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Newletter 01-02 January 2002 Customer Newsletter A Message to Canal Customers Two years have passed since the transfer a successful year in terms of activity the change in the traffic mix now of the Panama Canal to the Republic of and accomplishments. Despite a comprising bigger vessels and while the Panama. During these two years our moderate decline in oceangoing rigorous maintenance program was main efforts have been directed to transits and PC/UMS net tonnage, underway and the modernization maintaining the gates opened to the fiscal year 2001 saw a considerable program continued as scheduled. All shipping community, and ensuring a safe increase in Panamax vessels, which major programs were successfully and efficient transit of the waterway to all constituted 35.8 percent of the total fulfilled, while providing improved vessels of the world. number of transits. During this service to our clientele, as demonstrated The Panama Canal Authority has since by a reduction in Canal Waters Time the transfer in December of 1999, from 29.4 hours in FY 2000 to 23.9 hours embraced the challenge of focusing in in FY 2001. fulfilling its new responsibilities, which The modernization program reached a go beyond the efficient operation of the new milestone. Its largest project, the waterway and reach the realm of Gaillard Cut widening, originally becoming the prime driving force of planned to take about 20 years, was Panama's progress and growth. These successfully concluded last November, new responsibilities entail a clear eleven years before it was originally understanding of our role as one of the planned and with significant savings. most important world maritime The widening is now finished and upon commerce waterways and as pillar of our completion of the signaling the widened country's development. Reconciling Cut will be fully operational, probably by both roles is important to enable the March 2002, permitting Panamax design of alternatives that can respond, vessels to pass each other without not only to our customers' expectations, restriction at this narrow portion of the but also to the expectations of the waterway. The other components of the Panamanians who for many decades modernization program are also cherished the dream of becoming the advancing with excellent results. sole administrator of this paramount During the year now ending, the Panama enterprise. Canal Authority received the ISO 9001 We have not lost sight of our supreme Certification in two of its most important responsibility with regard to world trade. areas: the Department of Maritime Through these years we have been Operations and the Training and working towards modernizing the Development Division of the waterway and improving, not only its Department of Human Resources. The plant and equipment, but also its period, 366 transits of vessels ISO 9001 certification is a great infrastructure and operating systems. measuring over 950 feet in length accomplishment resulting from the hard This challenging and extremely complex were reported, as compared to 247 in work and commitment of the men and operation demands a high level of fiscal year 2000. women in our labor force who --aware of maintenance and constant Furthermore, impressive statistics for a the importance of this process-- put all modernization to continue serving its particularly safe year at the Panama their efforts into making this objective a multiple users and customers from all Canal marked the ending of fiscal year reality. We are extremely proud of each over the world, providing a 24-hour 2001. Accidents reported and every employee who played a part service, three hundred and sixty five corresponded to only 0.13 percent of and contributed to the success of this days a year. the overall transits made. The effort. This closing year has been particularly accident rate throughout Canal Looking ahead into the future, we fully challenging for us at the Panama Canal history has never been this low. understand the need to continue Authority, as I am sure it has been for However, more significant are the improving and we are committed to do everyone else in the world. In spite of challenges and critical factors that so in order to remain the route of choice the well-known negative effects of the surrounded this great achievement by of our customers and a cornerstone of the world economic slowdown and the Canal employees. The remarkable global transportation system. horrific events of September 11, we had safety record was reached in spite of continue... continue... We will continue with the process of channel along Gatun Lake and closer to its customers. I hope that you certifying the rest of the organization Gaillard Cut by one meter. This now find a Panama Canal workforce under ISO 9001 standards, and expect to deepening will increase water storage willing to listen to and attempt to achieve this goal in the year 2003. We capacity in Gatun Lake and will also understand your concerns, and that - will continue with the studies for the next help the Panama Canal maintain even if you do not always agree with our Canal expansion and considering larger maximum draft during the dry months actions - you view the process as fair and locks to be able to accommodate of the year. the decisions informed and principled. existing Post-Panamax vessels as well as In summary, we are concentrated in We will continue striving to improve the those being ordered and built by the providing significant added value to Canal's competitiveness, safety, maritime industry. our customers while increasing world reliability and profitability through an The Panama Canal Authority is working, trade. We have intensified our efficient utilization of our resources, within its charter, to make Panama a outreaching efforts and periodically while giving greater attention to our destination and the most important meet customers and industry leaders to clients. We at the Panama Canal distribution center in this hemisphere. review tendencies and assess Authority pledge to continue providing We are finalizing the studies to dredge opportunities. We have taken high quality transit service and the Pacific entrance to the Panama advantage of the meetings with the responding adequately to the changes in Canal, allowing Panamax and post- Advisory Board to obtain their expert the maritime transportation business to Panamax vessels to enter Balboa port advice, guidance, and useful fulfill our natural mission to unite the and any other future terminal in the information from the global maritime world by providing passage to vessels of Pacific fully loaded, thus delivering community perspective on how to all countries. greater cargo volumes to Panamanian prepare the Canal to meet future ports. Meanwhile, we proceed with the challenges. project to deepen the navigation The Panama Canal Authority is now The Financial Perspective The past two years have been challenging, as we needed to bring about a culture change from the non- profit federal agency of the United States government to a profit-driven corporation of the Republic of Panama. Both fiscal year endings satisfied management expectations as well as the expectations of all Panamanians. In terms of payments to Panama, in fiscal year 2001, the corporation contributed with 150.4 millions in direct payments resulting from tolls collection and 29 millions in payments for public services rendered, thus complying with our vision of becoming the driving force of Panama's progress and growth. In spite of the economic slowdown and a slight decline of our revenues, during fiscal year 2001 we accomplished The year 2002 is somewhat of a It is precisely at this time when our important savings in financial terms and concern as economic growth and corporate effort is geared to further achieved essential operational international trade continue to show strengthening the Canal's financial efficiencies that guided the agency to a weakness, a situation that was position, focus long term towards future year end closure in sync with the worsened by the tragic events of requirements for larger vessels and traffic financial plan. This was the result of a September 11. Yet the Panama Canal volumes, while positioning the company successful financial management as a long term on going concern is to meet the challenges of a global program that enabled the Canal to carry prepared to meet the challenges of the economy driven by market forces. on with its multimillion-modernization business cycle, at all times with a and improvement program, while business attitude toward the long term considering massive investments to commitment of providing safe, increase capacity to satisfy the maritime reliable and efficient transit passage industry demand well into this century. between the oceans. Canal Transits and Cargo Information A preliminary forecast for the first quarter Major Canal Cargo Flows October-December (Estimated) of fiscal year 2002 (October-December) reflects a 4.0 per cent decline in GRAINS commercial cargo tonnage to 48.3 CONTAINERIZED CARGO million long tons by comparison to the PETROLEUM AND PETROLEUM PRODUCTS ORES AND METALS FY 2001 50.3 million recorded in the same period FY 2002 of fiscal year 2001*, an indicator that the NITRATES, PHOSPHATES AND POTASH MANUFACTURES OF IRON AND STEEL overall world economic slowdown has CHEMICALS AND PETROLEUM CHEMICALS affected Canal traffic performance. REFRIGERATED FOODS Cargo tonnage declines were evident for LUMBER AND PRODUCTS grains, coal and coke, chemicals and COAL AND COKE petroleum chemicals, lumber and 0 2,000 4,000 6,000 8,000 10,000 12,000 lumber products as well as petroleum Thousand Long Tons and petroleum products. By contrast, commodities that showed positive results The enclosed chart compares the major Canal commodity flows for the first quarter of fiscal years 2002 and 2001. * Includes cargo long ton projections by commodity groups for the month of December 2001.
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