Full steam ahead for Panama Canal expansion

http://www.gulfnews.com/business/Shipping/10319447.html

Los Angeles Times-Washington Post

Published: June 03, 2009, 23:36

The economic downturn has stalled big construction projects across the globe, but in Panama, smoke-belching steam shovels and dredges work around the clock on what people here call simply "la ampliacion" or the expansion.

As soon as this month, officials will award the principal contract for the $5.25-billion (Dh19.27 billion) expansion of the landmark Panama Canal, a project that will probably alter global shipping patterns and cement this Central American nation's place as a centre of global logistics.

"This is a financial crisis, and there has been a decline in ship traffic, but we are very much on time and on target," said Panama Canal Authority chief executive Alberto Aleman, addressing rumours that the global recession could cause the project to miss its 2014 scheduled completion date.

The authority is on the verge of choosing among three international consortiums, including one led by San Francisco-based Bechtel, to build two sets of locks to accommodate massive container cargo ships. Dubbed post-Panamax, the super-sized vessels are capable of carrying three times more cargo than ships now transiting the canal.

The construction of the two new locks - one at the waterway's Caribbean entrance, the other on the Pacific Ocean - will cost $3 billion or more, take five years to complete and require an army of 5,000 construction workers.

The winning consortium is expected to use the contract's marquee value as one of the world's highest-profile construction endeavours as a calling card to bid on other major infrastructure projects around the globe.

The canal authority maintains the expanded canal will make Panama an even more important transit hub by attracting a bigger share of Asian container freight destined for the eastern US Currently, 70 per cent of that cargo is offloaded at Los Angeles, Long Beach, California, and other North American ports and moved by rail or truck across the country.

"There will be a migration of freight to the canal, the implication being that Los Angeles and Long Beach ports will take the hit," said Mark Page of Drewry Shipping Consultants in London. "The US rail lines will also suffer."

Despite the recession gripping the US and other destination countries, the 9 per cent drop in global container traffic forecast for 2009, and a financing scheme that assumes rising traffic and tolls, Panama's Aleman said the expansion project is moving forward and will not be deterred.

"We factored in a margin of error and we are ahead of the projections," he said.

A new four-mile access channel on the Pacific side is 85 per cent excavated and dredging is under way. The new segment will be much deeper than the existing canal, allowing passage of 402-metre long ships carrying 14,000 cargo containers, compared with maximum 4,500-container ships that now transit the 80-kilometre waterway.

The winning contractor will be awarded a $50 million bonus if the expansion is done by 2014, the 100th anniversary of the Panama Canal's completion by the US Army Corps of Engineers.

The canal expansion project is already having a ripple effect in Southern California. The Los Angeles and Long Beach ports each have launched expansion and streamlining projects valued at hundreds of millions of dollars to improve their competitiveness with an expanded Panama Canal.

"We're using the down time to improve our infrastructure," said Los Angeles port marketing director Mike DiBernardo, referring to his facility's 16 per cent decline in container traffic over the first three months of 2009. The port's plans include the expansion of three terminals and improved wharf access for rail lines.

Long Beach port spokesman Art Wong said his facility has put in motion a 10-year plan to invest $1.6 billion in upgrades of piers and rail access, a response he attributes partly to the tougher competition the port expects from the Panama Canal, as well as from port projects in Mexico and Canada.

But global shipping companies are wary of the rising tolls the canal is charging to fund the expansion. Michael Kristiansen, Latin America operations chief for Danish shipping giant Maersk, said the expanded canal will divert some US freight away from US West Coast ports, but how much will depend on transit times and the impact of the canal's toll hikes.

Another factor is whether US ports on the Eastern Seaboard make changes to accommodate the biggest ships. Ports including Savannah, Georgia, Charleston, South Carolina, and Miami are currently too shallow, and the Bayonne Bridge currently blocks their access to the Newark, New Jersey, port, the most important in the New York area.

As a defensive measure, Maersk and other shipping lines serving the Asia to eastern US routes are taking a close look at westward routes through the Suez Canal. Although Maersk is not yet diverting traffic away from Panama, it plans to open a Suez route for post-Panamax ships in the near future, Kristiansen said.

In addition to the Bechtel-led consortium that includes Japanese partners Taisei Corp and Mitsubishi Corp, two other groups also placed bids in March for the contract. They include teams led by Grupo ACS of Spain and another led by Sacyr Vallehermoso of Spain and Impregilo of Italy.

The locks will employ a "water savings basin" that will allow recycling of 60 per cent of the water used to fill them. Canals in Germany currently use the system, said Jorge de la Guardia, the canal authority's locks project manager.

