.S. East Coast
The Panama Canal expansion program
Potential impact of the expansion
The Panama Canal connects 144 trade routes
across the globe
User Nation
FY 2012
FY 2013
United States
142.0
134.8
China
52.7
46.4
Chile
28.0
29.0
Japan
22.4
20.0
Colombia
15.0
17.5
South Korea
17.0
16.8
65% of Canal cargo traffic originates in or is
destined to the United States
PCUMS ‘97 Tonnage (Million Tons)
FY 2011-2013
117.6
119.9
Container
113.7
72.7
83.4
80.0
43.0
42.9
38.7
30.3
27.9
25.9
Chemical Tankers
35.9%
35.3%
22.7%
Dry Bulk
Vehicle Carriers/RoRo
36.7%
25.0%
24.8%
13.4%
12.9%
12.0%
9.5%
8.4%
8.0%
17.8
19.5
19.5
Crude/Product Tankers
4.9
4.3
3.7
LPG
9.2
9.2
9.2
General Cargo
5.9
7.4
7.7
Others
0.0
2013
2012
1.1%
2011
2.8%
2.7%
3.4%
10.3
10.2
12.8
Refrigerated
6.1%
1.5%
1.3%
8.9
9.1
10.9
Passengers
5.6%
5.8%
3.2%
3.1%
4.0%
2.9%
2.8%
2.9%
1.8%
2.2%
2.4%
20.0
40.0
60.0
PCUMS in millions
80.0
100.0
120.0
140.0
Liner Services Connectivity of Panama
Vancouver
Seattle
Hamburg
Rotterdam
Antwerp
Dunkirk
Le Havre
La Spezia
Naples
MarinBilbao
Valencia
Gioia
Tauro
Tangier
Tilbury
Vancouver
Seattle
Oakland
Qingdao
Pyongtaek Tokyo
Busan
Yokohama
Los Angeles
Ensenada
Shanghai
Ningbo
Hong Kong
Chiwan
New York
Norfolk
Charleston
Savannah
Jacksonville
Houston
Miami
Taipei
Kaohsiung
Manzanillo
Lázaro
Cardenas
Dubai
P. Caucedo
Kingston San Juan PR
Port of Spain
Cartagena
P. Cabello
Manzanillo
Cristobal
Balboa
Buenaventura
Manta
Guayaquil
Callao
Lautoka
Il
o
Iquiqu
e
Mejillones
Antofagasta
Noumea
Sidney
Melbourne
Commercial Route
San Antonio
Auckland Tauranga
Napier
No. Of
Services
Annual
Capacity
Commercial Route
No. of Average Vessel
Vessels
Size
Feeder Services Atlantic
Feeder Services Pacific
24
9
2,019,094
2,287,197
74
66
Total
33
4,306,291
140
1,904
6,072
Asia - USEC / Gulf
WCSA - Europe
Pendulum
WCUS - Europe
WCSA - ECUS
Asia - Caribbean
Australia - Europe
Australia - ECUS
WCSA - Caribbean
Total
Source: ACP MEMN, Compair Data, November 2013
No. Of
Annual
Services Capacity
11
2,540,082
7
1,204,679
2
493,012
2
430,335
2
405,620
1
246,428
1
90,572
1
178,642
1
49,010
28
5,638,380
No. of Average Vessel
Vessels
Size
109
4,439
56
3,496
28
4,726
21
4,087
12
3,942
12
4,726
13
1,737
10
3,426
3
1,477
264
4,027
Panama Canal Services that call the Port of Savannah
Bremerhaven
Hamburg
Rotterdam
Antwerp
Dunkirk
Le Havre
Thamesport
Tilbury
Halifax
Tacoma
Vostochniy,
Oakland
Kobe Tokyo
Busan
Qingdao
Yokohama
Shanghai
Ningbo
Yantian
Hong Kong
Shenzhen
Kaohsiung
Taipei
Los Angeles
Ensenada
New York
Philadelphia Baltimore
Willmington
Charleston
Savannah
Jacksonville
Port Everglades
Kingston
CCT, Colon
Cristobal Manzanillo
Balboa
Guayaquil
Papeete
Service
Shipping Lines
All Water Express 1
All Water Express 5
Panama Direct Line
Ecuador Express Service
COSCO/Hanjin Shipping/K Line/Yang Ming
COSCO/Hanjin Shipping/K Line/Yang Ming
CMA CGM/Delmas/Marfret/ANL
CSAV/Libra-Montemar/MSC
East America Line 1
Asia-US East Coast service
North/Central China East Coast
Express
South China Express
Pacific Atlantic Express
Atlantic Pacific Express
Zim Container Service Pacific
CMA CGM/Delmas/UASC/CSCL/ANL/USL-US Lines
Evergreen Line
Lautoka
Noumea
Sidney
Melbourne
AucklandTauranga
Napier
45% of Savannah’s volume (742,420 Units or 1.3 Million TEU's) transits
through the Panama Canal.
