A Setback for the Corozal Port Project

APM-Terminals-Corozal

Image and source article thanks to La Prensa.

Many companies have been keenly interested in participating in the bidding to build and operate the port of Corozal on the Pacific side, and APM Terminals, a business unit independent of Maersk Group based in Denmark, confirmed that it expects the convening of the Panama Canal Authority (ACP) to present its proposal. APM Terminals, based in the Netherlands, is one of the leading port operators in the world with a presence in many of the port terminals of Europe.The Panama Canal administration (ACP) had announced that possibly in April it would open bidding for the Corozal port container terminal, thus becoming the third most important Panamanian port on the Pacific side. The project, however, experienced a delay when Panama’s National Assembly did not approve the bill equating tax rights of this terminal with the other operators last week.

It is estimated that the port terminal will require an investment of between $USD 600 and $USD 625 million, which will be provided by the winner of the award for a period of 20 years. The ACP expects to receive through this award about $USD 25 million which will further generate $USD 75 million dollars in income from the transit of ships that would occur with the new services.

In an interview with Joe Nielsen, CEO of APM Terminals for Latin America, about the expectations he has regarding this port and other aspects of the industry, he offered the following:

It was a year ago that Soren Skou, CEO of Maersk Line, confirmed APM’s interest in developing the port of Corozal. He confirmed that they still maintain an interest. “We know that there is a law that needs to be reviewed by the National Assembly of Panama, so we are aware of how this debate develops. We are also waiting for the ACP to disclose the exact terms and conditions of the project.

In general, however, we see a need in the market for container terminals in Corozal. We also believe that we have a role to play in its success, as the construction and operation of container terminals in new facilities is one of our core competencies.

We recognize Panama as a key player in the industry of regional and global logistics. The project of a port in Corozal ensures that Panama can count on another offering of competitive services to industry, consolidating its role in the global supply chain. APM Terminals has comprehensive global experience and the operational and technological knowledge which is certainly an added value to the project. We are confident that in Corozal we would be able to develop a truly world class port.”

In response to the question of what elements makes the project attractive for his company he said, “The project is attractive because there is a crucial market demand for competitiveness. This project is also very relevant to the mission of our company, as defined in building and operating the infrastructure that moves worldwide trade. Finally, the project fits our core competencies, which include the development of greenfield terminals and operations to meet the needs of all stakeholders, including customers, governments, communities and shareholders.”

In the Pacific sector of Latin America there are not many ports. Is the investment required really necessary?

“We believe that greater investment on the Pacific coast of Latin America is necessary because the capacity of the terminals are not sufficient to meet market needs. Imports and exports from Latin America to Asia will grow, as trade with the United States, Europe and elsewhere. Vessels are now bigger and it is necessary to create new infrastructure connecting the ports to major sources of consumption and production. The OECD estimated $USD 11 trillion dollars are required in global infrastructure investment by 2030, while Standard and Poor estimates for Latin America for the next five years would require $USD 336 billion.”

When asked what the expected impact of the Panama Canal expansion would be in the maritime sector, Skou said, “The Panama Canal expansion is a reflection of a trend with larger vessels already operating in the industry. The challenge for the Panama Canal and terminal operators is to build the capacity to accommodate larger vessels to operate efficiently and to provide world-class service that requires trade infrastructure. If we work together to achieve this, the impact will be continuous growth in the global supply chain.”

There is an ongoing tendency to build larger ships; this will continue, and the bigger boats are becoming a greater challenge for port terminals. Carriers appear to have settled around 18,000 TEU-21,000 TEU as the largest size yet, but the tendency to expect more and more of these large vessels continues. Each month there is an announcement that new orders have been placed. Maersk, MSC, CMA CGM, China Shipping Container Line, United Arab Shipping Co. and Evergreen all have, or will soon have, ships with a capacity of over 18,000 TEU. In Latin America the expectation is for the ship size to increase as boats are connected in the supply chain. The challenge for port terminals is to provide an efficient and thoroughly competitive supply chain service.

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