Panama Canal: Expansion Status and Future Impact “NUTC Business Advisory Council Meeting” Evanston, IL - October 2015
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Panama Canal: Expansion Status and Future Impact “NUTC Business Advisory Council Meeting” Evanston, IL - October 2015 Oscar Bazán Execuve Vice-President Planning and Business Development Panama Canal Authority Panama Canal Authority at a Glance Business Description The Panama Canal Authority, 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 20,000 Vessel Tonnage 14,544 13,660 15,000 13,482 In millions of PC/UMS 10,000 500 400 333.7 320.6 326.8 2014 Transit Revenues 5,000 $2,323,931 300 (thousand of US dollars) 0 200 2012 2013 2014 100 2014 Other Revenues $305,220 0 (thousand of US dollars) 2012 2013 2014 2014 Total Revenues $2,629,151 (thousand of US dollars) Employees 10,016 2 Source: ACP and public information 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 1 Atlan&c Locks as water lifts § The ships are raised from the sea level to the level of Gatun Lake 2 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 Pacific Locks and A day in the Canal 3 Culebra Cut (Atlantic To Pacific Route) 1ü Atlantic locks which raise ships to the Gatun Level form the sea level or vice versa 2ü Ships cross the canal Pacific Access Channel 4 through the Gatun Lake 3ü Ships arrive to the exit locks to reach the sea level again 4ü Ships exit the Canal 3 Source: ACP Maritime Transit Operational Overview Vessel Evolution Volume Evolution Average Vessel Size (in PC/UMS) Avg. ’06-’14: 334 14,284 327 4,832 9,931 18,940 27,286 322 321 FY1955 FY1975 FY1995 FY2014 313 310 14,193 14,721 14,702 14,342 14,230 14,685 14,544 13,660 13,481 301 298 299 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 2010 2011 2012 2013 2014 Transits PC/UMS Tonnage in MM Volume Breakdown 2014 2012-2014 Transits by Market Segment Passengers Other 111.0 34% General Cargo Container 117.6 37% Container 119.9 36% Refrigerated Cargo 3%3% 1% 3% 86.0 26% Vehicle Carriers Dry Bulk 72.7 23% 14% 34% 83.4 25% Vehicle 45.8 14% 43.0 13% Carriers/RoRo 42.9 13% 16% 9% Tankers Chemical 29.7 30.3 9% Tankers 28.3 8% 26% Dry Bulk Crude/Product 15.7 5% 17.8 6% Tankers 19.1 6% 38.0 1% 327 PC/UMS MM Tons Other 38.6 2% 2% 4 39.6 Source: ACP 2012 2013 2014 % Share of Total Transits 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 6,492 229 187 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 World Seaborne Trade (MM tonnes) Panama Canal Traffic (MM tonnes) Worldwide Cargo Market Share(1) Relevance of the Canal to Selected Countries(1) 12.3% 4.7% 2.6% 2.2% 1.5% 1.1% 1.1% Grains Cargo Minerals Chemicals Oil and Oil Derivaves and Metals Millions of Long tons - Trade Through the Canal Total Canal Par/cipaon Containerized Coal and Coke 5 The Canal is a key asset for the Source: ACP with information from IHS, July 2014 region’s competitiveness (1) Data as of 2014 Critical Cornerstone of Global Maritime Transportation Unique Position in the World Maritime Trade ü Serves 144 maritime routes and 1,700 ports in 160 Savannah, Charleston, countries Norfolk (USEC) 3-4 days Color ü Privileged location with the Approximately 18 to North 20 days at 18 knots Scheme most economical and time Asia America Europe saving option between the Lazaro Cardenas Pacific (Mexico) 38 69 156 Americas, Asia and Europe Ocean 3-4 days Caucedo (Dominican Rep.) Atlantic Kingston (Jamaica) 1-2 days ü The right to limit the access to Ocean 199 46 56 the Canal grants pricing Cartagena (Colombia) advantages without distorting Less than 1 day demand South 142 82 45 America Callao (Peru) Santos (Brazil) 3-4 days 10-11 Days 227 199 134 San Antonio (Chile) 5-6 days Undisputable Relevance to 686007_1.ai / NY008B8R Selected Attended Ports 11 149 229 Global Trade(1) Route(2) Savings US Panama 255 127 0 Intermodal Canal Market Segment From To Panama Suez Miles Days: System 39% Containership 29% NE Asia US East Coast 22,000 nm 26,600 nm 4,600 