APL/Hapag-Lloyd/Hyundai/MOL/NYK/OOCL
APL/Hapag-Lloyd/Hyundai/MOL/NYK/OOCL/ZIM
ACL-Atlantic Container Line/Hapag-Lloyd/NYK/OOCL
APL/Hyundai/MOL
ZIM
No. of services:
Annual capacity in one direction:
Average vessel size:
No. of vessels:
Source: MEMN Analysis & CompairData, Jan2014
11
2,392,964
4,391
111
Panama Canal Traffic
Factors influencing trade to the U.S. East Coast
The Panama Canal expansion program
Potential impact of the expansion
• The state of the economy
• Population growth
• World fleet composition
• Availability of infrastructure (ports, canals, rail,
land connectivity and distribution centers)
•
The world economy is expected to grow by 3.0%
in 2014 compared with an average of 2.2% in
2013. Most of the growth will be the result in a
relative improvement within the economic
environment and stability in the markets.
•
This macroeconomic environment will foster
enticing conditions for trade. Financial stability
in 2014 will help world commerce to expand by
5.1%. Most of the increase will be led by intraAsia trade and the United States. For 2015,
world commerce is expected to grow by 5.4%.
Northwest
WA, OR, CA, AK
+28.0% Pop: 70M
Great Lakes
IL, IN, MI, PA, OH
+2.5% Pop: 55M
Population
+21%, 353M
(Selected States)
GULF
LA, TX, OK, KS
+26% Pop: 45M
2011 US CENSUS: Interim Projections of the total population for the United States
Southeast
DE, VA, NC, SC, GA,
FL
+34% Pop: 68M
Northeast
NH, MA, RI, CT, NY , NJ
+4% Pop: 43M
Vessel size
Feeders
100-499
Feedermax
500-999
Handy
1000-1999
Sub-Panamax
2000-2999
Panamax
3000-5000
Neo Panamax* 3500-13,200
Post Panamax* 13,200+
Total
% Less than Panamax
% Panamax
% Neopanamax
% Pospanamax
Existing fleet as of December 2013
Capacity
No. of
No. of
%
(thousands
%
vessels
vessels
of TEUs)
355
6.9%
108
0.6%
0
793
15.5%
594
3.5%
7
1,226
24.0%
1,724
10.1%
66
661
12.9%
1,678
9.8%
43
899
17.6%
3,761
22.0%
10
1,107
21.6%
8,208
47.9%
261
74
1.4%
1,056
6.2%
87
5,115
17,129
474
59.3%
24.0%
24.5%
17.6%
22.0%
2.1%
21.6%
47.9%
55.1%
1.4%
6.2%
18.4%
Orderbook 2014-2018
Capacity
%
(thousand
s of TEUs)
0.0%
0
1.5%
5
13.9%
95
9.1%
101
2.1%
35
55.1%
2,081
18.4%
1,375
3,692
5.4%
0.9%
56.4%
37.2%
%
0.0%
0.1%
2.6%
2.7%
0.9%
56.4%
37.2%
Estimated Fleet in 2018
Capacity
No. of
%
thousands
vessels
of TEUs)
355
6.4%
108
800
14.3%
599
1,292
23.1%
1,819
704
12.6%
1,779
909
16.3%
3,796
1,368 24.5%
10,289
161
2.9%
2,431
5,589
20,821
56.4%
20.7%
16.3%
18.2%
24.5%
49.4%
2.9%
11.7%
*Neopanamax estimated at a maximum range of 13,200 TEU based on information provided by Samsung H.I.
