Panama looks to DP World as canal expansion is completed

The last four gates from the sixteen to be used in the Panama Canal expansion arrive in Colon, 80km from Panama City, on November 12, 2014. Rodrigo Arangua / AFP

The ports operator DP World is in talks with Panama ahead of the completion of the country’s expansion of its key trade conduit, the Panama Canal.

During a visit to Dubai this week, Panama officials including Isabel Saint Malo, the vice president and foreign minister, continued discussions with DP World and Emirates Airline that began with the country’s prior government.

The discussions centred on the prospect of Panama building up infrastructure to meet an expected increase in trade volumes, thanks to the widened canal.

“Panama has several port operations but we have the potential to build several more,” Ms Saint Malo said. “And the model DP World has is a model that Panama is interested in.

There is interest on their part and there is interest on our part about their model. So, there are different areas where the two can cooperate in terms of building the facilities, in terms of running the facilities [among other areas].”

Ms Saint Malo is part of a government inaugurated in July.

DP World manages about 65 marine terminals around the world, including in Latin America, where it has operations in Argentina, the Dominican Republic and Peru.

The expanded Panama Canal, expected to start operations in January of 2016, will help to reduce the cost of trade as it will allow larger vessels with a capacity of 13,500 standard container units to pass through the waterway. The current capacity is for 5,000-unit vessels.

“That is enough for LNG transport which, currently, we do not have the capacity for, and will help commerce in general,” said Ms Saint Malo. “In terms of trade, cost is critical and larger vessels give the opportunity of diminishing the transportation cost of goods.”

The deadline for completing the US$5.25 billion expansion has already been delayed several times. The original target date for completion was last month.

The century-old 77-km canal, which links the Atlantic and Pacific oceans, has been losing ground to the Suez Canal on trade between Asia and the North American east coast amid a glut of larger container vessels that cannot pass through it.

The average size of ships along the Suez is 7,500 units, versus 4,500 units on the Panama Canal. According to Drewry shipping consultants, this trend could be reversed after the Panama waterway’s expansion is completed.

Trade between Panama and the UAE is built around business between the free zones of Panama and Jebel Ali.

Panamanian officials expects two-way trade would grow if direct flights were to begin between the two countries.

According to the UAE Ministry of Economy, Panama exported goods worth Dh3.5 million to the UAE last year, up from Dh2.9m the previous year, but imported only Dh2.5m last year, a drop from Dh4.3m.

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