Transshipment hubs are vying for business from the Panama Canal expansion. Panama’s location is key for timely delivery to emerging Latin American markets. The expanded Panama Canal is viewed as a game changer. When completed in 2016, the Canal will nearly triple the capacity of the vessels that can transit the waterway. While some steamship lines already have determined that the improved Canal won’t be wide enough to accommodate their recently deployed megaships (think the MSC Oscar with its capacity of 19,224 TEUS), shippers transporting products via ocean are finding they can save supply chain costs by performing certain manufacturing tasks in free zone areas near the Canal and by transshipping shipments via one of Panama’s various terminals. This is what executives at Panama Pacifico are counting on. A development on the former US Howard Air Force Base on the Pacific side of the Canal close to Panama City, Panama Pacifico is positioned as an all-inclusive world-class global logistics center for multinational corporations. The 3,450-acre project is an enormous mixed use development that includes everything from apartments, clinics, parks and recreation facilities, as well as office, retail and warehouse space. But its biggest benefit is its location in a Special Economic Zone (SEZ). This means companies can perform valued added production and receive tax free treatment. Already more than 200 companies are located there, including 3M, DELL, VF, BASF, and Caterpillar. Eight companies are Fortune 500 companies; 16 are Forbes Global 2,000 companies. “There is big interest in value added from computer chips, automotive divisions, some construction companies that specialize in additives, and pharma packaging and repacking services for different regions,” says Henry Kardonski, managing director, Panama Pacifico. Rainbow Agrosciences, one of the biggest agrochemical companies in China, located in Panama Pacifico last year. Rainbow already plans to build a new plant that will serve as platform for the production of new specialty and innovative formulated products as well as a distribution center for distributing their products to Latin America. 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. Construction is expected to be completed by April 2015. Kardonski reveals that Asian companies say that by being located in Panama Pacifico, they are 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.” This means they do not have to stock large quantities of inventory. “Shipping goods through Panama also gives companies many weekly connections to the Orient and Europe, as well as connections to every port in Latin America and North America,” comments Kardonski. This benefit is already reflected in figures that indicate that trade between Asia and Latin America has more than doubled over the past decade, reaching over $500 billion in 2014. This figure is expected to grow to at least $750 billion by 2020. Besides Panama Pacifico, a number of other specialized and dedicated logistics parks for warehousing and third party logistics (3PL) operations are popping up around Panama. They include: Costa del Este Industrial and Commercial Park, located between downtown Panama City and Tocumen International Airport; Parque Sur, a multipurpose project located in the eastern side of Panama City with connections to major roads and direct access to Tocumen International Airport; Panama Logistics Park, located in the east side of the city within walking distance from the Tocumen International Airport; and the Global Business Terminal (GBT), a 44-acre business center located in 2,230 feet from Tocumen International Airport. Major Transshipment Opportunities Transshipment plays a huge part in Panama’s growth as a logistics hub. The Corozal Terminal, which received approval in December by the Panama Canal Board of Directors, will be built as a transshipment port in Panama’s Corozal region. The terminal will encompass some 291 acres that will include a container yard, offices for the Panama Canal Authority (ACP), and warehouse facilities. The two-phased port project will include the construction of a 6,827 linear foot dock. Its terminal also will have direct rail access. ACP Administrator/CEO Jorge Luis Quijano expects the new facility will result in a significant increase in inter-oceanic cargo traffic. “It will enable the Canal to add value to the route and customers, consolidate Panama’s position as an international logistics and maritime hub,” he says. The Colon Free Zone (CFZ) has operated as a major trading center for Latin America and the Caribbean since 1948. Billed as the premier free trade zone in the western hemisphere, its operations began in a segregated area of around 86 acres. Now CFZ is divided into nine different sectors, totaling 2,630 acres for exhibition, storage and warehousing, logistics services, and other potential areas for expansion. Complementing the CFZ is the Colon Container Terminal (CCT), which is part of the Evergreen Group and started operations in Panama in 1997. Located in Coco Solo North in the province of Colon, CCT is built on a former US Navy base. By leveraging the geographical position of Panama and the benefits of the country’s connectivity and array of maritime and logistics services, CCT operates as a transshipment port and handles both inbound and outbound cargo to and from the CFZ. At the Atlantic entrance of the Panama Canal, CCT serves to the regional markets of the Caribbean, North, South and Central America with shipments mainly originated in the Far East. With over 296 acres, the terminal has three container berths, 10 quay cranes and other yard equipment that allow CCT to handle 1.3 million TEUs. Its expansion plans include additional container storage areas near the port and additional equipment for container handling operations. On the Atlantic coast near the Northern entrance of the Panama Canal, Manzanillo International Terminal (MIT) operates as a world-class container transshipment facility. MIT is fully equipped with over 6,560 feet in seven berths – five for containers, one for roll-on/roll-off (ro/ro) activities, and one multipurpose. The container berths are equipped with 17 Panamax, Post Panamax and Super Post Panamax quay cranes; over 1,500 reefer points and modern terminal management computer systems. The port handles 2.06 million TEUs annually with a handling capacity of 2.4 million TEUs. Transshipment operations represent 85 percent of its containerized activity. MIT is connected to France Field, the largest warehousing area in the CFZ. MIT is also developing a logistics park with four warehouses, off dock empty area, railroad access and an area for value added activities. Port of Cristobal, which has been in operation for over 150 years, is located in Limon Bay at the southern east part of Colon City and at the Atlantic entrance of the Panama Canal. Its handling capacity is over one million TEUs. Cristobal has road access to CFZ and an on-dock railroad interface. On the Pacific side is the Port of Balboa, currently the only container terminal fully operating in the country to serve the many shipping lines for loading, discharging and transshipping operations from the Pacific basin to the region. Observers maintain that given its location, Balboa has an ideal location to grow as a hub for cargo, connecting major liner services from Far East and North America to the west coast of South America, Central and the Caribbean. The port has been expanding its capacity since its privatization, handling 2.76 million of TEUs during 2010. PSA Panama International Terminal (PPIT) is a new port terminal built at the Pacific western-side entrance of the canal. Operator Port of Singapore Authority (PSA) plans to expand PPIT from its current capacity of 450,000 TEUs per year to a minimum of 1,850,000 TEUs annually. The port is regarded an important port of call for container and Roll-on Roll-off (Ro-Ro) cargo. The Green Port Panama Atlantic, a new project approved in April 2014, calls for developing a mega-port with approximately 313 acres on Largo Remo Island in Cristobal, province of Colon. Completion of the $7.97 million port is expected within seven years. Also new, the Panama Colon Container Terminal (PCCP) will be located at the Atlantic entrance of the Canal in Isla Margarita at the Coco Solo area. The $600 million project will encompass 121 acres, four berths and be able to receive 18,000 TEU vessels. It will have a capacity to handle around 2 million TEUs per year.