March 2002 Customer Newsletter

Brazil President Cardoso and President Moscoso Launched Deepening ff Gatun Lake On March 6, Brazil President Fernando reliability levels. However, planning is Henrique Cardoso and Panama now underway to prepare the President Mireya Moscoso launched the waterway for future shipping needs. A 's channel deepening long-term Master Plan is being The Panama Canal project by setting off a spectacular blast prepared to roll out a progressive, that marked yet another milestone in the time-phased program of expansion Improves: famous waterway's history. The projects that will level Canal traffic fragmentation blast symbolized the growth. The ACP plans to provide The World Trade beginning of a seven-year program to continuous service to customers and Benefits deepen the channel by one meter keep the waterway at the forefront of (3 feet). This is the first major world trade routes. improvement project scheduled by the Panama Canal this century. President Cardoso visited Panama to further strengthen the ties between the two nations. During President Moscoso's trip to Brasilia last year, high- ranking government officials expressed special interest in the future expansion plans of the Panama Canal. The waterway constitutes a vital artery for fueling Brazil's maritime trade development, particularly in the northeastern area, which has the fastest growth rate, since the Canal represents the most economic route for cargo transportation to Asian markets. During the ceremony that initiated the project at Gatun Lake, Administrator Alberto Alemán Zubieta pointed out the importance of the project to increase the waterway's efficiency and improve the service provided to the world maritime industry. The project's goal is to increase Gatun Lake's water storage capacity by 45 percent and augment the Canal's watershed water output. Deepening the channel will benefit Canal customers by enabling a more efficient draft administration and by reducing the impact of water shortages on shipping. Additional storage capacity will also permit the Canal to meet long-term demand for potable water. The deepening of the channel will be completed using available ACP resources. The project will require drilling and blasting for rock material and will help the Canal maintain existing Canal Transits and Cargo Information Available statistics for the five-month principal bulk commodity transported Overall, containerized cargo holds a period (October-February) of fiscal year through the Panama Canal, recorded a 19.0 percent share of total Canal cargo 2002 recorded a 4.3 percent decline in 3.1 percent decrease to 16.7 million tonnage. Petroleum and petroleum commercial cargo tonnage to 78.3 long tons relative to the same period products, third commodity group in million long tons from the 81.8 million during fiscal year 2001. This decline importance for the Canal, declined by recorded during the same period of in shipments was significant in 13.1 percent to 11.3 million long tons. fiscal year 2001, as the world's October, particularly because of the The world economic recession has deteriorated economy continued to closure of one lane at Gatun Locks for caused an accumulation of inventories in negatively impact on Canal traffic. On maintenance and the slower pace of industrialized nations, which has the one hand, the weak performance United States exports after the terrorist contributed to the weakening of demand. during this period was evident in a attacks on September 11th that Moreover, the September 11th terrorist number of bulk-type and specialized prompted tighter security measures at attacks in the United States directly commodities including grains, U.S. ports. Containerized cargo resulted in a significant contraction in the petroleum and petroleum products, coal maintained its place as the second demand for jet fuel. Another factor that and coke, lumber and products, most important commodity, as has caused a negative influence on this chemicals and petrochemicals, and tonnage levels for the first five months segment is the moderate winter phosphates and fertilizers. On the other of the fiscal year rose by 4.5 percent to temperatures that have reduced the hand, commodities with tonnage 14.9 million long tons. During this demand for heating oil. increases consisted of containerized five-month period, cargo flow on the Cargo tonnage comparisons for the first cargo, ores and metals, manufactures of principal two-way trade route of Asia five months of fiscal years 2002 and 2001 iron and steel, refrigerated products, and and East Coast U.S. has risen by 11.1 are illustrated in the chart below. autos, accessories and parts. Grain, the per cent from previous year level.