nm 14 (roundtrip) 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 Cape of Good Market Segment From To Panama Miles: Days: Suez Canal Hope 32% Dry Bulk US Gulf Dalian, China 10,069 nm 15,353 nm 5,284 nm 16 Source: ACP 6 (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 The Panama Canal Service Package… Economies of Scale Connectivity Sustainability Reliability Reliability… Operational Reliability Since the Canal’s Opening Safe and secure - Opens 24 hours a day, 7 days a week, 365 days a year ü Over 100 years of operations ü Customer satisfaction of ~99% in 2014(1) ü The canal has stopped operations only 17 hours in total ü Predictability: Published tariffs and fixed transit date with since 1,999 (year in which ACP assumed control of the reservation Canal) ü Sufficient to attend large traffic volumes with 7,379 Panamax Solid Solid ü Maintenance is executed without interrupting or slowing type vessels transited in 2014, exceeding previous record of Experience down operations 7,241 in 2012 PCNT Tonnage in MM(2) PC/UMS Tonnage in MM 1915 1959 1974 1999 2002 2005 2007 2009 2011 2012 2014 4 53 138 228 235 279 313 299 322 334 327 Steady transit levels through decades 9 Source: ACP Sustainability… Sustainability – Capital Investment Program Dredging Accumulated Investment – Capex 2,914 (USD millions) 2,403 2,232 1,869 1,548 1,360 1,194 1,262 1,027 Bridge over Atlantic 912 Budget side 750 600 463 350 511 211 363 102 321 139 113 137 150 162 115 167 188 171 102 109 68 98 FY 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2000 Launches Ground dams Fuel Pipeline and Tank Farm Tugboats Sustainability – The Green Route • The CO2 emission reduction in the planet as a result of the Panama Canal route • The actions taken by ACP: Environmental management in operations and Canal Watershed sustainability programs • Become carbon neutral CO2 Emission's for Container Vessels Asia – USEC New York - Kaoshiung Emissions perTEU (tons) Emissions 2 CO Intermodal Cape of Good Panama Canal Cape of Horne Suez Canal USA Hope Connectivity… Global Maritime Trade Routes Overview Color Scheme Dresund 38 69 156 Dover Strait Tsugaru Bosphorus 199 46 56 Dardanelles Gibraltar Taiwan Strait Suez Canal Strait of Hormuz 142 82 45 Windward Passage Yucatan Channel Luzon Strait Mon Passage 227 199 134 Panama Canal Bab el-Mandab Strait of Malacca Makassar 11 149 229 Sunda Torres Lombok 255 127 0 Global Seaborne Routes Cape of Good Hope Core Routes Secondary Routes The Panama Canal is a cornerstone of the Western Hemisphere’s maritime trade and a prime asset in the Americas 15 Source: Dr. Jean-Paul Rodrigue, Dept. of Global Studies & Geography, Hofstra University The Panama Canal’s Key Routes The Panama Canal’s strategic position renders it a crucial role in the Western Hemisphere’s seaborne trade dynamics. More than 225MM tons made their way through its waters in 2014 (1) Color Scheme Asia 38 69 156 Europe 199 46 56 North America 142 82 45 227 199 134 11 149 229 Liner Services through the Panama Canal South Panama Canal Routes (Long tons MM) No. of Annual Average vessel America 255 127 0 Commercial Route services capacity size Asia - USEC / Gulf 14 3,303,521 4,549 Asia - East Coast US ( 86.2M) WCSA - Europe 7 1,213,667 3,556 West Coast South America – WCSA - ECUS 2 438,919 4,245 East Coast US (33.4M) Pendulum 2 481,406 4,629 WCUS - Europe 3 660,381 4,288 West Coast South Asia - Caribbean 1 242,805 4,669 America - Europe (12.6M) Australia - Europe 1 55,085 2,421 West Coast Central Australia - ECUS 1 178,142 3,426 America – East Coast US (12.0M) WCSA - Caribbean 2 134,560 1,282 Total 33 6,708,486 4,186 South America Intercoastal (10.9M) Feeder Liner Services at Panamanian Container Terminals Feeder Services Atlantic 25 2,456,006 2,490 Feeder Services Pacific 14 3,106,958 6,314 Total 39 5,562,964 Source: ACP 16 (1) Long tons Hanjin Shipping Service Network through the Panama Canal • Panama Canal Customers´ Ranking for Container Vessels - Position No.