Panama Canal: Expansion Status and Future Impact

Transcription

1 Panama Canal: Expansion Status and Future Impact 48th Annual Georgia Foreign Trade Conference Sea Island, GA - February 8, 2016 Oscar Bazán Executive Vice-President Planning and Business Development Panama Canal Authority

2 Panama Canal Authority at a Glance Business Description The Panama Canal Authority is the autonomous legal entity in charge of the operation, administration, management, preservation, maintenance, and modernization of the Canal. Leading market position in the container liner segment with a 51% capacity deployed on the Northeast Asia to U.S. East coast route. Stable business with diversified revenue streams: Toll income, electric power sales, potable water sales and other marine services. The Panama Canal is undergoing an Expansion program expected to significantly increase the Canal s capacity and strengthen its world-wide competitive position. Vessel Transits 15,000 10,000 13,660 13,481 13, Vessel Tonnage In millions of PC/UMS 5, Transit Revenues (thousand of U.S. dollars) 2015 Other Revenues (thousand of U.S. dollars) 2015 Total Revenues (thousand of U.S. dollars) $2,440,954 $169,276 $2,610,230 Employees 9,925 2 Source: ACP and public information

3 Understanding the Operations of the Canal With an extension of 80km, the Panama Canal connects the Atlantic and Pacific oceans. The Panama Canal uses systems of locks (compartments) that work as water lifts. 1 Atlantic Locks The ships are raised from the sea level to the level of Gatun Lake. Ships then cross the channel through the continental divide and enter the set of locks that will take them to the sea level again A day in the Canal (Atlantic To Pacific Route) Atlantic locks which raise ships to the Gatun Level form the sea level or vice versa. Ships cross the Canal through the Gatun Lake. Ships arrive to the exit locks to reach the sea level again. Ships exit the Canal. 2 Gatun Lake Pacific Access Channel 4 3 Pacific Locks and Culebra Cut 3 Source: ACP

4 Maritime Transit Operational Overview Vessel Evolution Volume Evolution Average Vessel Size (in PC/UMS) 4,832 FY1955 9,931 FY ,940 FY ,482 FY2015 Avg : 14,243 14,19314,721 14,702 14,34214,230 14,68514,544 13,660 13,481 13, Volume Breakdown 2015 Transits PC/UMS Tonnage in MM PC/UMS MM Tons by Market Segment 4 Passengers Other General Cargo Refrigerated Cargo 3% 3%2%1% Container Vehicle Carriers 14% 34% 19% Tankers 24% Dry Bulk 340 PC/UMS MM Tons Source: ACP Container Dry Bulk Vehicle Carriers/RoRo Chemical Tankers Crude/Product Tankers Other % Share of PC/UMS Tons 34% 34% 37% 24% 26% 23% 14% 14% 13% 10% 9% 9% 5% 5% 6% 2% 2% 1%

5 Containerized Cargo Grains Oil and Oil Derivatives Coal and Coke Minerals and Metals Chemicals Total Canal Participation A Key Facilitator of Transcontinental Seaborne Trade The Panama Canal s relevance to the global economy is evidenced by the strong correlation of its vessel traffic with global seaborne trade 10,529 6, World Seaborne Trade (MM tonnes) Panama Canal Traffic (MM tonnes) Worldwide Cargo Market Share (1) Relevance Relevance of the of Canal the Canal to Selected to Selected Countries Countries (1) (1) (Trade Through the Canal) 12.3% 41% 36% 32% 2.6% 1.5% 1.1% 1.1% 4.7% 2.2% 22% 22% 17% 10% 20% 16% 7% 10% 5% 5 Millions of Long tons - Trade Through the Canal Exports Imports Source: ACP with information from IHS, October 2015 The Canal is a key asset for the (1) Data for calendar year 2014 region s competitiveness