He said the project so far has not experienced serious set-backs such as those faced by original canal builders. Those included malaria and yellow fever that killed thousands and the difficulties of digging through highly unstable "cockroach shale", which kept sliding into the excavations.

Still, rumours that the canal project might face delays gained momentum when the authority extended the deadline for proposals to March from December and when a fourth bidder, a French-Brazilian consortium, dropped out of the bidding.

"You have to look at the long term," Aleman, of the canal authority, said. "Yes we're in a financial crisis but there have been others in the past. And Panama still has the best route for Asian traffic."

Panama Real Estate: Hopes Run High for the New President

Published on:

Wednesday, June 03, 2009

Written by: Yemi Kifle

Panama's most recent election was full of surprises. For one thing, Ricardo Martinelli, who in his first presidential bid in 2004 only got 5.3 percent of the vote, won the contest. Equally striking is the fact that Mr. Martinelli won 61 percent of the votes, making him the first president in the country's modern history to be elected into office with an absolute majority.

So, who is this man that has caught Panama's ruling party, the PRD (Revolutionary Democratic Party), by complete surprise? The 57 year old Ricardo Martinelli is a conservative tycoon who owns a spectrum of businesses including supermarkets, banks, and agricultural companies, according to Time magazine. The U.S. educated candidate campaigned promising change and voters decided he is the man that can deliver. "The Martinelli victory breaks the Latin Left’s 2009 electoral winning streak of Venezuela, El Salvador, and Ecuador," said Ray Walser, a fellow at the Heritage Foundation, a conservative American think tank.

The fact that the ruling party's candidate had to fight accusations of corruption during the campaign is sure to have helped Martinelli. It probably also made a difference that he was once the chairman of the board of directors at the Panama Canal. The Canal is often cited as an example of the kind of efficiency Panamaians want from their government. Martinelli was also the Minister of Canal Affairs when, in 2006, voters said yes to a $5.25 billion investment into the sector. This canal expansion project, which will be finished in 2014, has generated over 2,000 new jobs with many more expected to follow.

Martinelli and his party, Democratic Change, hold the majority of seats in the National Assembly. This puts him in a position where he can implement his reforms, including budget cuts and business friendly regulations regarding taxes and labor, once he takes office on July 1. If he carries though, international investors, real estate or otherwise, will likely give Panama an even closer look. He is also expected to push for the passing of a bi-lateral trade agreement between the U.S. and Panama. "The average voter in Panama is betting on a dynamic and productive relationship with the U.S. and has demonstrated confidence in continued strong ties between the two nations," said Walser.

Real Estate in Panama City and beyond

The current state of the property market in Panama City is nothing to envy. The city's real estate sector is in crisis. Sales have practically ground to a halt, according to Sam Taliaferro, who was recently interviewed by the New York Times. Mr. Taliaferro, who is the author of the widely read Panama Investor Blog, said he has yet been able to sell properties he bought on speculation. Prices in the capital are also dropping. "In a building in Punta Pacifica that I happen to own property in, they were selling at $2,400 a square meter as of, say, six or eight months ago. Now I can’t sell it at $1,300 a square meter," Taliaferro told the Times. Anyone who is interested in buying in Panama City should have plenty of options and opportunities to negotiate the purchase price. In fact, for those willing to look and haggle with developers, there are a lot of choices. In addition, the $200,000 to $400,000 market that was popular over the past five years has disappeared, according to Mr. Taliaferro. That market, he argues, was highly dependent on the abundant credit conditions that existed before the subprime mortgage crisis. The new market that is now emerging in Panama's real estate sector is one that is made up of well-heeled clients in search of a safe place to park their money.

Looking ahead

Panama's president "happens to own the largest supermarket chain in the country. But he’s also a businessman and has a number of buildings and towers that he has under construction. So he will do everything, obviously, to keep that machine going as long as possible," Taliaferro told the times. In addition, the finishing of the Panama Canal will mean it can process large ships that can carry up to 12,000 20 feet long containers, according to Time magazine. There is a lot of hope that with the help of an efficient and trustworthy government in place, Panama will become the regional Singapore.

Alcatel-Lucent to deploy all IP network for Claro Panama

http://www.telegeography.com/cu/article.php?article_id=28722&email=html

Hot on the heels of its March 2009 commercial launch, Panamanian mobile operator Claro Panama has contracted French-US hardware vendor Alcatel-Lucent to build its all-IP nationwide mobile backhaul network.

Claro claims that the new network will enable it to expand the range of multimedia services it offers, as well as increase the quality of its high speed internet service.

