Friday , 24 January 2020
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The government’s proposed mega-port planned for the Pacific entrance to the Panama Canal at Palo Seco/Farfan is progressing, albeit slowly.

Mega-terminal pre-qualification

The preliminary design for the facility is for it to occupy up to 113 ha and comprise 1,600 m of berths with 15 m depth alongside and a throughput capacity of 2.4m teu. The terminal will be state-of-the-art and capable of handling the largest generation of post-Panamax vessels in today’s order book and will provide Panama with additional capacity to capture increasing transhipment demand.

Likely to cost in the order of US$600m for the initial stage, the project is being handled by the Office of the President of Panama in conjunction with the Panama Maritime Authority and the Panama Canal Authority (ACP) as part of the country’s maritime strategy.

The project has been controversial from day one, with one argument against the proposal is that there will not be sufficient volumes for another mega transhipment terminal in Panama, particularly when the PPC/Cristobal/MIT developments are completed. It is argued that there is not, nor will there be for many years, sufficient cargo on the west coast of South and Central America to justify two mega-terminals at the Pacific end of the of Panama Canal, namely Balboa with 4.5 teu capacity and the proposed new mega-terminal with 2.4m teu capacity.

Being a regional transhipment facility, Panama already faces tremendous competitive pressures from the direct volumes discharged in Latin America from Far East direct services. As a result, at least some of the operators are against the proposed mega-terminal, not least because it will not introduce new work and it will need to try to attract the volumes currently handled by the existing terminal facilities leading to rate reductions and a consequential debilitating effect.

It was then argued that the awarding of a concession was illegal as it conflicted with the original concessions to existing operators and subsequent pending legal claims are among the reasons for an apparent lack of interest in the project by international operators.

Although several international port operators including NYK, SSA Marine, APM Terminals, DP World, PSA International, COSCO and MTC Holdings are said to have shown showed an initial interest in participating, most are no longer in the running having given up or having been excluded for a variety of reasons.

To date only COSCO and MTC Holdings have continued to show any interest and having just been declared successful pre-qualifying bidders, it is now believed that the next logical step would be the formation of a COSCO/MIT joint venture for the project, although little further progress is likely until the legal wrangling has been overcome.