6 Critical Cornerstone of Global Maritime Transportation Serves 144 maritime routes and 1,700 ports in 160 countries Privileged location with the most economical and time saving option between the Americas, Asia and Europe The right to limit the access to the Canal grants pricing advantages without distorting demand Unique Position in the World Maritime Trade Asia Approximately 18 to 20 days at 18 knots Pacific Ocean North America Lazaro Cardenas (Mexico) 3-4 days Callao (Peru) 3-4 days Savannah, Charleston, Norfolk (USEC) 3-4 days South America Atlantic Ocean Europe Caucedo (Dominican Rep.) Kingston (Jamaica) 1-2 days Cartagena (Colombia) Less than 1 day Santos (Brazil) Days US Intermodal System 29% Undisputable Relevance to Global Trade (1) Panama Canal 39% Route (2) Savings Market Segment From To Panama Suez Miles Days: Containership (roundtrip) San Antonio (Chile) 5-6 days Selected Attended Ports NE Asia US East Coast 22,000 nm 26,600 nm 4,600 nm 14 Suez Canal 32% 6 Source: ACP (1) Container cargo market share on the Northeast Asia to U.S. East coast route (2) nm = Nautical Miles (3) Expected savings after the Canal s Expansion Vehicle Carrier NE Asia US East Coast 10,859 nm 14,490 nm 3,631 nm 8 LNG (3) US Gulf Japan 9,623 nm 14,117 nm 4,494 nm 10 Market Segment From To Panama Cape of Good Hope Miles: Dry Bulk U.S. Gulf Dalian, China 10,069 nm 15,353 nm 5,284 nm 16 Days:

7 EXPANSION PROGRAM UPDATE

8 Program Components Expansion Program M m % 95.3 % Atlantic Site Neo Panamax Locks Increase of Gatun Lake s maximum operating level 96 % Progress Atlantic entrance deepening and widening 95 % 26.7 m 27.1 m Gatun Lake widening and deepening and widening of Gaillard Cut s navigation channels Pacific Site Neo Panamax Locks 96% 26 M m % Pacific Access Channel 49 M m % 8.6 M m 3 Pacific entrance deepening and widening 99 %

9 1939 Excavations Agua Clara Locks Updated as of 28-Dec-2015

10 Agua Clara Locks 15-Jan Jan-2016

11 2016 Foto: 5-Feb-2016 Agua Clara Locks Avance 95.3% Excavación y dragado: 46.4 M m 3 / 48.7 M m 3 Concreto: 4.4 M m 3 0% 50% 100%

12 1939 Excavations Cocoli Locks Updated as of 28-Dec-2015

13 Cocolí Locks 17-Jan Jan Jan-2016

14 Torre de Control - Esclusas de Cocolí

15 2016 Foto: 5-Feb-2016 Cocolí Locks Trabajos varios Control Panels Lighs Contol Tower (Cocolí) Back up - Generators Back up - Bateries

16 ELEVATION Pacific Access Channel UXO 3 80 Ha Borinquen dam PAC 2 PAC 4 PAC 1 PAC 3 Borinquen dam construction Clearing of 80 hectares of UXO. Amount (PAC-4): B/. 267,798, Company: Consortium ICA-FCC-MECO PAC: 48.9 M m 3 excavated (Phase 4: 26.2 M m 3 excavated) 99 % Progress

17 Pedro Miguel Locks 6/10 5/10 4/10 3/10 2/10 1/10 8/10 7/9 10/10 9/10 19-Nov Oct-2015 Pacific Access Channel Miraflores Locks Cocoli Neopanamax Locks

18 Updated as of Dec-2016

19 Expansion Program UPDATE

20 OUTLOOK OF CANAL EXPANSION

21 Tons in millions YEAR Long Term Demand Historical Historical Revised Forecast Forecast Canal Capacity Additional tonnage after Expansion 340 Maximum Capacity of Existing Canal 100

