With access to both the Atlantic and Pacific Oceans within a few kilometres of each other, Panama is one of the best-located countries for maritime activities globally. Added to its location, the Panama Canal and its expansion make it a key player in world commerce. The current container-handling capacity for the Pacific side of Panama is estimated at 5m twenty-foot equivalent units (TEUs). Canal expansion-related projects are expected to boost capacity up to 6m TEUs by 2016 and 8m TEUs by 2020. Still, competition in the region is fierce and infrastructure expansion is key to maintaining regional leadership. According to Philippe Fiore, CEO of Pier17 Group, a transport and logistics operator, “The way for Panama to move from merely a transit point to a freight consolidation hub in the region is through investments in the logistics sector and a better understanding of Panamanian authorities. To develop trans-shipment business, local Customs have to be more cooperative to increase competitiveness in service delivery. This will allow Panama to maintain its competitive edge in the region.”

Capacity Boost

Significant future competitors include the planned Nicaragua Canal and the free trade zones in Honduras. In the Strategic Government Plan 2015-19, the Panamanian government recognises the maritime transport sector as one of the most important economic pillars, and specifies courses of action such as the rehabilitation of state-owned ports and administrative offices, and the construction of piers and docks including Isla Taboga, Isla Grande, Miramar, Chepillo and Puerto Caimito. Public works include $33m for the rehabilitation of ports, $23m for berth construction and $19m for the renovation of the Aguadulce Port. Added to the high-level plan, Flor Melina Pitty, chief of the Port Operations Department at the Panama Maritime Authority (Autoridad Marítima de Panamá, AMP), told OBG that many large projects are also under way such as Puerto de Corozal, Panama Colón Container Port, Bahia de las Minas, Bahia Manzanillo and a new cruise ship terminal. Puerto de Corozal is a 120-ha project proposed by the Panama Canal Authority (Autoridad del Canal de Panamá, ACP). The package of canal expansion-related initiatives consists of a container terminal, built especially for trans-shipment operations in the West Corozal area near the Canal’s Pacific entrance. According to the AMP, the port’s estimated annual capacity will reach 6m TEUs when completed. The $650m project will be privately built and operated, with the first phase to include 1 km of docks, multiple positions for post-Panamax ships and 3m-TEU capacity.

Singapore’s PSA also announced a $350m port expansion at its Panama International Terminal. In collaboration with AMP and ACP the expansion plan was presented to the government in early 2015. The company estimates an 18- to 24-month duration for the works, which could triple the current revenue in the terminal. The project was approved by the National Assembly in January 2015 with a 20-year concession to develop and operate the port in the former Rodman Naval Station. The plan for the terminal includes expanding the annual capacity to 1.8m TEUs from 450,000 TEUs.

The Panama Colón Container Terminal project will be located on Isla Margarita, the Atlantic side of the canal, in the former Fort Randolph US base. With a 37-ha area, the capacity will be 2m TEUs with a total investment of $600m. The investors are a consortium of Asian developers. Puerto Verde, Isla Largo Remo in the Colón region, close to the Atlantic entrance of the canal, is another upcoming port. The development by Spain’s Linden Partners is estimated to be worth $8bn, making it one of the largest projects so far.

Cruise Terminal

On the Pacific side, the Amador Cruise Terminal has been under discussion for some time. The former administration decided that the project was not viable due to the low depth of the original location. The dredging to achieve the 10-metre draft required for cruise ships to berth would have raised costs considerably. However, after an analysis of bathymetric data, a group of private investors decided that a new location at the Amador Yacht Club area may be of high interest and has presented a proposal to the Panama Tourism Authority. The proposed model resembles a public-private partnership in the sense that most of the funds would be private but public authorities would provide a small percentage and have involvement in the project. Cruise ships need to use boats to disembark passengers to bring them to land. This, combined with disagreements with local authorities, has lead to some cruise lines avoiding Panama City.

Liquid Cargo

Two new terminals are also planned for liquid cargo. Worth $99.6m and $80m, these projects represent a significant investment from major European players. Spanish DF Duro Felguera plans to construct an oil storage terminal for Vopak in Bahia las Minas, on the Atlantic Coast. The project plans to use the Panama refinery and old complex built by Chevron. Plans include nine storage tanks for bunkers and refined products with an estimated capacity of around 400,000 cu metres. The project is expected to start in 2015. Meanwhile, Swiss-based Puma Energy is building an $80m fuel storage terminal with a capacity of more than 1bn barrels. The specific location is yet to be announced.


According to Maximiliano E Jiménez Arbeláez, managing director of Georgia Tech (GT) Logistics Innovation and Research Centre, the expansion of the logistics sector in Panama faces three main challenges. First is the mentality. “Regional competition is becoming fierce and people should realise this. We need to shift towards a more goal-oriented, excellence-driven culture, where people strive for quality of service and collaborate on information and even resources,” Jiménez told OBG. The availability of trained personnel constitutes another challenge. GT experts mentioned that although Panama has a good availability of trained graduates, the technical baseline for key operations is still not enough to feed the expanding market.

Henri Tello, research engineer at GT, said, “In the region there are already large investments going to ports in different countries. If we are not prepared, we are bound to lose some business to them. With current plans, if all new ports come into operation, existing cargo movements would only cover about 50% of the new total capacity. However, these ports are not yet built, which gives us the opportunity to prepare.” He added, “Some of our regional port competitors are making large capital investments to increase their capacity and to accommodate larger vessels. We must define a well thought-out strategy to avoid losing some of our current business to them. Our strategy must address business retention initiatives which should be complemented by business expansion initiatives.”

According to Tello, if the necessary technical capacity is not reached, policy should be changed to allow the required workforce to enter the country. Finally, and as pointed out by Jiménez, the last piece of the puzzle is government-private sectors and cluster collaboration. If the challenges are met on time, Panama will be able to solidify its status as a key regional transport hub.