Source: ACP MEMN Analysis of the Fleet.
2013
Panamax or Less
2018
Neo Panamax
6%
Post Panamax
Panamax or Less
Neo Panamax
12%
39%
46%
48%
Source: ACP/MEMN, December 2013.
49%
Post Panamax
%
0.5%
2.9%
8.7%
8.5%
18.2%
49.4%
11.7%
Main U.S. East and Gulf Coast Ports with
Infrastructure Projects in Preparation for the
Expansion
NY/NJ: Deepening from 45’ to 50’ (to be
completed in 2014) and elevating the Bayonne
bridge from 151’ to 215’
Completion 2015-2017
Philadelphia: Deepening from 40’to 50’
Completion 2017
Baltimore: Deepening to 50’
Completion 2012
Norfolk: Current depth 50’, Authorized to dredge
to 55’.
Houston: Current depth 45’. Bayport Container
Terminal in phases
Charleston: Deepening from 45’ to 50’
Completion 2019
Savannah: Deepening of inner harbor from 42’ to
47’’
Completion 2017
Jacksonville: Deepening from 40’ to 47’ (TBD)
Terminal and wharves improvements, and
intermodal container transfer facility (2015)
Miami: Deepening from 42’ to 50’/52’, tunnel
project, enhanced rail connectivity
Completion 2015
You’re in
Great Company
Note: Not
representative of all
manufacturing &
distribution centers
Revised 5/8/2013
Panama Canal Traffic
Factors influencing trade to the U.S. East Coast
The Panama Canal expansion program
Potential impact of the expansion
Panama Canal
Expansion
Program
Update
Expansion Program
Components
17.66 M
m3
Post Panamax Locks Atlantic
Presen
t Locks
▼
Increase the maximum
operating level of
Gatun Lake
Deepening
and widening
of the Atlantic
Entrance
26.7 m
27.1 m
Access
Channel
►
Deepening and
widening of the Gatun
Lake Channels and
Deepening of the
Culebra Cut
Post
Panamax
Locks
Pacific
Presen
t Locks
▼
8.7 M m3
Pacific Access Channel to the new Locks
49 M
m3
New
PacificDeepening
Locksand Widening
of Pacific
►
Entrance
Deepening and Widening of
The Pacific Entrance (8.7 M M3)
• Scope of Contract: 8.7 M m3
• Award: April 1, 2008
• Amount: B/. 177,500,676.78
• Company: Dredging International
• Amendment No. 12 : February 10, 2012
- Expansion Program deliveryable: Dec
31, 2012
- Completion of Contract: June 30, 2013
Actual
0%
50%
100
% 100
%
Atlantic Entrance Deepening & Widening
17.38 M M3 Dredged and Excavated / 17.66 M M3
Widening: of 198 m to
530 m (navigation
channel)
Channel width to
300 m (North access
channel)
Extension 13.8 Km.
Creation of PostPanamax area to
turn around
Award: September 25, 2009
Amount: B/. 144,236,596.44
Company: Jan De Nul NV
Conclusion of contract: April
25, 2013
Actual
0%
50%
100
% 100
%
Atlantic Entrance Deepening & Widening
Pacific Access Channel
UXO 3
80 Ha
Pacific Access Channel
• PAC : last award contract 7-Jan-10
• Company: Consortium ICA-FCCMECO
• Amount of award: B/.
