101 Years as a Cornerstone of the Global Transportation System

With just months separating us from the inauguration and commercial opening of the expanded Panama Canal, the excitement's been palpable.
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With just months separating us from the inauguration and commercial opening of the expanded Panama Canal, the excitement's been palpable. It's apparent among the Canal's customers, the industry in general and throughout Panama. Soon, global commerce will transform, providing shippers and others with new routes, capacity and opportunities to serve their customers and global consumers all over the world. For this, we at the Panama Canal Authority are extremely proud.

Today, the Canal services 144 transportation routes from every corner of the globe, connecting trade arteries and creating efficiencies for shippers and container companies, alike. With Expansion, the impact will be further reaching. The container segment alone will experience significant benefits; shippers could more than double their per-transit TEU load, using what will now be called Neo Panamax ships. And of course, greater cargo capacity means greater economies of scale, a benefit for us all.

We are making history for all Panamanians, the world and our customers. And as we focus on the finishing touches that remain, I must salute the many years of dedication and hard work by the thousands of ACP employees, partners, consultants and vendors that led to this moment. I celebrate our customers and all involved in global shipping. Without you, expansion would not be possible.

The very dream of carving a passage through Panama to unite the Atlantic and Pacific dates back to the early 16th century. In 1880, the French began--and later abandoned--construction. In 1904, under the leadership of President Roosevelt, the United States resumed the dream, completing the Canal in 1914 and overcoming a myriad of obstacles along the way. The U.S. then managed it until the Torrijos-Carter Treaty was signed in 1977 and later ratified, leading to Panama's operation in 1999. Knowing the storied history of our national treasure, the day we took full control was one of my proudest as a Panamanian.

From that moment, the ACP has run the Canal with a savvy, market-oriented and customer-centric approach, much like a Fortune 500 company and always contributing to Panama's well-being. From the beginning, we have been singularly focused on safe, reliable and efficient service, providing segmented products and services, smart new cost structures, and innovative and sustainable initiatives. Our diligent stewardship of the Canal's watershed--one of the largest in the world--helped ensure we had the water and other resources in perpetuity to service our customers.

As international trade grew, Panama proved it was more than capable of managing the waterway at the highest levels. Understanding demand would continue to rise and based on customer feedback, President Torrijos formally proposed in 2006 to expand the Canal. The proposal was based on years of research, including more than 100 studies on economic and engineering feasibility, market demand and environmental impact. In 2007, a national referendum passed with a staggering 76.8 percent support and the proposal was approved.

We've come a long way since then, setting operational milestones often. Recently in 2011, we poured structural concrete for the new locks and partially flooded the Neo Panamax channel. In 2012, four million cubic meters of material were dredged from northern Gatun Lake to provide greater Canal access. In 2014, the 16 new lock gates were installed, each weighing 3,200 - 4,200 tons. And in 2015, the new locks were flooded and the Pacific Access Channel was filled and its plug removed, joining the Culebra Cut. Most recent, we filled and tested the massive water-saving basins we constructed for the new locks. These basins, which reuse 60 percent of water used for each lockage, will further our commitment to the environment, as well as improve our ability to reliably manage our water reserves for customers.

Expansion's timing could not be more serendipitous: This year we hit full cargo capacity--something we forecasted would happen now, nearly a decade ago. In 2015, a record 340.8 million Panama Canal tons of cargo transited the Canal, of which the container ship segment saw a 3.7 percent year-on-year increase. It only reaffirms the decision to expand.

This success, and the success of the Canal, can be directly linked to our people. So as we approach the commercial opening, we have been preparing and training our employees, from our talented pilots to our mechanics. Whether through educational programs and training at the Canal's simulation center, or conducting mock transits at the Scale Model Maneuvering Training Facility and trial transits of Neo Panamax vessels, the ACP has invested in its people to ensure the Canal's continued reliability.

This will be crucial, as the expected growth from Expansion stands to benefit all segments--reefer, dry bulk, car carrier and more. But the container segment, which represents nearly 50 percent of our business, will arguably see the most. As perspective, the capacity of one Neo Panamax ship is equal to the cargo capacity of up to 16 standard trains, leading to a more cost-effective mean of shipping goods.

According to IHS Maritime and Trade, the opening of the Expanded Canal will unlock the waterway to 45 percent of the international container ship fleet. Adding to the container ships that currently transit the Canal, Expansion will enable access for 87 percent of the vessels worldwide.

And not only growing the container business, Expansion will impact its footprint. Boston Consulting Group predicts that by 2020 up to 10 percent of U.S. - East Asia container traffic could shift from the West Coast to the East Coast, profoundly altering global trade. The shift would represent more than 40 percent of U.S. inbound container traffic, and would be an economic boon for major East Coast port cities.

As of July 2015, 33 container liner services were deployed through the Canal weekly--14 along the Asia-U.S. East and Gulf Coast route. Moreover, Panama ports ranked top in container movements in Latin America according to the Economic Commission for Latin America and the Caribbean. Panama's central location has made the country an ideal hub for transshipping containers originating in Asia with destinations in the Americas. Today, the Panamanian port system handles an estimated 6.8 million TEU per year, 80 percent of which is transshipped to Latin America, North America and the Caribbean.

Looking forward, Panama will continue to consolidate its position as the transportation and logistics hub of the Americas, connecting trade routes, serving neighboring economies and providing a wide variety of goods and value-added services to companies and consumers. But as we finalize Expansion, our focus remains on quality and testing to ensure the same safe and reliable service for the years to come.

I am truly excited for what lies ahead. This is a tremendous feat that would not have been possible without the support of the people of Panama, our dedicated workforce, and our loyal customers and partners. With the same long-term vision of those who built the Canal 101 years ago, I look forward to the Panama Canal of the 21st century.

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