javier carrillo koo

Javier Carrillo Koo International Trade Specialist

Panama Canal Authority September 1, 2015

1

Panama Canal Overview

Panama Canal Expansion Program Update

Implications and Opportunities

Agenda

What’s next

2

THE PANAMA CANAL

1903 - 1914 Construction

of a Locks type Canal by

the U.S.

ATLANTIC OCEAN COLON

GATUN LAKE

PANAMA CITY

MADDEN

CHAGRES RIVER

PACIFIC OCEAN

GATUN LOCKS

P.MIGUEL

LOCKS MIRAFLORES

LOCKS

3

0

50

100

150

200

250

300

350

400

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1914

1916

1918

1920

1922

1924

1926

1928

1930

1932

1934

1936

1938

1940

1942

1944

1946

1948

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

326.8

FY 1955 FY 1975

27,286 3,947 9,902 15,899

Tran

sits

PC

/UM

S t

on

nag

e in

mill

ion

s

FY 2014 FY 1995

13,482

Fiscal Year

Transits vs PC/UMS Tonnage FY 1914 – FY 2014

4

AN IMPORTANT CHANGE IN PERSPECTIVE

Differentiation by size

Identified segments

A more structure pricing proposal

One price for all vessel types.

No segmentation

MODERNIZATION

5

* Measured in Million of Long Tons

Total Cargo Movement FY 2014

USERS FY 2013* FY 2014* 2014 (%)

United States 136.5 154.1 68.5

China 46.4 51.5 22.8

Chile 29.0 29.5 13.1

Japan 20.0 21.7 9.5

Colombia 17.5 19.2 9.6

South Korea 16.8 19.1 8.5

THE PANAMA CANAL TRADE

AND MAIN USERS

Total Cargo

Movements 224.9

Million Long Tons

6

Main Routes - FY 2014

Asia - East Coast US 86.2M

West Coast South America - Europe 12.6M

Total: 224.9 M (long tons)

South America Intercoastal 10.9M

West Coast South America - East Coast US 33.4M

West Coast Central America – East Coast US 12.0M 7

It’s all about Connectivity

1914 - 2014 Transits: 1,057,332

Cargo: 9,660,377,591 LT

Container Cargo 44.5M

Grains 48.6M

FY 2014 Total: 224.8 M LT

Top 5 Commodities

Metals and Ores 15.0M

Petroleum & Petroleum products 40.7M

Coal and Coke 14.3M

• 144 trade routes

• 1700 ports

• 160 countries 8

• 3.0% of world maritime trade

• 10.6% of grains

• 5.8% of chemicals

• 6.2% of containers

PANAMA CANAL’S SHARE OF

GLOBAL SEABORNE TRADE

9

• Opens 24 hours a day, 7 days a week, 365 days a year

• Safe and secure • 98% customer satisfaction • Strikes not allowed by law; only two

closures in its history • Predictability: Published tariffs and

fixed transit date with reservation

Reliability

11

Sustainability

102 211

350 463

600 750

912 1,027

1,194 1,262 1,360

1,548

1,869

2,232 2,403

2,914

102 109 139 113 137 150 162 115 167

68 98 188

321 363 171

511

FY2000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bud

get

Accumulated Investment – Capex

(USD millions)

