Puerto de Corozal an urgent need

By Franklin Castrellón

A workshop on marine cargo transshipment, held on August 17 under the auspices of the Logistics Cabinet and the Panama Chamber of Shipping (CMP) concluded on the need to expand port capacity of Panama on the Pacific coast if it is to exploit the opportunities open to the country by the expanded Canal.

Puerto de Corozal an urgent needIn addition to the organizers and the representative of the Center for Innovation and Research in Logistics of Georgia Tech in Panama, participants in the event were senior officials of the National Customs Authority, the Department of Agricultural Quarantine, the Panamanian Authority for Food Safety (AUPSA) the Panama Canal Authority (ACP), the Panama Maritime Authority (AMP) and the Transit and Land Transport Authority (ATTT), port operators (PSA, PPC and MIT) and shipping companies.

The purpose was to exchange ideas on the models that each operates, limitations or barriers to optimal development of transshipment and the risk that – if the limitations and deficiencies are not corrected – of shipping lines moving to ports outside Panama for cargo operations and distribution.

Other countries have already made significant port investments and have taken additional measures to attract business, generating huge sources of well paid employment.

By qualifying for profitable exchange of ideas between the private and government sectors to improve logistics and the competitiveness of Panama in the business of transshipment, Rommel Troetsch, president of the CMP, noted that it is clear that there are problems that remain to be resolved in Panama for competitiveness in the transshipment business.

Troetsch summarized the fundamental problems in two aspects: first, Panama has a first world transshipment center, but that at the bureaucratic level it is being handled with procedures of the third world, and secondly, it needs to urgently increase its port capacity on the Pacific to meet the needs of the shipping industry.

The cost of bureaucracy

Puerto de Corozal an urgent needThe president of the CMP said that Customs, Quarantine and AUPSA continue to rely on photocopies, so that when procedures for the transshipment of cargo are carried out, they have to prepare a set of photocopies for each entity rather than implementing the modern Internet service.

In addition, he said, many of the payments for services provided by these institutions are made in cash and they have not implemented the necessary steps to accept payments from online credit/debit cards or through the electronic funds transfer (ACH) technology. Anachronistic processes delay the handling of cargo and impact the cost of transshipment services, he said.

“We hope that in a few months photocopies are replaced by electronic formats and payment is enabled by the authorities with ACH accounts or credit, debit card payments,” he stressed. He also warned that costs should not be increased on the movement of cargo transshipment, as this would adversely impact the competitiveness of Panama in terms of logistics.

Port capacity

Another major issue to be addressed urgently, added Troetsch, is the clear need for additional port capacity on the Pacific coast of Panama. Asked about the loss of 12.8% recorded in the first half of 2016 in the movement of containers at ports, he said that rather than the slowdown in the world economy, in his opinion, this is mainly due to several shipping companies stopping their transshipment activities in Panama because of that limitation.

The planned Port of Corozal.

The planned Port of Corozal.

“One of the reasons that Panama is losing breakbulk cargo is that it is moving on direct routes between Asia and South America, using the port developments of Buenaventura (Colombia) and Callao (Peru), on the Pacific coast, as they can not transship at Panama because of the unavailability of the docks they need,” he added.

Under the new model, ships do not cross the Canal carrying 200 or 500 containers to Cartagena (Colombia), Caucedo (the Dominican Republic) or Jamaica, but they do so through the multimodal system in Panama (road and rail) and then ship them through the ports of Colon to their destinations.”

“The beginning of the expanded Canal has come to increase this business,” he said, adding that from this point of view the construction of the port of Corozal is urgent.

Thomas Kenna, president and CEO of Panama Canal Railway Company (PCRC), strongly supported the view of Troetsch. “We’re already late with the development of the port of Corozal,” he said, adding that he does not understand the government’s delay in pushing this project because it will not cost a cent to the country.

“All the risk will be assumed by the operator,” he said.

Rehearsing an analogy, Kenna said Panama has a cake in her hands that can grow and benefit all stakeholders if Corozal is developed, but it will decrease in size if not carried out. Its development, he added, will benefit both shipping lines and their agents, port operators, shipyards, suppliers of bunkers, ferry services and the railway itself.

With more port capacity, Panama could attract 700,000 containers handled by Hamburg Sud in Colombia, the million teus of the Israeli shipping company that handles Zim in Jamaica and another three million teus that move on direct routes on the Pacific coast of the Americas.

Troetsch stated categorically, “the market exists already and prequalified stakeholders have also been clearly identified, and the area for the project is already assigned. It only remains to define who will win this award.”

Currently there is potential for 3.5 million additional transshipment teus on the Pacific coast.

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