By the time the Panama Canal Authority opens its new set of locks in 2015, the 50-mile stretch of canal may have at least two new terminals, one at each entrance, with plans for a third on the Pacific end. In addition, several of Panama’s four large existing container terminals are completing expansion projects or planning them.
“We see Panama as one large port, with the terminals on both the Atlantic and Pacific oceans since they are only 50 miles apart and joined by a cargo railroad and highway,” said Jorge Quijano, the engineer in charge of the canal’s $5.25 billion expansion project. On Sept. 4, Quijano will take over as the new administrator of the Panama Canal Authority.
The biggest potential new terminal is the $600 million post-Panamax facility in Colon at the Atlantic entrance of the canal. Panama Colon Container Port, the consortium of Asian developers planning the facility, said it’s in final negotiations with one of the largest global terminal operators to operate the 92-acre terminal when it’s completed in fall 2014.
“This will be the first terminal in Panama designed from the ground up for the post-Panamax era,” said John Carver, who heads the global port infrastructure group for Jones Lang LaSalle and is acting as development adviser. “This will be a big needle mover for Panama, one entirely built by private developers.”
The terminal, which will have annual capacity of 2 million 20-foot equivalent container units, is being built as a transshipment center to help eliminate some of the pressure from U.S. East and Gulf Coast ports that won’t be ready to accommodate the 11,000-TEU vessels that will sail through the canal after 2014.
But there is some skepticism as to whether the project will come to fruition by then. “Unless they can get a major terminal operator or shipping line involved that can bring the business and operate the terminal, it could just sit there for a long time,” said Richard Wainio, director and CEO of the Tampa Port Authority. He said Evergreen Marine, operator of the Colon Container Terminal adjacent to the planned project, had not even heard of the plans for the terminal when Wainio visited there recently.
Eyeing the market for transshipment of cargo to and from Asia to the west coasts of North and South America, Quijano’s focus is more on port opportunities on the Pacific end of the canal. “There is still a lot of potential for additional transshipment on the Atlantic side, but it is quite a competitive arena,” he said. “We feel that there is higher demand for the Pacific side, and that’s why we believe a new port could be built there.”
The Panama Canal Authority is exploring the potential for a third container terminal at Corozal near the canal’s Pacific entrance where Quijano’s offices are located. “What we see is a lot of interest to develop such a port facility in a land which is partly owned by the ACP,” he said.
Asked if the canal authority would develop such a port, however, Quijano said, “The ACP has not made any decision in that regard; it is rather premature to assume that we would undertake such an effort.”
The land belongs to the canal authority. Its board of directors would have to approve plans to allow its use by others or to allow the canal authority to get into the terminal business at Corozal. “We’re not sure that is something we want to become involved with, but it’s close enough to the core business of the canal,” Quijano said.
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The U.S. Canal Commission operated terminals on the Atlantic and Pacific entrances of the canal until 1979, 20 years before the canal reverted to Panamanian ownership. If the authority decides against building its own terminal there, the Panamanian government would request proposals for bids from other terminal developers.
Also on the Pacific entrance, PSA International of Singapore already has completed a new terminal for containers and roll-on, roll-off cargo at the former Rodman U.S. Navy Base. The PSA Panama International Terminal has one berth and two ship-to-shore cranes capable of handling 16 rows of containers. It has already handled deliveries of rebar for the new locks. PSA is planning to expand the terminal, building a second berth.
Hutchison Ports operates a two-berth container terminal in Balboa on the Pacific entrance to the canal. Already handling the transshipment of cargoes loaded and unloaded from post-Panamax ships of between 8,000 and 9,000 TEUs, Hutchison is expanding the container yard at the terminal.
On the Atlantic entrance to the canal, the operators of the three existing terminals at Colon also are considering expansion plans, but Quijano said plans are on hold. “Right now, they have more capacity than they have demand for, and it is a highly competitive,” he said. “Everybody is waiting to see what’s going to happen with the expansion to see how much additional investment they will do on the Atlantic side.”
Hutchison plans to invest $1 billion to double capacity at its Cristobal terminal in Colon. Evergreen is investing $200 million as the first step in a three-stage expansion at its terminal at Coco Solo, where it’s filling in existing bulk piers to create a new 1,215-foot berth with three more ship-to-shore cranes and reclaiming land for 30 more acres of container yard.
At Manzanillo International Terminal, operator SSA Marine plans to invest $200 million to $300 million to almost double its annual capacity in several phases to 4 million TEUs from the current 2.2 million. SSA has built a 17-acre distribution center next to the Colon Free Trade Zone, with more than half already used for cargo consolidation and logistics.
Shipping lines have many other options for transshipment hubs in the Caribbean, including Kingston, Jamaica; Freeport, Bahamas; Caucedo, Dominican Republic; Cartagena and Santa Marta, Colombia; and Costa Rica, where APM Terminals is building a $1 billion hub at the Port of Moin.
“We want to make sure they stay in Panama,” Quijano said. “I think the canal expansion will lure them to stay and use the Panamanian ports on the Atlantic and Pacific.”