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LOGISTICS PLATFORMS PROLIFERATE NEAR PANAMA’S PACIFIC ENTRANCE
February 23, 2015
Panama Pacifico facilities
Facilities at Panama Pacifico sit in a special economic zone, giving companies which operate there special tax, labour and legal incentives.

Competition to attract transshipment business in the Americas is heating up due to the Panama Canal expansion, which is expected to be completed in 2016. Numerous seaports in the United States, Mexico, Central and South America and the Caribbean are working to improve their infrastructures to accommodate increased freight coming on larger ships.

In Panama, Singapore-based PSA International is expanding the terminal operated by its subsidiary, PSA Panama International Terminal (PPIT). The expansion, subject to approval by the Panamanian government, is expected to increase its current capacity of 450,000 teus per year to a minimum of 1.85 million teus annually. Once the National Assembly approves the contract, work will begin and last from 18 to 24 months. The expansion includes an 800-metre long pier, Post-Panamax cranes, and dredging to depths that will accommodate super-Post Panamax ships.

Located in the former US Rodman Naval Station, PPIT is situated at the Pacific entrance of the Panama Canal. Its port infrastructure aims to attract new cargo from Asia to the west coast of America by using Panama as a transshipment hub for the growing demand of shipping lines that need to carry more cargo to Latin American countries, and need more shore handling capacity to expand their commercial activities. The port is regarded an important port of call for container and Roll-on Roll-off (Ro-Ro) cargo.

Currently, the terminal has no connectivity with the trans-isthmian railway and road connectivity is limited. However, among the government’s plans are the expansion of the road between the Bridge of the Americas and Arraiján, and the construction of a road between Cocolí and the Centennial Bridge that will service the PSA terminal.

 

Panama Pacifico Project

Massive developments are also underway on the Pacific side of the Panama Canal to accommodate distribution, warehousing, value added manufacturing and transshipment of cargoes.

A project dubbed Panama Pacifico located on the former US Howard Air Force Base near the Panama Canal has quickly become a vital business hub and world-class global logistics centre for multinational corporations. Already more than 200 companies are located there, eight of which are Fortune 500 companies and 16 Forbes Global 2,000 companies. Among them are 3M, DELL, VF, BASF, Samtec, and Caterpillar.

Just 15 minutes from downtown Panama City, the 3,450-acre project is the largest mixed use development in the world. Panama Pacifico is located in one of Panama’s special economic zones. These zones give companies special tax, labour and legal incentives. This means that companies involved in some element of valued-added production will receive tax-free treatment for all goods produced at Panama Pacifico.

“Shipping goods through Panama also gives companies a lot of weekly connections to the Orient and Europe as well as connections to every port in Latin America and North America,” said Henry Kardonski, managing director, Panama Pacifico.

He added, however, that Panama – in general – is about 10 years behind where it should be in terms of logistics service. Where Panama stands out is in distribution. For one, trade between Asia and Latin America has more than doubled over the past decade, reaching a historic high of over US$500 billion dollars in 2014. This figure is expected to grow to at least US$750 billion by 2020.

Panama Pacifico is particularly well-poised for Asian companies. “There is big interest in value-added from computer chips, automotive divisions, some construction companies that specialize additives, and pharma for packaging and repacking for different regions,” Kardonski said.

For example, Rainbow Agrosciences, one of the largest agrochemical companies in China, located in Panama Pacifico last year and already plans to build a new plant and distribution centre that will serve as platform for the production of new specialty products and their distribution to the Latin American market. Construction is expected to be completed by April 2015. The expansion will allow Rainbow to increase its supply chain capacity, have a more efficient distribution operation and respond faster to all Latin American markets.

Other Asian companies are realizing the benefits of being located within miles of the Pacific entrance to the Canal. Kardonski revealed that executives at one Asian company told him that they found that by locating in Panama Pacifico, they were able to shrink their supply chain time table by three weeks.

“Their value added opportunities were immense,” said Kardonski. “Not only can they hold smaller inventories, it takes them only one week or less, depending on destination, to ship their products from Panama to markets in the Americas versus 30+ days from Asia. Consequently, they do not have to stock large quantities of inventory.” 

Currently, the industrial portion of Panama Pacifico, a project that also includes office, retail, and residential development, is one-third complete. New roadways and infrastructure accommodate ample vehicle manoeuvrability and connect traffic directly to the vast Pan-American Highway.

 

By Karen E Thuermer

Correspondent | Washington

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