Interview: Jorge Luis Quijano
Do you think that rising costs in China are likely to push manufacturers to relocate to South-east Asia, benefitting the Panama Canal?
JORGE LUIS QUIJANO: We are constantly evaluating cargo flows and the possible relocation of manufacturing plants, and have seen how the Association of South-East Asian Nations countries have developed. There has been a shift, but China is still – and will continue to be – the main source of manufactured products.
We are exploring areas in which to pursue other commercial undertakings that are close to the canal’s core business but which can add value to the canal as a gateway to multiple services. In the short-term, we will enhance capacity on the Pacific side with the development of a container terminal. We are also conducting feasibility studies of projects that include logistic parks, roll-on, roll-off terminals, shipyards and a liquefied natural gas bunkering station.
How much port infrastructure expansion will be needed along the US eastern seaboard to take full advantage of the canal’s new capacity?
QUIJANO: Some of the main ports on the US east coast are able to receive New Panamax vessels – larger vessels that will be operational once the expansion is completed – while other ports in the region are dredging and undertaking other works to prepare for handling these larger vessels once they begin transiting through the Panama Canal. However, the ports are just the first link in the chain. Each region on the east coast will have to analyse its capacity to handle a larger number of containers arriving at the same time. This means that internal transportation infrastructure, such as railways and roads, have to be improved.
Will the customer loyalty programme fully compensate for the higher fees being sought from vessels that will not benefit from the expansion?
QUIJANO: The new tolls proposal has recently been approved and will come into effect in April 2016. It was subject to extensive informal consultation with representatives of the main associations and groups representing the users of the waterway in order to get the industry’s feedback. Tolls are based on the value of the “all-water-route”, and implemented through a participatory process to ensure competitiveness. For the first time, a customer loyalty programme is being proposed for the container segment where frequent container customers will receive premium prices, once a particular TEU volume is reached. For the container segment, this programme will include significant adjustments to the capacity-based charge.
What impact will the expansion have on the local labour market? Is training and education needed?
QUIJANO: It will generate benefits that go beyond those directly related to the transit of vessels. The canal is at the heart of Panama’s logistics cluster, which is a key contributor to the economy. This cluster includes ports, free trade zones, shipping lines, bunkering services and a railway, among other facets. The expansion will generate direct and indirect jobs in the short term due to an increase in economic activity that began with the start of the programme. However, its most significant contribution will come in the medium and long term through the creation of indirect jobs as a result of the economic growth caused by an increase in demand in and around the logistics cluster.
In recent years Panama has enjoyed an economic boom that has put it among the Latin American countries with the highest growth rates, averaging 8.3% over the past decade. This has driven a reduction in unemployment and poverty, with unemployment down by 7% since 2004. In 2014 the government and the private sector created the High Commission for Public Policy on Technical and Professional Employment. The commission includes employers, employees and universities, as well as private and public institutions that are playing a role in addressing the future skill sets needed for the increasing demand in Panama.
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