Panama Freight Transport Report Q4 2011
Business Monitor International, September 2011, Pages: 31
Panama remains one of our favourite economies in Latin America, with real GDP growth forecast to come in at 6.3% in 2011 and 6.8% in 2012. While this means the pace of economic expansion will slow slightly from the 7.5% in 2010, the economy will still grow faster than any other country in the region during this period (except for Paraguay, with 6.5% growth forecast in 2011). We expect surging fixed investment and private consumption to drive much of the gains over the coming years, which will lead to Panama posting an average rate of economic expansion at a whopping 5.6% over our long-term forecast period (2011-2020).
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 Panama a first world economy.
A Panama Free Trade Agreement (FTA) is ready to be considered by the US 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. 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, with progress also being made on similar deals with Colombia and South Korea. The signing of an FTA 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% in 2011. We predict average annual growth of 6% over the medium term.
- Total tonnage throughput at Manzanillo is forecast to grow by 3% in 2011. We predict average annual growth of 3% over the medium term.
Key Trends
New Orleans Looks to Panama, But Dredging Dreams Unlikely To Become Reality
The Panama Canal Authority (ACP)'s penchant for MoUs continues as it seeks to secure new business in the time for the opening of its US$5bn expansion in 2014. With the ports of Miami and Baltimore having recently renewed MoUs with the ACP, the Port of New Orleans has become the latest facility to renew its MoU with the canal authority. BMI cautions, however, that New Orleans' ability to take full advantage of the expected increase in traffic in the region post-2014 could be stymied by the lack of funds to pay for badly needed dredging work on the Mississippi River.
Vopak Expands Operations In Panama Vopak has announced its intention to build and operate 655,000m3 of independent storage capacity for oil products in Bahia Las Minas on the Atlantic coast of Panama. This particular project, which includes the enhancement of two existing jetties, is expected to be commissioned in the first half of 2013. Based on positive market demand, Vopak says it can expand its independent capacity by around 1m m3 to 1.75m m3 and build a new post-Panamax deep-water jetty to support the site's operations.
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.
A further downside risk comes from a possibility of a slowdown in the US' economic recovery. Sluggish consumer demand could result in a drop in demand for imported goods from China, which would have a negative knock on effect on the Panama Canal's throughput volumes.
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.
Executive Summary
SWOT Analysis
Panama Freight Transport Industry SWOT
Industry Trends And Developments
Maritime
Market Overview
Road
Rail
Air
Maritime
Global Oil Products Price Outlook
Table: Oil Product Price Assumptions, 2011 (US$/bbl)
Table: Oil Product Price Forecasts, 2011-2015 (US$/bbl)
Industry Forecast
Air Freight
Table: Air Freight, 2007-2015
Maritime
Table: Maritime Freight - Throughput, 2007-2015 ('000 tonnes)
Trade
Table: Trade Overview, 2008-2015
Table: Key Trade Indicators, 2008-2015 (US$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)
Political Oultook
Macroeconomic Outlook
Table: Panama – Macroeconomic Activity, 2007-2015
Company Profiles
Panama Canal Authority
Agunsa
Copa Holdings
BMI Methodology
How We Generate Our Industry Forecasts
Transport Industry
Sources
- Panama Canal Authority
- Agunsa
- Copa Holdings
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