Q&A: Panama Canal Authority's Aleman on Expansion Project

In this podcast, Senior Editor Peter T. Leach sits down with Alberto Aleman, administrator of the Panama Canal Authority, on location in Panama City, Panama, to discuss the massive canal lock expansion project that is currently underway.

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Transcript:

Leach: I’m here in Panama City at the headquarters of the Panama Canal with Alberto Aleman, the administrator of the Panama Canal Authority. He is the man who has had the vision to expand the canal and add a third set of locks which will be finished by the end of 2014. Alberto, can you tell us what you think that expansion is going to mean for both world trade and for this country?

Aleman: Well first let me tell you that for world trade, we are changing the dimensions of the Panama Canal with a new infrastructure by building a new set of locks. This is a game changer because it will allow for larger ships, therefore a bigger economical scale. But how do you translate that into movement of cargo? I think it will allow cargo ship to come to the Panama Canal and to use Panama as a transshipment hub for the Americas. It will allow the countries to be more efficient in the way they send their products into world markets, that range from the US into Asia , to be more competitive, or copper from Chile into the markets of lets say Europe, or energy from Peru and Bolivia and Ecuador into the Atlantic regions like the US east coast or Europe or one that is producing like in Trinidad and Tobago that can go to Chile. Those are examples of things are going to happen because now with one vessel you move three times the cargo. That in itself is big and that is for world trade. the lanes will change. They way that the transfer is done is changing.

Now for Panama: What happens to Panama? Panama is the only port that has terminals in two oceans and they are interconnected, and that is unique. There is the same distance in the port itself that we have between the two oceans. We have terminals already in the two oceans. We are building more terminals so I think you can capture that value because of your interland, that is actually the Americas on both coasts, either Atlantic or the Pacific, and that is south, central, the Caribbean and actually the East Coast of the U.S. and some of the West Coast of the U.S., so you interchange all of that can happen in Panama; that East-West route that interconnects with the North-South route. And Panama has a huge connectivity.

Leach: How much more cargo do you think will start to move to the East coast and Gulf coasts of the us after the new locks are complete?

Aleman: We expect to grow from 310 million tons that we have now to go to be around 500 million tons by the year 2025. So that is a large growth in a short period of time. I think that when the industry and the countries realize the economy of scale and that's already what we are looking at, because now no longer is this a dream, it's becoming a fast reality and time is running short. So we are getting a lot of people visiting Panama, a lot of companies looking at how they are going to start deploying their vessels, what trades they want to start using, and I think we are going to have an interesting challenge because I think the canal is going to be utilizing more than what we expect to be used.

I think that when you start getting the taste of this new product you will start looking at some advantages. What we have to do locally in Panama is to understand the value that we're providing and how we can enhance that even further. I use Singapore as an example because I see them doing some very key issues, like reducing the amount of paperwork that you need to do in moving some for this cargo. How do you do that? And that is actually hidden values that you need to actually do to be faster in the way that you react and the things that you can do you to capture more.

We can add a lot of value to this process to make it start happening. We need to train our people, we need to invest heavily in education. We need to train our youth to understand this new world. A world where communications is key, that knowledge can be acquired which you can get through the Internet. You can Google anything you want. We will do that for the fact of how you can basically gain that knowledge and then put it to work. And then actually sell it eventually. And that is something that we need to invest in and I think Panama has done a lot of good things in that direction. We have a city of knowledge, upgrading the opportunities to do that, so we are working towards that also.

Leach: your second term as administrator of the Panama Canal Authority comes to an end in August 2012. What are your plans after that?

Aleman: well I will move back into the private sector and I hope to improve my golf game which is down in shambles now. I used to have a five handicap, now it’s I don’t know where. And I want to spend time fishing and maybe writing my memories.

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