The past twelve months have been very demanding for the shipping and logistic industry, with delays in the Panama Canal widening works, new laws for the ancillary maritime industry and the development of logistic parks and ports. This is a brief summary of the most important news of the years.
Panama’s auxiliary maritime industry is looking to fill port gaps
It is a well known fact that the auxiliary maritime industry in Panama is not capable of handling the increased transit of ships through the Panama Canal after its expansion is completed because it does not have space to provide its services.
“There is an urgent need for launching areas to the sea which are adequate and equipped so that commercial boats can provide the services requested by anchored ships which are waiting to transit through the Canal,” said the president of the Panama Chamber of Shipping (CMP), Willys Delvalle. “The auxiliary maritime industry has developed only 30% of its capacity, if it had the proper terminals it could double that percentage, because the sector has certified companies who have many years of experience,” he said
Bulgarian captain is still waiting for trial
Panama’s legal system is slow and tortuous, especially for foreigners who have been accused of breaking the country’s law.
That is the case of the Bulgarian captain Lyubomirov Sobadzhied, accused of drug trafficking. He was arrested on March 29, 2011 and to date has not appeared before a judge. Instead he is still waiting for his trial date at La Joyita Detention Center in Panama City.
Bearer share elimination endangers Panama Ship Registry
The Panama Ship Registry is the number one in tonnage and a ship standard bearer in the world. However, in the last three years it has decreased in the amount of new tonnage registered, but it still remains strong.
Other registries remain aggressive competitors of Panama for traditional markets, such as Japan and Greece.
International news reports suggest that tax reform in Greece could scare the second largest market for the Panama Ship Register and, on top of that, more recently the possibility of bearer shares in Panamanian corporations being eliminated could have an even more adverse effect on the Panamanian registry.
Colombia endangers Colon Free Zone
Colombia has taken aggressive measures to protect its products and now is imposing tariffs on goods coming from countries with which it does not have free trade agreements.
This new policy will have a very negative effect on re-exports from Panama’s Colon Free Zone.
The Colombian government has imposed higher tariffs on textile and shoe imports, but this new duty will not be applicable to Colombian products.
Panama offers great advantages for US retailers
Panama outperforms major US cities as a distribution center for retailers in their international expansion for several factors, ranging from freight rates, which are lower, to the cost of human resources.
Nelson Cabrera, director of new business of Lilly Associates, a logistics provider based in Miami, said that Panama offers many advantages to be the distribution center of US retailers because of its proximity to the Caribbean, Central and South America.
Panama has an air cargo potential
Panama has the potential to be placed in the top positions in the movement of air cargo in the region for its strategic position and especially for its links with maritime cargo transport and the Panama Canal expansion.
These affirmations were made by the leader of the World Bank mission, Ralf Kaltheier, who visited Panama to define the parameters for a study of the Air Logistics Strategy.
Japan requests cap on Panama Canal tolls
Concern that increasing Canal tolls could cripple efforts to maintain a stable energy supply in Japan was raised at a meeting with President Ricardo Martinelli and Foreign Minister, Fernando Nunez Fabrega, in Panama recently by Japan’s Foreign Minister, Fumio Kishida.
The basis for the concern is shipping shale gas from the US and Canada to the island nation via the Panama Canal.
According to Kishida, shipping companies which transport the natural gas imports that Japan desperately needs, have been concerned about continuing increases in Canal-based costs.
Panama Logistics Hub will be key to the Pacific Alliance
To the extent that the Pacific Alliance (AP) consolidates and boosts regional trade and that with other continents, the Panama Canal and the international ports will benefit, the vice president of the Office of Research and Market Analysis of the Panama Canal Authority (ACP), Rodolfo Sabonge, told The Bulletin.
The Pacific Alliance was born in October 2010 when the then President of Peru, Alan Garcia, invited his counterparts from Colombia, Chile and Mexico to form an integration alliance and promote their economies, based on their geographical locations.
The Alliance was formalized on April 28, 2011 with the so-called Declaration of Lima, taking in these four countries as full members.
Government promotes Nicaraguan canal construction
A bill granting an exclusive concession for 50 years, renewable for the same period, is being discussed to give the Chinese company HK Nicaragua Canal Development, a concession to build, develop and operate the canal.
The concession document does not specify whether Nicaragua will receive some percentage of profit on the toll once the canal becomes operational.
The legislation, called the “Special Law for the Development of Infrastructure and Transport of Nicaragua, responsive to the Canal, Free Trade Zones and Associated Infrastructure”, leaves to the discretion of the HKC Company, incorporated in Hong Kong, the setting of the tolls.
Human talent is scarce
The great challenge facing the ports and railways of Panama serving international trade is to meet growing demand and provide the reliability demanded by users of these facilities to meet the demands of their customers, said the President and CEO of Panama Canal Railway Company (PCRC), Thomas Kenna.
PCRC is an American company formed by Kansas City Southern and Mi-Jack Products, and on February 18, 1998, it was granted the concession to develop, build, operate and manage the historic railway on the Isthmus of Panama.
Pilots are not prepared for the Canal widening
The Panama Canal expansion is scheduled to finish in June 2015 and the question arises whether pilots and other personnel of the Panama Canal Authority (ACP) are prepared for the challenge of guiding the enormous Post Panamax ships through the locks.
According to Captain Rainiero Salas, President of the Panama Canal Pilots’ Association (Asociación de Prácticos del Canal de Panamá) that is not the case, which means that lack of training could reduce the efficiency of the Canal’s operations jeopardizing the safety of the super ships in the future.