267,798,795.99
Actual
• Order to proceed: 22-Ene-10
• Start date: 27-Apr-10
0%
50%
80.2
%
100
%
Uxo Removal
Potential Development of a
Special Economic Area
Cocoli
Ro–Ro Port
2,500 acres have been reclaimed
Additional Port Capacity – Pacific Side
Airport
Railroad PCRC
130
acres Port
of
Corozal
106
acres
57 acres
Cocoli
Ro–Ro Port
125
acres
Port of
Balboa
PSA+
PSA
Pacific Access Channel – Phase 4
26 M M3 Dry Excavation
• Scope of Contract:
– 26 M m3 excavation
– Borinquen dam construction
– Clearing of 80 hectares of MEC.
• Award: January 7, 2010
• Amount: B/. 267,798,795.99
Actual
• Company: Consortium ICA-FCC-MECO
• Completion of contract: August 31, 2014
0%
50%
74
%
100
%
Pacific Access Channel – Phase 4
Pacific Access Channel – Phase 4
Excavation and Dredging Aat the Northern Entrance
of The Access Channel to The New Locks
• Scope of Contract:
– Deepening of 27.5m a 9.14m
PLD
– Channel Width = 218m
– Length = 1.6km
– Volume approved 4 M m3
• Award: August 16, 2010
• Amount: B/. 54,550,647
• Company: Jan De Nul n.v.
• Concluded: 17 October 2012
Actual
0%
50%
100
% 100
%
9
m
Bohío
Actua
l
100
% m3
Volumen: 1,786K m3/ 1,786K
Lago Gatún
Buena Vista
Actua
l
Volumen: 913K m3/
100
%3
913K m
San Pablo
Actua
l
100
%m3
Volumen: 4,211K m3/ 4,211K
Juan Grande
Avance
Gatún
Actua
l
Volumen: 146K
81%
Volumen: 1,182K m3/ 1,987K m3
m3/146K
m3
100
%
Gamboa
Barro Colorado
Avanc
e
43%
Volumen: 1,519K m3/ 3,380K m3
Peña Blanca
Chagres Crossing
Actua
l
100
%3
3
Volumen: 1,116K m / 1,116K m
Actu
al
100
%
3
Volumen: 244K m / 244K m3
Gamboa
Tabernilla
Actua
l
100
%3
Volumen: 1,910K m3/ 1,910K m
Mamey
Actual
88%
Volume: 2,281K m3/ 2,596K m3
85%
Actual
0%
50%
100%
Dredging Areas in the Culebra Cut
N
Actu
al
Bas Obispo
Actu
al
100
Volume: 307K m3 %
Actu
al
Volume: 655K
100
%
m3
Quibian I
dredger
Las Cascadas
100%
Volume: 412K m3
Empire
Actu
CunettealVolume: 240K m3
Actu
al
100
Volume: 664K m3 %
100
%
Culebra
Actu
al
CucarachaVolume: 512K
Centenario Bridge►
m3
100
%
Actu
Paraiso
al
Volume: 204K m3
100%
Actual
Cornelius dredger
%
100
%
50%
100%
Dredging Areas in Gatun Lake
R.H. Christensen
Quibian I
Cornelius
Mindi
Dredging Areas in Gatun Lake and Culebra Cut
Alberto Aleman
Zubieta
Locks Design and Construction
• Scope of Contract: Design and Construction of Locks
• Award: July 15, 2009
• Order to Proceed: August 25, 2009
• Initial Amount + options: B/. 3,158,600,059
• Consortium: Grupo Unidos por el Canal S.A.
– Sacyr Vallehermoso – Impregilo – Jan De Nul
- CUSA
• Conclusion of the contract: October 21, 2014
Actual
0%
66%
50%
100
%
Dimensions of Locks and Ships
Maximum size of vessels in existing Locks: 4,400 – 5000 TEU
33.5 m (110’)
12.4 m
(39.5’)
32.3 m (106’)
49 m (160’)
15.2 m
(50’)
18.3 m (60’) min.
28.3 m (93’) max.