Major Canal Cargo Flows October-February

GRAINS

CONTAINERIZED CARGO

PETROLEUM AND PETROLEUM PRODUCTS FY 2001 FY 2002 ORES AND METALS

NITRATES, PHOSPHATES AND POTASH

MANUFACTURES OF IRON AND STEEL

CHEMICALS AND PETROLEUM CHEMICALS

REFRIGERATED FOODS

LUMBER AND PRODUCTS

COAL AND COKE

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Thousand Long Tons

Canal Traffic Update Preliminary traffic statistics for the first During this five-month period, Panamax Transits five months (October - February) of fiscal Panamax-size vessel transits held a 100' Beam & Over year 2002 registered a total of 4,872 38.1 per cent share of total oceangoing oceangoing transits, a 4.9 percent short transits. Month FY 2001 FY 2002 % Change fall from the 5,125 transits recorded Oct. 419 355 -15.3 during the same period the year before. Nov. 379 389 2.6 Transits by Panamax-size vessels, the Dec. 395 370 -6.3 largest that can fit Canal locks, totaled Jan. 376 395 5.1 1,855 with a 3.1 percent decrease from Feb. 346 346 0.0 the 1,915 transits in fiscal year 2001. Total 1,915 1,855 -3.1 Fifth Meeting of Advisory Board Concludes Successfully With an unprecedented attendance, the Canal executives informed the again encouraged the Canal fifth meeting of the Panama Canal Advisory Board on the progress of the administration to continue to promote Authority Advisory Board concluded plans to install signals and other aids to the development of a national maritime successfully, after two days of intense navigation, that will make Gaillard Cut strategy. discussions between its members and the maritime waterway with the best The next meeting of the Advisory Board the members of the Board of Directors of system of signals in the world. This will be held in Fort Lauderdale, , the ACP. investment will increase the safety of on September 19 and 20 of this year. William A. O'Neil, Secretary General of vessel transits, particularly Panamax the International Maritime Organization, vessels under foggy conditions, and and Chairman of the Advisory Board, other conditions that reduce visibility. congratulated the ACP for its excellent The Advisory Board was also informed administration of the waterway since its of the contract recently awarded to Kudos to Advisory transfer to Panama, and for its important Kongsberg Norcontrol, Inc., to update Board Members o achievements, such as the decrease in the new 360 full-bridge simulator, for International Maritime Organization the accident rate and in Canal Waters the continuous specialized training of Secretary-General and Chairman of Time, as well as the completion in Canal maritime operations personnel. the Advisory advance and with significant savings of All the members of the ACP Board of Board, His Excellency, Mr. William the Gaillard Cut widening. With the Directors, the Administrator, Deputy O'Neil, will be honored with the Administrator, and management team "Lifetime Achievement Award" from participated in the meeting. Members the providers in the communications of the Advisory Board who and information technology in participated were Flemming Jacobs, shipping for steering the introduction President and CEO of NOL Group; of the Global Maritime Distress & Stephan Schmidheiny, President of Safety System, thus contributing to FUNDES International; Albert saving life at sea. The award will be Nahmad, former member of the Board presented during The 6th of Directors of the Panama Canal International Conference Commission and President and CEO of Communication & IT in Shipping - Watsco, Inc.; Salvador Jurado, CITIS 2002 - on March 19 in London. intent of meeting the increasing demand President of Building Components Mr. Armando Codina has been of international commercial maritime Group, Inc.; Tommy Thomsen, partner elected to the General Motors trade, the Advisory Board encouraged in A.P. Moeller (Maersk Sealand); Corporation Board of Directors. Canal executives to materialize, as soon Gerhard Kurz, President and CEO of Currently the Chairman and CEO of as possible, the benefits that can be Seabulk International; Philip A. Codina Group, a privately owned derived from the Cut widening, such as Embiricos, Director of Embiricos company with expertise in the 20% increase in operating capacity, Shipbrokers, Ltd.; Joe Reeder, partner development, construction, by enabling simultaneous, unrestricted in Greenberg Traurig, and former brokerage, management, and transit of two Panamax vessels through Chairman of the Board of Directors of consulting services located in Miami, Gaillard Cut, and also the increased the Panama Canal Commission. Florida, Armando Codina is a flexibility scheduling transits through the William O'Neil, Secretary General of distinguished member of the Panama waterway. the IMO, was re-elected as Chairman Canal Authority Advisory Board. The Advisory Board especially praised of the Advisory Board until 2004. The Florida Trend Magazine the introduction of improvements and The fifth meeting of the Advisory recognized Codina Group as the stricter security measures that were Board followed the Panama Maritime largest commercial developer in the incorporated into the organization's VI Conference, organized by the State of Florida. Armando Codina, the security program immediately after the Panamanian Association of Maritime American Red Cross Humanitarian of September 11 terrorist acts. The Law and the Panama Chamber of the Year 2000, has been recognized Advisory Board encouraged the ACP to Shipping, during which important as the Free Enterpriser of the Year follow closely the IMO meetings and the Canal users and clients praised the 1999 from the Florida Council on corresponding recommendations on country for its notable administration Economic Education; Entrepreneur of terrorist threats and suppression. and operation of the inter-oceanic the Year from the Wharton School; Among other aspects, the Advisory waterway. The members of the and Business Leadership Hall of Fame Board and the Board of Directors of the Advisory Board, leaders of the by Junior Achievement. ACP analyzed the progress of the current maritime community and The Panama Canal Authority staff modernization and improvement international trade, emphasized the joins in congratulating Armando programs, expansion plans, possible need for an effective leadership of the Codina and William O'Neil on the revisions of the tolls structure, and country, in view of its responsibility as above recognitions testimonial of dredging plans for the Pacific entrance to a world maritime center, with the their outstanding leadership qualities. the Canal. world’s largest shipping registry, and A World Class Visitors' Center Data Collection Efforts

