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Panama Canal Gears Up For High-Tech Shipping
The Tico Times / December 18, 1998

By Larry Luxner

COLON, Panama -- Panama's sprawling Colón Free Zone, which celebrates its 50th anniversary this year, already ranks as the largest free zone in Latin America.

Now, Panama wants to become known as the region's top transshipment center as well -- thanks largely to Colon's recently inaugurated Manzanillo International Terminal.

"Our goal is that over the next five years, Panama will become the No. 1 transshipment container port in Latin America," says Nicolas Ardito-Barletta, executive director of Panama's Autoridad Regional Interoceanica (ARI). "Large ships are moving to big ports, dropping their cargo there for other ships to pick up and distribute. But there's no place like us in Latin America. Other countries are trying to do it, but they're not moving as fast as Panama, and they don't have the right conditions."

Manzanillo International Terminal has the good fortune of sitting across the Colon Free Zone, right at the Atlantic entrance to the Panama Canal. Inaugurated in April 1995, the project is a 50-50 partnership between Panama-based Motores Internacionales S.A. and the local affiliate of Seattle-based Stevedoring Services of America.

The port's marketing manager, Carlos Urriola, told a visiting reporter that in the last three years, the joint venture has poured $210 million into what was originally envisioned as a $10 million project.

"Financing a project like this in Panama was not easy," he said. "We went to the banks, but they told us to get commitments from shipping lines. The partners decided to invest $30 million of their own money without having financing arranged or one customer signed up."

At present, Manzanillo (which according to Urriola is also known as MIT "so people will associate it with high-tech") boasts a 225-meter Ro-Ro berth; two Panamax and four post-Panamax gantry cranes; a 600-meter container berth; a dedicated opening in the breakwater (separate from the Panama Canal's Atlantic entrance); various terminal handling equipment for ground operations; automated computer system for terminal, vessel and gate activities; 25 hectares of adjoining stacking and container yard area, and 83 hectares available for automobile and container storage.

On Jan. 30, 1997, a direct access gate was opened to the Colon Free Zone, which itself imports and re-exports $11 billion worth of goods annually. Neither of MIT's two local competitors -- Evergreen's Colon Container Terminal nor Hutchison Port Holdings' Atlantic port of Cristobal -- can boast such direct access.

At the moment, MIT averages 33 container moves an hour, and pays its 750 employees average wages of $800 a month.

"Our commitment with the government was to create 300 jobs in three years. We've created three times that amount," says Urriola, adding that "Colon has a bad labor reputation. We took people with no experience whatsoever, and today -- three years later -- they're sitting at a computer talking EDI with a ship captain."

Volume figures are impressive as well.

Last year, Manzanillo moved 359,516 containers (586,452 TEUs) -- up from 220,188 containers (355,857 TEUs) in 1996 and 104,339 (165,626 TEUs) in 1995. Port officials expect those volumes to grow between 10% and 20% annually over the next five years as Manzanillo draws business away from other competing transshipment centers such as Kingston, Jamaica; Freeport, Bahamas; Miami and San Juan, Puerto Rico.

"MIT alone has more cranes than all of Central America," said Urriola. "This compares to Buenos Aires, and all this has been developed in the last three years."

John Bressi, MIT's port director, says 90% of Manzanillo's business is containers, with the remaining 10% consisting of Ro-Ro and breakbulk cargo. He declined to release sales or earnings information, though he did say MIT is comparable with the Port of Miami. MIT's top three countries in terms of sources of revenue are Brazil, Colombia and Venezuela, in that order.

"The Colon Free Zone represents about 20% of our transshipment volume, but only indirectly, because the cargo is distributed to the free zone, repacked and redistributed in different containers through MIT," said Bressi. "For every 10 boxes we put in the free zone, two of them come back through the port. The other eight are exported through other channels."

Among MIT's leading clients are Maersk-Sealand, P&O Nedlloyd, Hanjin Shipping, American President Lines Ltd., OOCL and Zim Lines.

Aware of Panama's reputation for drug smuggling, Manzanillo has also contracted with Grupo de Seguridad de Las Americas (GSA) for a 100-man security force, complete with 12 drug-sniffing dogs, a water patrol, video cameras and illumination for night operations. GSA maintains a close relationship with both the U.S. Customs Service and Panamanian authorities.

"You don't open every container," Urriola explained, "but you try to deter drug smugglers so that if they're going to use Panama as a contraband center, which they are, they'll use other avenues instead."

Despite MIT's proximity to the Colon Free Zone, Urriola says "the business isn't here because of the free zone," but because "it's cheaper to unload in Panama than in Miami." Regional integration efforts notwithstanding, he says, "regardless of how the countries get together, if we're still the least expensive alternative, they'll come here."

Asked how the return of the Panama Canal to Panamanian sovereignty on Dec. 31, 1999, might affect operations at Manzanillo, Urriota chooses his words carefully.

"We feel that MIT is a typical example of what can be done in Panama," he says. "The canal is a cash cow, and needs more money to be put into maintenance. As long as politics are put aside, we should have no problem."

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