Interview: Juan Carlos Croston
How much will the number of trans-shipped containers be increased by the presence of post-Panamax carriers, once the canal expansion is complete?
JUAN CARLOS CROSTON: Over the past decade, 13% to 14% of the world’s containers went through the Panama Canal. Peaks in growth are largely associated with reforms in the network offered by shipping companies, and it is still too early to be able to adequately determine how the expansion of the canal will impact trans-shipment figures. Furthermore, it is important to take into account that it will take years for shipping companies to take full advantage of the expanded canal capacity.
What prompted the Logistics Cabinet’s decision to create an executive branch that regulates the sector? What would its functions and goals be?
CROSTON: The Logistics Cabinet was founded to tackle common logistics issues and improve Panama’s logistic competitiveness. The maritime industry covers 14 different sectors, so the idea is to unite varying government stakeholders. The current national logistics plan came about as a result of this initiative to combine efforts within the maritime industry. The idea for an executive branch was prompted because the sector’s evolution calls for more public-private coordination and efficiency. As a result, the new government administration decided to revamp the Logistics Cabinet by shifting decision-making power to a body closer to the Presidency and appointing a coordinator to carry out the day-to-day activities needed.
Although improving the structure of the cabinet is a good starting point, the industry needs to take into consideration that, as with everything involving government agencies, critical improvement will take time. The private sector needs to walk alongside the cabinet and its coordinator to help shape policies.
When discussing what form this branch should take, it should also have the direct backing of President Juan Carlos Varela and guaranteed participation of the private sector. One of its main functions should be raising awareness about the maritime industry’s importance to the country. It should also highlight how much the industry could contribute to the country’s GDP, beyond the 25% that it currently contributes, if even some of the main industry challenges were adequately tackled.
What are the security challenges for the maritime industry stemming from the canal’s expansion?
CROSTON: Considering that Panama follows the International Ship and Port Facility Security Code – like any other signatory to the International Convention for the Safety of Life at Sea – no additional challenges should be expected. The main challenge, however, continues to be the need to train and educate professionals who can properly implement security measures and protocols. Given that the number of containers will increase as a result of the expansion, there will be a need to proportionally increase the number of professionals.
What are the reasons and goals behind the administration’s decision to audit all entities that inspect and certify vessels carrying the Panamanian flag?
CROSTON: In January 2015 a code became effective that requires all entities inspecting and certifying vessels to be verified by the maritime administration. The measures were approved at the end of 2014. These companies had not been audited in years, which further motivated the move to audit them.
More than 8000 vessels fly the Panamanian flag. The objective is to determine the quality of services, management, competence and available capacity of all entities that inspect and certify these vessels. The audits also ensure that vessel inspections are carried out under the parameters of local regulations and international agreements regarding security, environmental protection and labour regulations. Moreover, there is an interest in strengthening the services and processes that these entities offer. This is especially important in light of the increased competition from other major flag states, such as Liberia and the Marshall Islands.
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