Maximum size of vessels in new locks: 13,200 TEU
Locks – Pacific Site
1939 Excavations – Pacific Site
2013
2012
2010
2011
2009
Locks – Pacific Site
Locks – Pacific Site
Locks – Pacific Site
Locks – Pacific Site
Locks Heads
Locks – Pacific Site
Locks – Culvert
Locks – Pacific Site
1939 Excavations – Atlantic Site
2012
2010
2011
2009
2013
Locks – Atlantic Site
Locks – Atlantic Site
4th Set of Locks Concept and Studies
3rd Set of Locks
Pacific
Entrance
Conceptual 4th Set of Locks
Summary Schedule of Main Projects with Baseline and Contingency
As of 31 December 2013
Activity by quarter (Q)
Locks
Pacific access channel - phase 1
100%
Pacific access channel - phase 2
100%
Pacific access channel - phase 3
100%
Pacific access channel - phase 4
75%
Dredging of the Pacific entrance
100%
Dredging
Specifications and locks models
Access channel
% Progress
2007
2008
2009
2010
2011
2012
2013
2014
100%
Design and build post-Panamax locks
66%
Deepening and widening of Gatun Lake and
deepening of Culebra Cut
Dredging of the Atlantic entrance
85%
100%
Increase operating level of Gatun Lake
58%
Expanded Canal begins operations
Expansion Program progress
72.3%
Specifications and design
Bidding and contracting
Execution
Baseline*
Baseline
Baseline
* Baseline from 31 December 2006 including contingency
2015
T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4
Contingency
against baseline
Beginning of operations
Panama Canal Traffic
Factors influencing trade to the U.S. East Coast
The Panama Canal expansion program
Potential impact of the expansion
Dimensions of Locks and Ships
Maximum size of vessels in existing Locks: 4,400 – 5000 TEU
33.5 m (110’)
12.4 m
(39.5’)
32.3 m (106’)
49 m (160’)
15.2 m
(50’)
18.3 m (60’) min.
28.3 m (93’) max.
Maximum size of vessels in new locks: 13,200 TEU
Impact of Canal expansion
Reduces
transport cost
per TEU
Improves
productivity and
flexibility of
carrier
Reduces CO2
emissions per
TEU
Improves the
competitiveness
of the Panama
route
Improves
carrier´s
network
performanceT/S
Impacts
development of
US ports and
land
infrastructure
Service Deployment Scenario
Service A + Service B = Service AB
Number
Yearly
of
transits
vessels
Service
Average vessel
size (TEU)
Transit
frequency
Service A
4,500
7
8
104
468,000
Service B
4,500
7
8
104
468,000
Service AB
9,000
7
8
104
936,000
-8
-104
0
Result
Yearly service
capacity (TEU)
Under this scenario, the carrier requires less vessels and less transits to deploy
the same capacity, therefore providing savings to the carrier.
Service Deployment Scenario
Service A + B + C = Service ABC
Service
+
Average vessel
Transit
size (TEU)
frequency
Number
of
vessels
Yearly
transits
Yearly service
capacity (TEU)
Service A
4,500
7
8
104
468,000
Service B
4,500
7
8
104
468,000
Service C
4,500
7
8
104
468,000
Service ABC
13,200
7
8
104
1,372,800
Total
-300
-16
-208
-31,200
+
=
Under this scenario, the carrier takes advantage of economies of scale through
the deployment of bigger vessels.
• Fewer port calls
• More concentration of cargo at chosen ports
• Increased transshipment opportunities
Transshipment Hinterlands of the Americas
Los Angeles
Freeport
Panama
Recife
San Antonio
Source: ACP/MEMN, June 2013.
Latin America
Population / Growth
Projection
Caribbean: Cuba, Puerto Rico, Dominican
2010-2030
Mexico +18.9%
Pop: 135M
Republic, Jamaica, Haiti +11.0%
Pop: 42M
Guatemala, El Salvador,
Belice, Honduras, Nicaragua.