Fuel Pipeline and Tank Farm Tugboats Ground dams

Bridge over Atlantic side

Dredging

Launches

12

Liner Services Connectivity of Panama

Source: ACP MEMN, Compair Data, July 2015

Commercial Route No. Of

Services Annual

Capacity No. of

Vessels Average Vessel

Size

Asia – USEC / Gulf 14 3,303,521 139 4,549

Rotterdam Antwerp

Dunkirk

Hamburg

Bilbao Marin

Guayaquil

Callao

San Antonio

Mejillones Antofagasta

Manta

Cartagena

Ensenada

Kingston

P. Caucedo

Manzanillo

Port of Spain

P. Cabello

Chiwan

Shanghai

Busan

Ningbo

Kaohsiung

Qingdao

Hong Kong

Jacksonville Houston

Miami

Savannah Charleston

New York

Tangier

Napier

Lautoka

Noumea

Tilbury

Le Havre

San Juan PR

Iquique

Ilo

Taipei

Pyongtaek

Yokohama Tokyo

Los Angeles

Oakland

Norfolk

Melbourne Tauranga

Sidney

Auckland

Vancouver

Seattle

Lázaro Cardenas

La Spezia Naples

Valencia Gioia Tauro

Seattle Vancouver

Buenaventura

Cristobal Balboa

Manzanillo

WCSA – Europe 7 1,213,667 55 3,556

Pendulum 2 481,406 30 4,629

WCUS – Europe 3 660,381 29 4,288

WCSA – ECUS 2 438,919 13 4,245

Asia – Caribbean 1 242,805 12 4,669

Australia – Europe 1 55,085 6 2,421

Australia – ECUS 1 178,142 10 3,426

WCSA – Caribbean 2 134,560 7 1,282

Total 33 6,708,486 301 4,186

Feeder Services Atlantic 25 2,456,006 88 2,490

Commercial Route No. Of

Services Annual

Capacity No. of

Vessels Average Vessel

Size

Feeder Services Pacific 14 3,106,958 84 6,314

Total 39 5,562,964 172

13

Economies of Scale

14

Dimensions of Locks and Vessels

32.3 m (106’)

Beam 49 m (160’)

18.3 m (60’)

12.04 m (39.5’)

15.2 m (50’)

Maximum size of vessels in existing Locks:

Maximum size of vessels in new Locks:

33.5 m (110’)

15




Agenda

What’s next

17

Neopanamax Locks Pacific

Deepening and widening of Atlantic

Entrance

17.66 M m3

Deepening and widening of

Pacific Entrance

8.7 M m3

Increase the maximum operating level of Gatun Lake

26.7 m 27.1 m

Deepening and widening of the Gatun Lake channels and deepening of the Culebra Cut

Pacific Access Channel to the new Locks 49 M m3

New Pacific Locks ►

Access Channel ►

Present Locks

▼

Neopanamax Locks - Atlantic

Present Locks

▼

Expansion Program Components

18

Excavation and Dredge Volume

200

155

0 50 100 150 200 250

New Locks

Current Locks

1886 1909

2008 2007

Million Cubic meters

78%

Expansion Program Components – Concrete Volume

3.4

4.4 0 1 2 3 4 5 6

New Locks

Current Locks

In million cubic meters

129%

New Locks Existing Locks

PANAMA CANAL EXPANSION UPDATE

21

Panama Canal Expansion Milestone: FILLING OF THE ATLANTIC LOCKS COMPLEX

June 11, 2015 During an initial phase of filling, which will take approximately five days, the Canal will gradually raise the water level within the lower chambers of the new locks, pumping in approximately 50 thousand cubic meters of water per hour from Gatun Lake. This will allow for the testing of the first gates.

22

Successful tests of the gate operation in the Atlantic Side

June 23, 2015 The gates have buoyancy tanks that allow them to weigh 15% of their actual weight inside the water-filled new locks.

23

Panama Canal Expansion Moves Ahead with Filling of New Pacific Locks

June 22, 2015 The intricate filling process will make use of powerful electric and diesel pumps, designed specifically for the job. The electric pumps are expected to provide 30,000 gallons of water per minute each, while an added network of 13 diesel pumps will work to pump 7,000 gallons of water per minute each, filling the lower chamber at a rate of nine inches per hour. The filling and subsequent testing of the new Pacific locks is expected to take approximately 90 days to complete.

24




Agenda

What’s next

25

Reduces transport cost

Improves productivity

and flexibility of carrier

Reduces CO2 emissions

Improves the competitive-ness of the

Panama route

Improves carrier´s network

performance

Impacts development on ports and

land infrastructure

26

It ’s all about Connectivity

144 trade routes 1,700 ports 160 countries 27

Panama provides easy and direct access to markets in Latin America,

Caribbean, North America and Europe

The expansion will increase the area of

influence of the Panama Canal

28

PANAMA´s COMPETITIVE ADVANTAGE

• Land availability

• Sea-air connectivity (for parts)

• Sea: All major carriers have weekly

services through Panama

• Air: DHL, COPA, UPS, FEDEX,

Avianca

• Skilled labor to provide value added

services (final detailing, refurbishing,

reverse logistics, etc.)

• Panama offers Legal and Financial tax

incentives to Multinational Companies

that establish their regional

headquarters in Panama.

• Panama offers a place to keep stock

near final regional markets.

