Panama will soon become
one of the key transshipment points in the world. Colon is already
the largest port complex in Latin America, handling 1.3 million
teus ( twenty foot equivalent unit) per year, according to UN’S
With its Canal linking the two greatest oceans, Panama has always
been very aware of its advantage in having a unique geographical
position, but making the most of this attribute and establishing
the country as an important point for cargo handling has taken
longer than it should. This was due to a number of factors beyond
Panama’s control. The first was the operation of the Panama
Canal as a U.S. government agency.
With the opening of the Canal in 1914, the two major deep water
ports of the country became Balboa, on the Pacific side of the
Canal and Cristobal on the Atlantic side. The old Panama Canal
Company, and later the Panama Canal Commission, looked upon these
ports as simply adjuncts to the Canal itself, firstly for the
convenience of Canal customers for servicing their ships, such
as with coal and later bunker fuel and, secondly, as ports for
the movement of cargo in and out of the Republic of Panama. The
Canal Company did not look upon the ports as commercial operations
which could be commercialized, modernized and expanded.
Meanwhile, the Colon Free Zone, on the Atlantic side of the
Isthmus, founded in the 1940’s, had grown into the biggest
duty free zone in the western hemisphere despite the slow development
of the ports.
After the signing of the Torrijos-Carter Canal Treaties and
the handing over of the ports and the Panama Railroad in 1979,
little changed. The succeeding military dictatorships and their
civilian puppet governments clung to the ports and railroad and
used them for giving jobs to their faithful for political ends.
The railroad gradually ground to a halt for lack of funds and
attention and the ports remained at virtually the same stage of
development that had existed when they belonged to the Panama
It took the US military invasion of Panama in 1989, the destruction
of the Panama Defense Force and the installation of the civilian
government of Guillermo Endara Galimany to change the course of
Under the Director General of the then Panama National Ports
Authority(APN), Jerry Salazar, the Endara government gave a concession
to Manzanillo International Terminal (MIT) to develop a private
port operation adjacent to the Colon Free Zone.
The consortium comprised Motores Internacionales, S.A., a Colón
Free Zone company specializing in the importation and sale of
Russian-made vehicles, and Stevedoring Services of the Americas
(SSA), of Seattle, Washington. In time, SSA bought out the share
of Motores Internacionales.
MIT covers an area of 45 hectares. Another 51 hectares are available
for future expansion. The port has ten container cranes in service.
At present it has eight super post-Panamax container cranes and
two Panamax container cranes. The port has 1,240 meters of continuous
berths and a ro-ro facility.
As this port facility developed, its efficiency made it not
only a strong competitor of other key ports such as Miami and
Kingston, Jamaica, but also of the government-operated port of
Cristobal. With a change of government in 1994, it was apparent
to the incoming administration of Ernesto Perez Balladares that
the government ports could not compete with MIT and plans were
made to offer Balboa and Cristobal on concession to a private
Colon Container Terminal
Firstly, however, a concession contract was made by APN director,
Dr.Hugo Torrijos, with the Evergreen group to construct another
modern container terminal at Coco Solo, adjacent to the Manzanillo
terminal. This port, known as Colon Container Terminal (CCT) provided
Panama with another modern and highly-efficient operation. It
has 612 meters of dock available with five Panamax container cranes
and, in the first phase, covers an area of 25 hectares. This port
has an additional area of 37 hectares in reserve for phases II,
III and IV and will cover a total of 62 hectares. In the first
quarter of 2002 it registered the highest growth rate of all container
ports of 45.4 percent.
Panama Ports Company (PPC)
A bidding process on the ports of Balboa and Cristobal culminated
with the international ports operator, Hutchison Whampoa, of Hong
Kong, and Felixstowe, England, winning the process. Their Panama
subsidiary, Panama Ports Company (PPC) totally reconstructed the
Port of Balboa and has converted part of the Cristobal docks into
a cruise ship terminal.
The old Pier 18, Balboa, part of the port complex built in the
early 1900’s at the time of construction of the Panama Canal,
has now disappeared, replaced by a straight dock parallel to the
Panama Canal, in its first phase, 350 meters long. It has general
cargo berths of 1,466 meters in total length.
At the time of publication three super post-Panamax container
cranes had already been installed on the completed section of
the new structure. Eventually 12 super post-Panamax cranes will
be installed and the complex will cover an area of 50 hectares.
Colon Port Terminal (CPT)
Located between Manzanillo International Terminal (MIT) and
Colon Container Terminal (CCT), this port, which serves smaller
coastal vessels and those trading to Central America, Colombia
and the Caribbean, was also privatized during the past government.
Its operators also have plans to modernize the facilities and
install at least one container crane.
The Panama Canal Railway
The railway connecting the Atlantic and Pacific port terminals
holds an historic place as the first trans-continental railroad
link on the American continent. Built in the first half of the
19th Century, it was a popular method for “forty-niners”
to cross the Isthmus on their way from the east coast of the United
States to the gold rush in California. Before it was completely
finished, some actually paid for the convenience of being allowed
to walk along the line and the clearings between Colon and Panama
The railroad was a traditional link between the ports on both
sides of the Isthmus and in its early years it carried cargo between
the two oceans for the Pacific Steam Navigation Company (PSNC)
which traded on the west coast of the Americas from Chile, in
the south, to California, in the north.
The railway became part of the French canal building project
and was eventually bought by the U.S.government along with the
French rights for building the Panama Canal. It continued operating
with subsidies from the Canal and the U.S. military until it was
turned over to Panama in 1979. Without the continued support of
the previous operators and because of neglect and overstaffing
by Panama’s military governments, its condition slowly declined.
