There has been much talk lately about the trade relationship between the U.S. and countries in the Asia-Pacific regions, but did you know that the U.S. also has significant trading partners in Latin America? Panama is already a powerhouse in the region, but as investments in air, sea, rail, and road infrastructure comes online, it is quickly becoming a major western hemisphere hub and a critical part of global supply chains.
That's why, following our 2017 Retail Supply Chain Conference held last week in Orlando, Florida, RILA gathered several retail supply chain, trade, and sourcing executives to head down to the Panama to see the opportunities with the new expanded Panama Canal. On behalf of RILA, I led the delegation, which included nearly a dozen retail executives from the U.S. and Canada. After a few days of benchmarking and networking with our supply chain colleagues, we were ready to get out in the field to see trade in action.
In June 2016, the Panama Canal Authority (ACP) opened its new expanded operations, which is already having an impact on trading patterns around the world. In 2015, 340.8 million tons of shipping passed through the canal. In January, ACP announced that the canal set a new monthly tonnage record of 36.1 million Panama Canal tonnes (PC/UMS) with the transit of 1,260 ships. Forbes magazine even called the expansion a "potential supply chain game-changer."
U.S. trade with Panama continues to grow. The U.S.- Panama Trade Promotion Agreement went into effect in October 2012, and since then, the partnership has provided a significant source of trade revenue and jobs in the U.S. In fact, according to the Office of the United States Trade Representative, the U.S. has a trade surplus with Panama, which is our 47th largest goods trading partner with $8.2 billion in total goods traded during 2015. That means we send more U.S. goods into Panama than they send to us. The U.S. exports goods such as mineral fuels, machinery, beverages, and agricultural products like corn, diary, and wheat to Panama every year, while importing things like seafood, sugar, precious stones, and bananas. And the U.S. Department of Commerce estimates that the U.S. export of goods to Panama supports around 31,000 jobs.
The retail delegation was welcomed in Panama with a reception hosted by the Panama Ports Company and featuring special guests, Panama Minister of Commerce Augusto Arosemena and Colón Free Zone General Manager Surse Pierpoint. The following day included a tour of MIT Logistics Park in Colón City, where footwear, hardware and electronic companies handle their regional distributions. We saw how a stop in Panama can provide companies that source in Asia the opportunity to break-up larger shipments or repackage products into smaller quantities for different Latin American markets. We also saw products being labeled or modified to meet different country-specific requirements.
The trip also included tours of the Agua Clara Locks Observation Center and the Miraflores Visitor Center, offering views of the Atlantic and Pacific sides of the canal, respectively. It was important for our retail executives to see the operations in real time as the savings in both efficiency and investments in sustainability are measurable.
On the final day of the Panama trip, retail supply chain executives visited Galores Cold Storage, which distributes cargo to Latin America and U.S. markets, including for U.S. fast food brands. We saw U.S. pork and apples ready to be shipped out, but also regional products preparing for delivery. We also toured the Panama-Pacifico Special Economic Area, where a U.S. manufacturer performs light manufacturing of 16 sandpaper product types exported to the U.S. We finished the final day visiting the Port of Balboa installations, hosted by the Panama Ports Company, a subsidiary of Hutchinson Ports, and the Panama Canal Administrator's residence.
The group learned a few interesting facts during their visit to the Panama Canal:
- It takes six to eight hours to pass through the Panama Canal.
- Princess Cruises' Caribbean Princess will operate the first passenger cruise ship to sail through the canal later this year.
- The expanded locks have water basins are filled and emptied by gravity, without the use of pumps, allowing 60 percent of the water to be reused in each transit.
- The Panama Canal is designated as one of the seven wonders of the world by the American Society of Civil Engineers.
- More than 14,000 vessels pass through the canal each year, ranging in size from the Neopanamax and Panamax size vessels to smaller seacrafts.
- New Panama Canal locks are 427 meters long and 55 meters wide, the size of four football fields.
- The Panama Canal represents 5 percent of world maritime commerce.
I would like to thank the Panama Canal Authority for their partnership with RILA to host an educational trip for our retail supply chain executives.
For more information or to learn more about how to get involved with RILA's community of retail supply chain executives, contact Jess Dankert at email@example.com or Hun Quach, vice president, international trade, at firstname.lastname@example.org. For more updates from the Panama trip and the important work retailers are doing to improve sourcing operations, follow Hun Quach on Twitter @RILA_Hun.