Under the terms of the deal Alca-Lu will provide its IP/MPLS solution, rolling out a full IP backhaul network designed for optimised costs and scalability. Additionally, the vendor will also be responsible for the design, installation and maintenance of the infrastructure.

Commenting on the deal Victor Agnellini president of Alca-Lu’s activities in the Caribbean and Latin American regions said: ‘By converging all services on a full IP mobile network Claro Panama will reduce its transport infrastructure costs while maintaining the reliability and quality of service necessary for delivering premium multimedia services to its mobile users.’

Panama: Graffiti on wheels

http://features.csmonitor.com/globalnews/2009/06/03/panama-graffiti-on-wheels/

A local, slice-of-life story from a Monitor correspondent.

PANAMA CITY – Liriola Miranda, a college statistics professor, steps aboard Mr. Chiriqui, an old school bus blazing with splashes of red and green that give homage to the owner’s home province, Chiriqui, in Panama.

“The buses are an expression of identity,” she says of Panama City’s main transport system – a fleet of US hand-me-downs known affectionately in Panama as “red devils,” both for their hues and their hastiness as they fly down the capital’s roads, honking in search of passengers.

Sometimes the colorful expressions are patriotic, other times it’s something entirely different, Ms. Miranda explains, shaking her head as another “red devil” passes by, decorated with images of bikini-clad women in both back windows.

The “red devils,” painted down to the hubcaps, have turned Panama City’s streets into a whirl of bright reds and oranges and blues. Some are emblazoned with superheroes and saints, pictures of Colombian singer Shakira, or epic scenes of warriors fighting off lions.

Bus décor is a mixture of romanticism and manliness. Many are named after the owner’s girlfriend or wife – but they are also painted with macho slogans that shout “force,” “power,” and “thunder” or instructions like “If you don’t know the rules, I’ll teach them to you.”

But now the transport system, which is both ridiculed as anachronistic and celebrated (like the privately owned taxis called “tap-taps” that crowd Haiti’s capital, Port-au-Prince) as a form of public urban art, faces an uncertain fate.

The winner in Panama’s presidential election early in May, supermarket tycoon and right-leaning Ricardo Martinelli, made modernizing the public transportation system a main campaign pledge – calling for a Panama City subway to alleviate the traffic jams that have become chronic throughout the capital.

Carlos Diaz, a bus driver for 18 years, says he supports a new fleet of buses. “Let the new ones come,” says Mr. Diaz, behind the wheel of Mr. Chiriqui, his friend’s bus. “We’ll paint the new ones!” he says, smiling, before closing his doors and driving off.

For Miranda, it’s a mixed bag. “On one hand it is primitive. Panama is a city with money, and we deserve a good public transportation system,” she says, adding that her cellphone was stolen from her on her commute back from work recently.

Transportation consistently ranked as one of voters’ top concerns, and helped knock out the incumbent party. On the other hand, a new fleet will replace one of the last remaining idiosyncrasies of Panama City – not unlike the way a chain store drives out the local mom-and-pop shop.

“There is nowhere else in the world you can find these [buses],” says Miranda wistfully, but then perks up. “When they get rid of them, I’ll try to buy one as a souvenir,” she says. Or better yet, she brainstorms later, she can transport one to her home province and start a mini-tourist operation. “That way their memory will live on.”

Maryland Port Administration inks deal with Panama Canal Authority

Tuesday, June 2, 2009, 2:32pm EDT

http://www.bizjournals.com/baltimore/stories/2009/06/01/daily28.html

Baltimore Business Journal - by Scott Dance Staff

The Panama Canal Authority has signed an agreement with the Maryland Port Administration to encourage shippers to visit Baltimore and other East Coast ports via the canal.

The deal could bring more business from Asia to Maryland ports. Meanwhile, Port of Baltimore officials are working to prepare the region’s terminals for an uptick in business that could come when the canal is widened in 2014.

“With the current economic climate, it has never been more important to provide optimal customer service, and this agreement will enable us to fully cooperate and work together for continued trade between Latin America, Asia and United States,” canal authority CEO Alberto Alemán Zubieta said in a statement.

The MPA is currently shopping for a private-sector partner to enter a long-term lease at Seagirt Marine Terminal, the state’s main container cargo terminal handler. MPA leaders say a public-private partnership would help boost business at the port. It’s the fastest way to pay for a 50-foot berth needed to accommodate larger ships that will come through the widened canal, MPA Executive Director James J. White has said.

The Port of Baltimore is one of two East Coast ports with a 50-foot channel, according to the MPA.