In June 2002, the Panama Canal knowledgeable Panama Canal guides The Panama Canal Authority (ACP) is Authority will inaugurate its new and and learn interesting facts about the seeking alternatives to improve the impressive visitors center complex Canal. process of filling out forms needed to located at Miraflores Locks, on the Visitors will also have a choice of comply with data collection required for Canal's Pacific entrance. At a cost of 5.5 grabbing a quick bite at the center's transits through the Panama Canal. million dollars, the complex will be a snack bar or enjoying a full-course Forms such as the Cargo Declaration spectacular four-story structure with meal at the five-star restaurant. The (CD) and the Ship Information and balconies that will provide a magnificent gift shop will offer visitors with Quarantine (SIQD) require from the view of the locks and its surroundings. exclusive Canal souvenirs and vessel Masters and officers to manually The structure will include exhibit areas, a memorabilia to take home to friends enter the necessary information. This conference room, theater with capacity and family, as well as fine jewelry. process is time consuming and prone to for 250 persons, an aquarium, restaurant, Visiting the center - a remarkable area human mistakes, which may translate snack bar, and a gift shop. full of interactive exhibits about the into costly delays. Fascinating multimedia presentations on waterway's past, present, and future - To simplify the procedure, we are Canal history, operations, and will be a must during your next stop in evaluating the feasibility of automating maintenance will be featured at the new Panama. the information exchange processes; theater, while all visitors will continue to therefore, we will be conducting a enjoy live presentations by survey with the purpose of determining customer preferences and the best course of action for establishing a channel of electronic data interchange (EDI) and collection. Customer feedback will enable the ACP to present to Canal customers with an efficient data exchange service that also satisfies users preferences. The ACP will also conduct important customer surveys beginning in late May. Customer cooperation will help ensure that the Panama Canal has an accurate and up-to-date database to communicate with its customers expeditiously.

Canal's New CFO Named The Panama Degree in Economic Engineering from the United States, Canada, China, Canal the University of California (UCLA). Taiwan, and Japan. He also held Authority He also studied Finance at the executive positions in Esso Standard Oil (ACP) has Massachussetts Institute of Co. designated Technology (MIT). He currently teaches Business Strategy Engineer Jose Alberto Aleman Zubieta, ACP and Corporate Finance in the Master's Barrios Ng as Administrator, indicated that "the Degree Programs of the Latin American its new Chief incorporation of Engineer Barrios into University of Science and Technology Financial the ACP management team will (ULACIT) and the University of Officer. This enable the Deputy Administrator, Dr. Louisville - Panama. function was Ricaurte Vasquez M., to assume the temporarily responsibilty of coordinating the carried out by work, studies, and analyses of the the present Canal Expansion Project, which is a Deputy priority issue for the organization." Administrator, Dr. Ricaurte Vasquez M. Engineer Barrios was previously Mr. Barrios holds a degree in Electrical Executive Vice-President of Finance of Engineeering from Louisiana State Cable & Wireless, and Chief Financial University, a Master's Degree in Officer of the Cerveceria Nacional, Electrical Engineering from the Georgia S.A. His experience in international Institute of Technology, and a Master's operations include Central America, Canal Excellence in Operations Praised during Panama Maritime VI