+28.0%
Pop: 19M
Costa Rica, Panama
+23.0%
Pop: 9M
Colombia, Venezuela
+22.0%
Pop: 88M
Ecuador, Peru,
Bolivia, Chile +20.0%
Pop: 85M
Uruguay, Paraguay,
Brazil, +18.0%
Pop: 251M
OVERALL
POPULATION
+19%, 700M
SOURCE: «2011 US CENSUS: International Database»
Argentina,+17.0%
Pop: 48M
Latin America By The Numbers
• 59% of retailers said their supply chains include
distribution to and from Latin America
• 25% currently have retail operations in Latin
America
• 30% currently have distribution operations in Latin
America
• 58% consider entering or expanding Latin
American operations in the next five years
Source: Casey Chroust, RILA Survey
Source: RILA Member Survey
Panama and the World Rank
Quality of
port
infrastructure
1. Netherlands
2. Singapore
3. Hong Kong
4.
Panama
5. UAE
6. Belgium
7. Finland
8. Iceland
9. Germany
10. Bahrain
11. Sweden
12. United
Kingdom
13. Denmark
14.
Spain
Well
developed
15.
andMalta
efficient by
international
standards
Affordability
of financial
services
1. Hong Kong
2.
Panama
3. Luxembourg
4. Taiwan, China
5. Singapore
6. Qatar
7. Bahrain
8. Switzerland
9. Finland
10. Norway
11. Malaysia
12. Puerto Rico
13. United States
14. Saudi Arabia
15. Ensure
United the
Kingdom
provision of
financial services
at affordable
prices
Soundness
of banks
FDI and
technology
transfer
1. Canada
2. South
Africa
3. New
Zealand
1. Ireland
2. Qatar
4.
Panama
4. Singapore
5. Costa Rica
6. UAE
7.
Luxembourg
8. Saudi
Arabia
9. Slovak
Republic
10. Hong Kong
11. Bahrain
12.
Hungary
Foreign
direct
13.investment
Uruguay
14.(FDI)
Israelbring
15. Mexico
new
technology
5. Australia
6. Finland
7. Hong Kong
8. Singapore
9. Norway
10. Barbados
11. Chile
12. Lebanon
13. Malta
14.Generally
Brazil
15.
Mauritius
healthy
with
sound
balance
sheets
3.
Panama
Business
impact of
rules on
FDI
1. Ireland
2. Singapore
3. Bahrain
4. Hong Kong
5.
Panama
6. Luxembourg
7. Uruguay
8. Slovak
Republic
9. Mauritius
10. Malaysia
11. Taiwan, China
12. Chile
13. United
Kingdom
Rules governing
14.foreign
UAE direct
15.
Estonia (FD)
investment
Container Movements in Panamanian Ports
3.4% growth 2012 vs. 2011
15.2% growth in the last decade
Source: ACP-MEMN/Panama Maritime Authority, June 2013.
Logistic Providers already Players in Panama
• 5 of the top 10 global container terminal operators
 4 in operations
 1 regional office
• Main shipping lines
• Air Hub
• Direct flights to Europe and the America’s
• World-class logistic service providers
Business Companies in Panama
Electronics
Consumer
Pharmaceutical
Fast Moving Consumer Goods (FMCG)
• Panama has a stable economy based on the US dollar
• Ideal location to open a Multinational Companies Headquarters (MHQ)
to carry out operations or services to their main office, subsidiary
or affiliate in the US
• Law No. 41 of August 24, 2007 provides for the creation of a special
regime for the establishment and operation of MHQ’s
• A MHQ can operate as a foreign company registered in Panama or as a
Panamanian company, property of the transnational company
• Since Panama has a territorial tax system, and since the MHQ will be
operating off shore (providing services to its operations outside
Panama), there is no taxable income
Source: Sede de Empresas Multinacionales http://www.sem.gob.pa/en/queessem.php
PANAMA:
Your gateway to
Latin America and beyond
Located in the narrowest point of
the Americas, the Republic of
Panama is the ideal location to
consolidate and distribute cargo to
consumers
around the world.
Its integrated transportation and
logistics Platform provides easy
access to over 470 million
consumers in the Americas.
Shipments can be easily delivered
by air or sea to destinations in Latin
America within a few hours or days.
FEBRUARY 9 - 11