29

PANAMA and the WORLD RANKING

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

15. Malta

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. United Kingdom

Soundness of banks

1. Canada

2. South Africa

3. New Zealand

4. Panama

5. Australia

6. Finland

7. Hong Kong

8. Singapore

9. Norway

10. Barbados

11. Chile

12. Lebanon

13. Malta

14. Brazil

15. Mauritius

FDI and technology

transfer

Foreign direct

investment (FDI) bring

new technology

1. Ireland

2. Qatar

3. Panama

4. Singapore

5. Costa Rica

6. UAE

7. Luxembourg

8. Saudi Arabia

9. Slovak Republic

10. Hong Kong

11. Bahrain

12. Hungary

13. Uruguay

14. Israel

15. Mexico

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

14. UAE

15. Estonia

Well developed and

efficient by international

standards

Ensure the provision of

financial services at

affordable prices

Generally healthy with

sound balance sheets

Rules governing foreign

direct investment (FD)

30

Multinational Regional Headquarters

Prove of reliable connectivity 31

Network Economies

Neo Panamax Long Distance

Bigger Volume

Buques Feeders Short Distance

Lower Volume

32

EXPORTERS SHIPPING LINES IMPORTERS CONSUMERS

Economies of scale - Efficiencies in the supply chain – Connectivity New Opportunities for business

Benefits from Transportation Cost Savings

33

Northeast

NH, MA, RI, CT, NY , NJ

+4% Pop: 43M

Southeast

DE, VA, NC, SC, GA,

FL

+34% Pop: 68M GULF

LA, TX, OK, KS

+26% Pop: 45M

Great Lakes

IL, IN, MI, PA, OH

+2.5% Pop: 55M

Northwest

WA, OR, CA, AK

+28.0% Pop: 70M

Population

+21%, 353M (Selected States)

US CENSUS: Interim Projections of the total population for the United States

Urban Population Growth Projection 2010-2030

34

Top United States Ports /Navigational Channel Depths*

Baltimore: 50-foot channel

Deepening completed in 2012

770K TEUs (2014)

Norfolk: Current depth 50’

Authorized to dredge to 55’

2.4M TEUs (2014)

Charleston: Current depth 45’. Deepening of

Charleston harbor to 52’

Project completion by 2019

1.8M TEUs (2014)

Savannah: Current depth 42’

Deepening to 47’

Scheduled for completion in 2017.

3.3M TEUs (2014)

Jacksonville: Current depth of St. Johns River

channel 40’. Deepening to 47’ with completion

TBD

922K TEUs (2014)

Miami: Current depth 42’

Deepening to 52’

Estimated completion in 2015

877K TEUs (2014)

Houston: Current Ship Channel depth 45’

Projected deepening (TBD)

1.95M TEUs (2014)

Los Angeles - Long Beach:

Current depth 50’

8.3M TEUs (2014 )

Oakland:

Current depth 50’

2.4M TEUs (2014)

Seattle: Current depth 50’

Tacoma: Current depth 51’

3.4M TEUs (Seaport Alliance – 2014)

Philadelphia: Current depth 40’

Deepening of main channel of the Delaware

River to 45’; completion by 2017

449K TEUs (2014)

NY/NJ: Current depth 45’

Harbor Deepening Project to 50’ Estimated

completion in 2015/2016

5.7M TEUs (2014)

*Sources: U.S. Army Corps of Engineers, channel depth at Mean Low Water

Individual port authorities

American Association of Port Authorities: Western Hemisphere Port Container Traffic through January 2015 35

Source: «US CENSUS: International Database»

Urban Population Growth Projection 2010-2030

Mexico +18.9%

Pop: 135M

Guatemala, El Salvador, Belice,

Honduras, Nicaragua. +28.0%

Pop: 39M

Costa Rica, Panama

+23.0%

Pop: 11M Colombia, Venezuela +22.0%

Pop: 88M

Ecuador, Peru,

Bolivia, Chile +20.0%

Pop: 85M

Uruguay, Paraguay, Brazil,

+18.0%

Pop: 251M

Argentina,+17.0%

Pop: 48M

Caribe, Cuba, Puerto Rico, Dominican Republic,

Jamaica, Haití +11.0%

Pop: 42M

36




Agenda

What’s next

37

Panama Canal Diversification Strategy

There is a close relationship between the Canal and other maritime and logistic activities that have proven to add value to

the users of Panama as a Trade Route.

Our diversification strategy focuses on related activities that are profitable and enhance the Canal’s core business.

Logistics Park Services

LNG Terminal Vessel Repair

Ro-Ro Terminal

Top-Off

Container Barge Services

Bunkering

Corozal Container Terminal

38

Panama: The Transportation and Logistics Hub of the Americas

50 MILES OCEAN TO OCEAN

BUNKER

TERMINAL

PACIFIC

BUNKER TERMINAL

ATLANTIC

Panama

39

javier carrillo koo

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