The 6th Panama Maritime World of the Panama Canal to the Republic of vessels to continue with their transit Conference and Exhibition held in Panama. plans despite late arrivals in Canal Panama from February 24 to 27 attracted Mr. O'Neil also spoke about Panama's waters. more than 300 delegates from over 30 Maritime sector, highlighting that the Canal Administrator Alberto Alemán countries from Asia, the Americas, and Panama Canal is a vital artery for the Zubieta assured the audience that Canal Europe. Hosted by the Maritime Law world's economy and that offering employees are working very hard and Association and the Panama Chamber of high quality maritime services to world aiming very high to make the waterway Shipping, the conference allowed shipping, both through the Panama safer, more efficient, and cost-effective Panama to display the country's Canal and its flag registry, is one of to world shipping. He also highlighted investment opportunities in the maritime Panama's major responsibilities. the Canal's commitment to remain as a sector, including the Panama Canal, the cornerstone of global transportation. nation's merchant fleet, and port Speakers at the Canal user's forum The Canal's Panamanian administration developments. praised the Canal performance since its transfer to Panamanian stewardship has been highly effective in providing During the conference, His Excellency in 1999. A representative from solutions to problems related to Mr. William A. O'Neil, Secretary Ecuador stated that all pledges made in shipping, according to business and General of the International Maritime 1999 have been fulfilled - over 80 maritime industry leaders speaking at Organization, commended Panama percent of Ecuador's economy relies the Panama Maritime Conference. Canal Authority executives on their on the Canal, particularly banana and They also pointed out that the Canal's recent presentation on the Panama oil exports. Another Canal client in future expansion plans are in line with Canal given in London regarding transit the container industry pointed out that Panama's goal of becoming a leading safety and risk management at the the industry has filed fewer claims transshipment hub in the region. waterway. He also commended them under Panamanian administration on the high quality service and effective than before, and added that he is very management demonstrated during these satisfied with the new late fee adopted two years of operations after the transfer for the booking system, as it enables