However, the railway was seen as an important link between the
various new terminals in the growing port system. As part of the
privatization process under the Perez Balladares government it
was offered under concession to private operators and bidding
was won by Kansas City Southern Industries and Mi Jack Holdings
of the U.S. The railway has now been reborn and has been re-named
as the Panama Canal Railway Company, totally rebuilt, including
new tracks and terminals. Double-deck container trains linking
all of Panama’s principal transshipment ports with a modern,
fast and highly-efficient system complete the multi-modal transshipment
opportunities offered by modern Panama. The railway was originally
intended to carry cargo only, but as cruise ship calls in Panama’s
cruise terminals have grown, the railway has added modern coaches
to its inventory of rolling stock with bubble-dome coaches for
visitors to view the Panama Canal and travel through scenic jungle
and lake areas along its route.
Cruise ship terminals
One of the first operational cruise ship terminals was Colon
2000, on the Atlantic coast of Panama. There are two other terminals
—Gatun Yacht Club, which was refurbished to receive passengers
off ships making a partial transit of the canal, and Pier 6, Cristobal,
operated by Panama Ports Company. Another cruise ship terminal,
the Fort Amador Resort and Marina, on the Pacific, is also receiving
cruise ship calls. Calls by cruise ships on trans-canal and Caribbean
itineraries has grown rapidly because of the efforts of both the
Panama Government Tourist Bureau (IPAT) and private operators
and is showing indications of becoming another of the country’s
successful tourist developments.
The supply of bunker fuel to ships transiting the Panama Canal
and calling at Panama ports is becoming a highly competitive activity
again after many years in the doldrums. In the 1960s Panama was
the major world supplier of maritime fuels after Rotterdam and
Kuwait. A series of circumstances, including the world fuel crisis
of the 70’s and a poor internal fuel policy, which ignored
the passing trade, lost Panama its position as a key supplier
for many years.
When duty free petroleum zones were established at the Canal
and at the trans-isthmian oil pipeline in the west of the country,
near the border with Costa Rica, a slow, but positive change in
this trade began again.
It took a dramatic turn when a consortium comprising Mobil Oil
and the Alireza family, of Saudi Arabia, won a concession to use
the former U.S. Naval Base of Rodman, on the west bank Pacific
entrance of the Panama Canal, and a tank farm of 36 tanks at nearby
Arraijan, connected to the docks. Since the amalgamation of Mobil
with Exxon, this facility has been sold to the Libermann Group
of Argentina and the Panamanian agricultural supply firm of Melo.
They intend to continue upgrading the fuel facility and adding
a bulk grain handling terminal.
Another major player, Almacenaje Petroliferos, S.A., has constructed
a new maritime fuel supply center on the island of Taboguilla,
at the Pacific entrance to the Panama Canal at a cost of U.S.
$20-million. This company is a subsidiary of Catalana de Almacenaje
Petroliferos, S.A., of Spain. The terminal is located less than
two miles from the southern gateway of the Panama Canal on the
Pacific Ocean. A number of smaller, but new and active suppliers
have also been attracted to the market.
Braswell Shipyard Panama
Another very successful privatization project in the maritime
sector is the Braswell Shipyard in Balboa under the administration
of the Braswell family, who gained the concession to operate it.
They also operate several other private drydocks in the United
The Braswell operation in Panama is a complex of three drydocks
which reverted to Panama under the 1977 Panama Canal treaties.
It was built at the same time as the Panama Canal, and its largest
dock is the same dimension as the lock chambers on the Canal and
can handle Panamax size vessels, the maximum size ship that can
transit the Panama Canal. This dock is also the largest available
on the Pacific coast of the American continent between Tierra
del Fuego and Los Angeles, California.
The shipyard has sophisticated heavy industrial machinery and
has carried out impressive repair and maintenance ranging from
supply vessels and tugs, to cruise ships, container ships and
Panama Maritime Authority
With the rapid modernization and expansion of the ports, the
government recognized that the country was growing in importance
as a maritime nation. This led to the restructuring of the former
Panama National Ports Authority (APN), incorporating the maritime-related
departments scattered under various ministries were combined into
one entity: the Panama Maritime Authority (AMP). This body is
again under the directorship of Jerry Salazar, who has been actively
involved in the shipping sector for more than 30 years. It incorporates
the former Panama National Ports Authority (APN), the Consular
and Shipping Department, the Panama Nautical School and the Maritime
and Coastal Resources.
The government of Mireya Moscoso, within its first 100 days,
recognized the importance of the maritime sector by naming the
Minister of the Canal to the post of chairman of the AMP Board
and adding the Minister of the Presidency to the Board. This was
obviously intended to keep the President of the Republic fully
informed on activities in the maritime sector.
Maritime Sector Outlook
Panama presents a formidable complex of multimodal cargo movement
options to world trade.
The effect of MIT, CCT and PPC is already being felt in the
Caribbean and on the east coasts of South and Central America
and as far north as the US and Canadian east coasts. A direct
challenge to the Panama Canal for many years has been the U.S.
mini landbridge - the rail connection between both coasts of the
US. However, as the demand for cargo movement over this link has
grown during the past decades, delivery time has often slowed
down considerably because of congestion.
This was starkly demonstrated during the shut-out of US longshoremen
by port operators in the last part of 2002, which resulted in
massive cargo backlogs. Ship re-routing and transshipment through
Panama’s ports during and after this event will be reflected
in the 2002 overall handling figures.
Despite a worldwide slump in cargo rates, a cyclical event,
and the slowdown in the world economy during 2002, Panama’s
modernized cargo handling complex is expected to serve both as
a “pressure valve” for the US mini-landbridge system
as well as creating its own growing network of worldwide links.
In the first quarter of 2002, the overall growth of container
movement in Panama’s hub ports grew by 5.7 percent, and
indications are that this trend will continue throughout the year
and into 2003.