Cuba, Brazil join forces to create Megaport
Cuba is preparing itself to become a major player in the international trade market by investing $900 million renovating Mariel Port and creating a Special Development Zone (free zone) near the terminal. The project is a joint venture between the Brazilian government, that is financing 85% of the works ($690 million) and La Havana that will contribute the remaining 15% ($260 million).
Yanni Solano, the Cuban Commercial attaché in Panama, told The Bulletin that it was decided to update the Mariel facilities because the Panama Canal growth potential is limited and it cannot meet all the needs of the commercial shipping, apart from this being a good opportunity for the Caribbean country.
New gates arrive at the Canal
The first four games for the new locks arrived from Trieste Port, Italy to the waterway’s Atlantic side on board of the semi-submersible vessel STX Sun Rise on August 20. The Panama Canal Authority Administrator, Ricardo Quijano said that this was an exciting moment for Panama, because the arrival of the new gates marks a great progress for this engineering project.
Built by subcontractor Cimolai SpA, the first four gates are 57.6 meters long, 10 meters wide and 30.19 meters high and weigh an average of 3,100 tons. They will be installed in the middle chamber of the new locks on the Atlantic side.
Panama the only Central American country ratifying labor convention
A statement from the International Labor Organization (ILO) states that the global shipping industry is sailing under a new rule.
A new “bill of rights” – the Maritime Labor Convention of the ILO – entered into force, ensuring protection for 1.5 million seafarers worldwide and fair competition for shipowners.
Maritime law creates friction with the European Union
An article incorporated at the last minute into Law 41 of June 14, 2013, which dictates labor provisions at sea and on waterways, is generating tensions between Panama and the European Union (EU).
The reason is that the EU considers that one article violates the Free Trade Agreement with that trading bloc.
FTA Panama-Mexico will be completed in 2014
According to Francisco de Rosenzweig, Department of Foreign Trade of the Ministry of Economy of Mexico, due to advances in the negotiations process of the Free Trade Agreement between Mexico and Panama, it is expected to be completed in the first quarter of 2014.
Conversation with presidential candidates beneficial initiative
The Board of Directors of the Panama Chamber of Shipping has developed talks by presidential candidates for the general election of May 4, 2014, as a two-way feedback for mutual benefit, said the president of the CMP, Willys Delvalle.
On the one hand, this allows the nearly 200 members of the Chamber of Shipping to know the plans of the presidential candidates on the maritime and logistics industry, and provides for the free exchange of proposals and ideas with political leaders knowing their problems, aspirations and expectations, said Delvalle.
Panama needs more ports to attract shipping companies
Panama must construct more ports on the Atlantic and the Pacific, otherwise other countries, such as Colombia, Costa Rica, Jamaica and the Dominican Republic will take advantage of the Canal expansion. Post Panamax vessels will then only cross the inter-oceanic waterway without stopping, the former Panama Canal Authority Administrator, Alberto Alemán Zubieta, told The Bulletin.
“It is strategically important for Panama to build more ports on the Pacific and increase their capacity. According to a recent forecast, by 2020, which is just around the corner, our ports could be moving 20 million containers a year. The shipping companies not only need efficient ports, but they also need to be interconnected”, said Alemán Zubieta.
Maersk: P3 alliance “entirely about sharing infrastructure”
The AP Moller-Maersk Group has affirmed that there will be no commercial cooperation among its P3 Network alliance members to dominate the container shipping market share.
This statement comes after concerns were raised on potentially breaching competition law and compromising the spirit of free trade. Analysts and industry observers have made projections that the coming together of the world’s top three carriers – Maersk Line, CMA CGM and Mediterranean Shipping Co (MSC) – would mean that the P3 alliance would dominate up to 45% of the global boxship market share.
Complaint of act against ACP policy sets precedent
A member of the Board of Directors of the Panama Canal Authority (ACP) who disclosed classified information, was operating beyond the scope of her jurisdiction, it has been denounced by the Association of Trial Lawyers of Panama to the ACP Inspector General on November 26, 2013 for violating organic law and the regulations of ethics and conduct of that agency.
The reported director is Lourdes Castillo who, during an interview given on November 18 to journalist Alvaro Alvarado, of Channel 13 TV, released information on an investigation of former executive vice president of Planning and Business Development for the ACP, Rodolfo Sabonge, which supposedly was undertaken by the Office of the ACP Inspector General, Antonio Dominguez.
The “Prisoner of Panama” wants resolution
The saga of the Bulgarian captain Svetlozar Sobadzhiev continues. He has now been in jail for almost three years. He has a new trial date, Thursday, December 19, but there is no guarantee that it will not be delayed again.
The Bulgarian captain is accused of smuggling 200 kilos of cocaine on the ship Maas Trader, property of the Dutch company Reider Shipping BV NL, after stopping in Barranquilla, Colombia, on March 28, 2011.
The drugs were found by the authorities on March 29, 2011, after receiving a “tip off” from the ship’s Chief Officer, Sergiy Poshyvaylo, and the Second Officer, Ronald Abanto. The crew was arrested and released after initial enquiries and only the captain was jailed.
Companies seek to streamline Central American Customs
The business leaders of Central America, Panama and the Dominican Republic have said they do not want borders to limit and delay trade between their nations.
Although the region has been selling products between themselves for over ten years, their borders and Customs limit their work and make them less competitive.
“We cannot continue to be a region where trade is moving at 15 mph when the developed countries have a movement of cargo at 60 kilometers per hour,” said Jorge Daboub, who was elected as the new chairman of the Federation of Private Entities of Central America, Panama and the Dominican Republic (FEDEPRICAP), which held its annual general meeting in San Salvador.