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PANAMA CANAL EXPANSION SUBJECT OF INTERNATIONAL MARITIME CONFERENCE

Date: 07-FEB-2007

CANAL EXECUTIVES BRIEF INDUSTRY ON EXPANSION AND OPPORTUNITIES AT
PANAMA MARITIME VIII WORLD CONFERENCE

EVENT COMES ON THE HEELS OF CANAL 
TOLLS RESTRUCTURING PROPOSAL

PANAMA CITY, Panama, February 07, 2007 – Panama Canal Authority (ACP) executives briefed maritime industry leaders on the state of the Panama Canal at the Panama Maritime VIII World Conference and Exhibition, held in Panama City, Panama, February 4-7, 2007. Overwhelmingly, the state of the Canal is excellent – with the expansion project at its initial stages, demand for the Canal at unprecedented levels and the value of the Canal and its “All-Water Route” (the route from Asia to the U.S. East Coast via the Panama Canal) at an all-time high.  

Canal Administrator/CEO Alberto Alemán Zubieta navigated participants through some key decisions the ACP has made since the handover from U.S. administration. In particular, he underscored the benefits of the ACP’s decision to run the Canal like a business. Today, the ACP looks at its “users” as customers who are different with different needs. In 2002, the ACP segmented the market into eight key segments and began offering unique products and services for those markets. Moreover, he outlined capital investments made to enhance reliability and customer service at the Canal.  

Mr. Alemán focused on the need for expansion because the Canal is nearing maximum capacity. He said that during the expansion project there will be no interruption of service with the existing Canal and that the ACP will use some of the same construction areas as the Americans did in 1939, when expansion was stopped because of World War II. "The project will double capacity, allow post-Panamax ships and will be environmentally sound, using state-of-the-art water-saving basins," Mr. Alemán stated.

The conference comes on the heels of the ACP’s decision to increase prices to customers – an effort to move to a charge that reflects the true value of the service and the route the Canal provides. The ACP did extensive research and modeling and proposed an average increase of 10 percent per year for three years.

Globalization has brought many changes to the transportation industry. In particular, it has increased the value of critical elements in the global supply chain. As trade and technology environments change, the Canal must adapt. Keeping and improving service levels in alignment with customer demands, in a dynamic environment, can only be accomplished if the Canal maintains adequate revenue streams.  

Of note, Panama Canal tolls have not increased in non-container segments – approximately 50 percent of Canal traffic – since 2002. Just accounting for inflation over the past four years would call for a 10 percent increase in tolls; over seven years, approximately a 16 percent increase. The ACP’s proposal follows a rare process in the industry of a 35-day comment period and will culminate in a public hearing.

In 2004, the ACP adjusted prices for containers, closing a loophole to account for containers transported on-deck. When the Canal first opened in 1914, Canal prices were $1.20 per laden ton of cargo; today they are less than $3.00 per laden ton of cargo. 

Other key topics discussed during the conference include the impact of expansion on global trade and Panamanian commerce, trends in port logistics and the impact of expansion on worldwide port infrastructure. International Maritime Organization Secretary-General Efthimios E. Mitropoulos was featured as a keynote speaker. At a press conference, he stressed the three maritime mandates of the IMO: safety, security and environment. He also heartily endorsed expansion, calling it “the right decision for Panama and the industry.”  

Panamanian Vice President and Minister of Foreign Affairs Samuel Lewis Navarro addressed attendees during the opening ceremony. Additional conference presenters from the ACP included: Director of Maritime Operations Jorge Quijano, Minister for Canal Affairs Dr. Ricaurte Vásquez Morales and Finance Department Director José Barrios Ng. 

"Panama is on its way to becoming the logistics and maritime hub of the Americas," said Mr. Alemán, who delivered the first ACP presentation and underscored the great position that Panama is in currently.  

Considered one of the main maritime events in Latin America and the Caribbean since 1991, the Panama Maritime VIII World Conference and Exhibition provides attendees an opportunity to discuss the latest trends and issues in maritime and port management. Organized by the Panamanian Maritime Law Association, the Panama Chamber of Shipping, the ACP and the Panama Maritime Authority, the event attracts more than 100 companies and other representatives from the maritime sector.

About the Panama Canal Authority (ACP)
The ACP is the autonomous agency of the Government of Panama in charge of managing, operating and maintaining the Panama Canal. The operation of the ACP is based on its organic law and the regulations approved by its Board of Directors. For more information, please refer to the ACP’s Web site: www.pancanal.com.