Panama Freight Transport Report Q3 2011
Business Monitor International, June 2011, Pages: 31
Business Monitor International's Panama Freight Transport Report provides industry professionals and strategists, corporate analysts, freight transportation associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Panama's freight transportation industry.
Developments in Panama's freight sector over the medium term will be dominated by the expansion of the Panama Canal, due to be completed in 2014. The canal currently accounts for 30% of Panama's GDP and President Ricardo Martinelli's government hopes that the effect of the project on the country's economic growth will be extensive enough to make the country a first world economy. Given our positive macroeconomic outlook for Panama, which has already established itself as BMI's favourite Central American economy and from a broader Latin American perspective.
Our GDP forecast for 2011 is a strong 6.5%. The transport sector, by far the largest component of Panamanian GDP, experienced 14% growth in 2010. The sector is still predominantly driven by canal expansion and other public infrastructure projects, and the government's solid fiscal footing and investment plans mean public sector capital expenditure is only likely to contribute further to growth over the medium term.
A Panama Free Trade Pact is ready to be considered by the United States Congress after Panama took actions sought by the Obama administration. In April 2011, Panama's Congress ratified tax changes that the Obama administration said were necessary before legislators would consider the trade pact. The US and Panama have begun exchanging tax information with both nations exchange information on bank accounts, a requirement by the US for advancing the trade deal. Free trade deals between the US and Panama, have been held up for years in the US Congress, but the outlook for passage has brightened recently. The signing of a Free Trade Pact will further increase trade between the two countries.
Key Industry Data
- Air freight tonnes are set to grow by 5.5% in 2011. BMI predicts average annual growth of 5% over the medium term.
- Total tonnage throughput at Balboa is expected to grow by 6%. We predict average annual growth of 6% over the medium term.
- Total tonnage throughput at Manzanillo to grow by 3%. We predict average annual growth of 3% over the medium term.
Key Trends
New Highway Projects
In January 2011 Panama's public works ministry opened economic bids for four highway projects totalling US$139mn, part of a wider plan to upgrade roads and highways in Panama City.
New Panama Canal Bridge Project In early April 2011 Panama's vice president, Juan Carlos Varela, announced plans to build a third bridge over the Panama Canal, with an estimated value of around US$300mn.
Expansion Work On The Panama Canal The extension works of the Panama Canal recorded an advance of 20% in mid April. The largest segment of this multi-billion dollar mega project is the construction of two new locks, which will be located at the entrance to both Pacific and Atlantic, to allow passage of the giant ships PostPanamax.
New Dredging Equipment In January 2011 a vital piece of equipment for the canal's expansion arrived. The D'Artagnan is the most powerful self-propelled heavy-duty cutter suction dredger in the world.
Adjusted Ocean Services On May 1 2011 the CKYH Alliance (COSCO, K-Line, Yang Ming and Hanjin Shipping), was to launch a new Far East-US east coast (AWE-6) service via the Suez Canal to replace the AWE-5 loop that uses Panama.
Risks To Outlook
The main risk to our outlook is on the upside. BMI believes that when the Panama Canal expansion project is completed in 2014 the canal will see increased throughput from bigger container vessels. This will increase throughput at the country's ports and possibly have a positive effect on road and rail freight. In the short term, a downside risk presents itself in the form of increasing canal tolls, which are being used to fund the expansion. Several lines have already introduced surcharges passing this extra cost on to customers, but if rates continue to go up, lines could avoid the canal in an effort to cut costs. We believe that rates will level off when the expansion is completed, so this should not have a long-term effect on traffic.
Executive Summary
SWOT Analysis
- Panama Freight Transport Industry SWOT
Industry Trends And Developments
- Road
- Maritime
Market Overview
- Road
- Rail
- Air
- Maritime
- Container Shipping Overview
- Drivers
- Bellwethers
- Rates
- Players
Industry Forecast
- Air Freight
- Table: Air Freight, 2008-2015
- Maritime
- Table: Maritime Freight - Throughput, 2008-2015 ('000 tonnes)
- Trade
- Table: Trade Overview, 2008-2015
- Table: Key Trade Indicators, 2008-2015 (US$mn and % change y-o-y)
- Table: Panama's Main Import Partners, 2002-2008 (US$mn)
- Table: Panama's Main Export Partners, 2002-2008 (US$mn)
- Macroeconomic Outlook
Company Profiles
- Agunsa
- Panama Canal Authority
BMI Methodology
- How We Generate Our Industry Forecasts
- Transport Industry
- Sources
- Agunsa
- Panama Canal Authority
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