Shipping industry supports Corozal

By Franklin Castrellón

“The arguments against the development of the Port of Corozal by the Panama Canal Authority (ACP) that Panama Ports Co. (PPC), the company that operates the ports of Balboa and Cristobal, lawyers and citizens who identify themselves as “residents” of the Diablo, have brandished, do not have enough valid arguments before the reality that the terminal is an essential piece in the transformation of Panama into a regional logistics hub and the ACP has the legal and constitutional capacity to promote it.”

A spokesman of the shipping community, who did not want to reveal his identity, made that statement as a response to the declarations given on Panamanian television by Paul Wallace, PPC director, on October 20, 2016 when he used those two arguments to support its company’s opposition to the Port of Corozal.

Port of Corozal planned location“Firstly”, said the spokesman, “an overcapacity exists in the ports located in the Pacific entrance of the Panama Canal, which coincides with a slowdown of the world economy, making (inopportune) the development of the port of Corozal. These arguments are foundless, because several shipping companies have transferred their transshipment operations from Balboa to other ports in the region, because that terminal does not have piers available the days the shipping lines need them.”

“The PPC boss’s theory is in sharp contrast to the demands that port operators are making on the ACP. It wants the Corozal area to expand its operations.” He added “if a demand does not exist due to the economic crisis, then why is it claiming the Corozal lots to expand the Port of Balboa?”

Paul Wallace, PPC directorAfter conceding that in effect international trade has experienced a slowdown in the last few years as a consequence of the downturn in the main economies, the source said that the diversion of cargo was shown clearly in 2015 when Balboa registered a decrease of 5% while the terminal of Buenaventura, Colombia, in the Pacific littoral, experienced an increment of 6.6% in the handling of cargo.

Other ports that are competing with Panama for the transshipment business also registered increases. For example, the port of Cartagena upped its container handling by 16.6%, while Kingston showed a modest increase of 0.9%. Buenaventura and Cartagena in Colombia and Kingston in Jamaica are the main competitors of Panama for the transshipment business.

This theory is shared by the Panama Chamber of Shipping (CMP) president, Rommel Troetsch. He believes that more than the slowdown of the economy, the decrease in container movement in the Panamanian port is due to the lack of terminals in the Pacific littoral. “One of the reason why Panama is losing its transshipment market is that it is moving to direct routes between Asia and South America, using the port developments of Buenaventura (Colombia) and Callao (Peru), in the Pacific littoral, because they cannot do transshipment in Panama for the lack of piers on the days they need them,” he said. Troetsch estimated that Corozal could attract around 3 million containers (teus) that currently are going to other ports.

With regards to the decrease in world trade alleged by Wallace, the source pointed out that although the low economic cycle has lasted longer than expected, the International Monetary Fund (IMF) forecasts indicate that the world economy will begin to grow in 2017, and it is estimated that will be 3.4% in comparison with 3.1% in 2016.

Legal arguments

“The other argument that the ACP does not have the constitutional authority to do other activities than ship transit lacks legal strength,” highlighted the spokesman. He added that article 319 of the Constitution which refers to the ACP, gives it the right “to award concessions to gives services to the Canal and the ships that transit through it.”

This norm is regulated by the ACP Law, which allows its board of directors to “approve policies, to carry out commercial, industrial and service activities that complement the Canal operations.”

“In 2019 when the port of Corozal starts to operate, Panama will have the capacity to consolidate its role as the main transshipment center of the region and will be well positioned to become the logistics hub of the Americas,” concluded the spokesman.

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