22 The Expansion Will Significantly Enhance the Canal s Global Competitive Position Relevant Vessel Capacity Increase Operational Optimization with Economies of Scale Panamax New Panamax Exporters Shipping Lines Importers Consumers 965 ft 106 ft Maximum capacity of transiting vessels 5,000 TEU 1200 ft 160 ft Maximum capacity of transiting vessels 14,000 TEU Higher capacity to strengthen ACP s market position Economies of scale - Efficiencies in the supply chain Connectivity Increasing Market Participation Persuading New Players to Consider the Panama Canal Route The Expansion will increase LOA of vessels from 965 to 1200 feet. Container Vessels Dry Bulk Liquid Bulk LNG / LPG Maximum transported capacity increase from 5,000 TEU to 14,000 TEU. Just-in-time; Reservation System Tariff incentives for new market segments and ballast traffic. 5,200 to 14,000 TEU new volumes from: Latin America Recover market from: West Coast United States Suez Canal Up to 170,000 DWT (1) Coal from Colombia Metalurgical coal from Vancouver Iron Ore from Brazil in Minicapesize (85, ,000 DWT) Up to 150,000 DWT Tankers Petroleum Products LNG Up to 177,000m 3 and VLGC Source: ACP (1) Deadweight Tons

23 Global Container Trade Trends Seaborne Trade (Mt) Container Trade (Mt) Containership existing and estimated fleet in ,440 9,839 10,175 10,529 10,959 1,405 1,454 1,532 1,629 1,744 Existing Fleet 2015 Estimated Fleet in E Alliances, mergers and vessel sharing agreements will dominate the global maritime market pursuing a more competitive status. Raising oversupply will lead to more market consolidation impacting negatively on the deployed capacity and cargo volume. Positive impact from the 2015 U.S. west coast port labor negotiations, resulting in cargo diversion through the Panama Canal E A major part of Panama Canal tolls comes from this segment. World demand for containerized cargo will continue its increasing trend at an average growth of 5%. Containerized cargo volumes for U.S. will keep its positive trend, with a sustained recovery of 3.4%. Delivery of Neo and Postpanamax vessels will continue putting pressure on vessel deployment in favor of the Panama Canal by increasing its average vessel size. 73.0% 24.5% 2.5% 70.0% 25.4% 4.6% Panamax or less Neo Panamax Post Panamax In 2019, 95.4% of the containership fleet will be able to transit the Panama Canal Source: ACP/MEMN/Fairplay World Fleet as of August Source: ACP/MEMN/Clarkson Research Services 23

24 Impact of the Expansion on Container Services Asia to the U.S. New container vessel tariffs for the expanded Canal As much as 10% of container traffic between East Asia and the U.S. could shift from West Coast Ports to East Coast Ports Source: Wide Open, How the Panama Canal Expansion is redrawing the Logistic Map (White Paper), The Boston Consulting Group, 2015.

25 The Panama Canal It is all about reliability, connectivity, and value added services ASIA Savannah, Charleston, Norfolk Houston 3-4 days Lazaro Cardenas (Mexico) 3-4 days PANAMA Approximately 18 to 20 days at 18 knots Callao (Peru) 3-4 Days San Antonio (Chile) 5-6 Days Caucedo (Dominican Rep.) Kingston (Jamaica) 1-2 days Cartagena (Colombia) Less than 1 day Santos (Brazil) Days 80% of container vessels that transit the Panama Canal call at a local port

26 BUSINESS DEVELOPMENT OPPORTUNITIES

27 Diversification Strategy Potential areas for development Corozal Container Terminal LNG Terminal New container terminal to serve more than 5MM TEU. Roll-On Roll-Off Terminal Potential for a dedicated terminal for vehicle transshipment in Panama. Capitalizes on global LNG flows by offering LNG bunkering to vessels. Competitive LNG traffic toll system will prop up U.S. to Asia market. Pipelines Opportunities related to the flow of petrochemicals and refined products from one ocean to the other. Logistics Parks Offers a strategic location for distribution and valueadded activities. Vessel Repairs Services Facilities to provide major scheduled ship repairs, routine maintenance or emergency repairs. Bunkering Opportunities to obtain a larger market share in vessel bunkering _1.WOR NY008RBR Top-Off Operations Potential for developing a ship-to-ship topoff operation in Panama. Power Generation Cost-competitive through the use of LNG as alternate fuel source.

28 Panama Logistic Hub of the Americas Reaching its maximum potential from its geographic position The HUB competitiveness will be strengthened with more reliable and efficient services.

29 Thank you Oscar Bazán Executive Vice-President Planning and Business Development Panama Canal Authority February 8, 2016