World's Maritime Economists to Meet in Panama The ACP will host the annual meeting accepted 120 different proposals for wide range of universities and and conference of the International papers written by 178 authors and co- international organizations. Association of Maritime Economists authors from 35 countries. For more information, please visit (IAME) from November 13-15, 2002. "We are overwhelmed by the large www.pancanal.com/iame2002. For the first time, the IAME annual number of responses to our request for meeting will be held in Latin America, papers. Although this implies more making it a unique opportunity for Pa- work than expected for the ACP, we nama's maritime community to actively are actually very happy about this participate in this conference. positive feedback," says Rodolfo The conference theme - "Maritime Sabonge, ACP Director of Corporate Economics: Setting the foundations for Planning and Marketing. The ACP is port and shipping policies" - appears proud of the trust that the international particularly appropriate in view of the community of maritime economists maritime activities currently being has bestowed in Panama and its Canal discussed in Panama, including Authority. Last year, the meeting was Panama's National Maritime Strategy held in Hong Kong. and the Panama Canal expansion Other organizations supporting this studies. The topics to be addressed event include the Panama Maritime during the conference include the Authority, Trainmar Panama, the supply and demand for nautical officers, Universidad Latinoamericana de an economic impact analysis, an Ciencias y Tecnología, the Panama organizational approach to port Chamber of Shipping, the City of efficiency, challenges to intermodal Knowledge, and the United Nations chains, hub port locations, IT systems, Economic Commission for Latin economies of scale in shipping, and the America and the Caribbean (ECLAC). safety record maintained by open The international steering committee registries. The Conference's is made up of twenty-four well-known International Steering Committee has maritime economists, representing a Visits by Clients and Users On January 19, 2002, Administrator On February 9, Administrator Alemán at the Panama Maritime VI Conference, Alberto Alemán Zubieta welcomed Zubieta welcomed the President of but could not pass on the opportunity to Honorable Ives Thibault De Silguy, Tarragona Port Authority, Mr. Lluis visit the Panama Canal and to learn first Minister Plenipotentiary of the French Badia Chancho. Also from Spain, hand about the various ongoing Government and member of the Counsel Doctor Javier San José Amézaga from modernization and improvement Committee of the Suez Canal. During the University of Deusto, Bilbao, projects at the waterway. his visit, Mr. De Silguy over flew the visited the Panama Canal. Dr. San José Mr. Steve Forbes, Chief Editor of Forbes Canal surroundings by helicopter, Amézaga was accompanied by Father Magazine and former candidate for the transited through the Gaillard Cut, and Pablo Varela Server, Dean of USMA United States presidency, visited the toured the Miraflores Locks, where the (the Panamanian Catholic university). Miraflores Locks on Tuesday, March 5, Director of Engineering and Projects, A delegation headed by Mr. Don 2002. Mr. Forbes was in Panama as the Agustin Arias, made a presentation on Young, from the U.S. House of special guest of the US-Panama Business the Canal Expansion Project. Representatives Committee on Council (USPA). Canal Administrator visited with Senator Transportation and Infrastructure, Richard Polanco of the State of California visited the Panama Canal on February and his delegation at the Administration 18, 2002. Administrator Alemán Building on January 23, 2002. greeted the delegation at the VISION OF THE ACP Miraflores Locks and hosted a partial On January 29, 2002, Canal WORLD LEADER in services to the transit through Gaillard Cut and Gatun Administrator welcomed a delegation maritime industry and in the Lake on board the "Marlin" to overview headed by Lieutenant General Robert B. sustainable development for the Canal projects. Flowers, US Army Corps of Engineers. conservation of the Canal watershed; Upon arrival at the Miraflores Locks, Mr. Mr. Chris Horrocks, Secretary-general CORNERSTONE of the global Jorge Quijano, Maritime Operations of the International Chamber of transportation system and driving Director, briefed the delegation on canal Shipping visited with Administrator force of Panama's progress and operations issues and Canal expansion Alemán Zubieta and toured the growth; projects. Delegates had the opportunity Miraflores Locks on February 25. Mr. MODEL of excellence, integrity, and to visit the control house. Horrocks was a distinguished speaker transparency, committed to the full development of our work force.

We want your comments A Very Important Customer Recieves Award You are very important to us. We want your comments and suggestions regarding this newsletter and the service Mr. Kazuo Sato, Deputy President of we provide. We would like to serve you Mitsui O.S.K. Lines Ltd. visited the best and convey important information Panama Canal on February 27. During for you and your business through this his visit, he received a complete newsletter. Please let us know your orientation on Canal operations views about this media (format, content, provided both at the Center for Marine topics) and what you would like to see in Traffic Control and the Miraflores Locks. our next edition. If you would rather Mr. Kazuo Sato traveled from Japan to receive it electronically, please send us a Panama to receive - on behalf of Mitsui note with your correct email address to: [email protected] If you need O.S.K. Lines Ltd. - the Panama Maritime additional copies or copies mailed to Excellence Award from Panama's other officials within your corporation, President, Mireya Moscoso. The award please contact us (see box at right for ceremony was held at the Presidential address, fax, and telephone numbers). Palace on February 26 and was attended by Honorable William O'Neil, Secretary-general of the IMO; Jerry for more information Salazar, Administrator of the Panama Corporate Planning and Marketing Maritime Authority and Alberto Alemán Panama Canal Authority Zubieta, the Panama Canal ACP-CP P.O. BOX 025513 Miami FL 33102-5513 Administrator. Tel.: (507) 272-7961 Fax: (507) 272-5916 The Panama Canal Authority is pleased e-mail: [email protected] with this award presented to Mitsui web site: www.pancanal.com O.S.K. Lines Ltd., a world-class enterprise, and one of Panama Canal's SEE THIS NEWSLETTER ON THE ACP WEB SITE AT: main users. www.pancanal.com (then click on “Canal News”)