Transport

Plain Sailing

Transport

World-famous for its inter-ocean channel, Panama is a key global transport hub, but its connections are not limited to the high seas.

FLYING COLORS

Panama’s aviation sector plays a significant role in the economy, employing around 40,000 people and contributing over 4% to GDP. The country has a large number of airports and airfields, the majority of which began life as US Air Force bases established to protect the strategic canal. However, less than half of those that remain are paved. Some have been converted into commercial and passenger airports, with Bocas del Toro, David, Rio Hato, and Albrook international airports among some of the more prominent after the capital’s principal gateway.

Inaugurated in 1947, Tocumen International is currently the busiest airport in Central America. In 2013, over 7 million passengers passed through the facility, located just 15 miles from Panama City. This figure represented an increase of approximately 750,000 travelers, and the traffic continues to grow. In the first seven months of 2014, Tocumen registered 4,881,985 passengers, an increase of 9.6% over the 4,454,529 of the same period in 2013. With 76 destinations connecting Panama with over 30 countries in America and Europe, the airport is a key international transit point and portal for the region.

Its importance in this regard has not gone unrecognized internationally, with the World Travel Award for Mexico and Central America’s Leading Airport being proudly received by Tocumen International in August 2014. Approximately 23,000 daily passengers utilize the most popular routes to Bogotá, Miami, San José, Caracas, and Cancún, as well as the many other cities served by the commercial airlines which operate from Panama City.

Copa Airlines is the airport’s primary operator, awarded Best Airline in South America by Flightstats in 2013, and Best Airline in Central America in 2012 and 2013 by the World Airport Awards. Its impressive route system, which connects Panama with most countries in North, South, and Central America, as well as the Caribbean, has allowed it to gain prominence in the hemisphere since it began expanding internationally in 1980. A steady growth in routes and passengers, along with the establishment of a strategic alliance with Continental Airlines in 1998, preceded its listing on the New York Stock Exchange in 2005. The total number of destinations stands at 69 in 2014, with Copa moving around 11 million passengers during the previous year. The rise of this airline is inextricably linked with the growth in importance of Tocumen and its reputation as the Hub of the Americas. “Panama is the most connected country in Latin America relative to its GDP,” explained CEO Perdo O. Heilbron, in conversation with TBY. “This unique connectivity is one of the main reasons why Panama has become a major business hub, tourism destination, and home for many multinational companies that have established their regional offices here.”

A series of significant projects to renovate and expand the airport’s facilities began in 2006, establishing dedicated cargo terminals, improving baggage handling systems, increasing the number of gates to 40, and designating thousands of square feet to duty-free commercial zones. A new phase of construction at the airport, begun in February 2013, represents an investment of almost $700 million. The new South Terminal is expected to increase the airport’s capacity to 18 million by 2016, and will add hotels and additional commercial space, bringing the total area to 141,000 sqm with 54 operating gates.

Total passenger figures for the country were 8,625,957 in 2013, according to World Bank data, which hints at the importance of other regional airports to the country’s infrastructure. David International Airport and Rio Hato International Airport are two other key points of entry, with the former serving domestic flights and also neighboring Costa Rica, and the latter having reopened in 2013 to serve the touristic Pacific beach region of Coclé.

HOT ASPHALT

A number of major road infrastructure projects have been underway in recent years, linking key regions and port and airport facilities to urban, industrial, and agricultural areas. Panama’s highways represent a comparatively robust road network for Central America. One of the most interesting sections of the international Pan-American Highway runs from Panama’s western border with Costa Rica right across the country to the Darién Gap, the Colombian border region. Its widening has increased safety and reduced accidents and congestion.

The extension of the Panamá-Colón Highway has been a key undertaking, focusing on relieving crowding on Colón’s road network to ease access to cargo vehicles on the trans-isthmian highway. The resulting reduction in transit time between the Colón Free Zone and Panama City’s Pacific Port of Balboa and Tocumen International Airport will greatly improve the logistics potential of the country.

Other projects of note include the North Corridor highway to Tocumen International, which again simplifies access for cargo moving south from Colón, but also opens up a more efficient route for agricultural produce from the west of the country, going some way to dealing with traffic problems on Panama City’s South Corridor. These investments also open up labor pools in areas outside the capital, as economic opportunities increase in the city. Additional connections between parts of the capital and stronger links to bridges across the canal, such as the Centennial Bridge, will reduce congestion on the iconic Bridge of the Americas. An extension and widening of the South Corridor is estimated to cost over $500 million, and was contracted to the Mexican firm Ingenieros Civiles Asociados (ICA) in 4Q2013.

TRACKING PROGRESS

Unlike in neighboring countries, Panama does not have a large railway network, though the one line that runs from the Caribbean to the Pacific has an interesting past. The Panama Canal Railway runs alongside the famous waterway, and was begun over 150 years ago. Its existence was crucial to the construction of the canal, and it served as an efficient method of crossing the isthmus before the channel was dug in the early 20th century.

The railway is still in operation, and was privatized and sold to a joint venture between Kansas City Southern and Mi-Jack Products in 1998. Now operated by their Panama Canal Railway Company for a 50-year period, $80 million of investment by the firm guarantees a strong inter-modal cargo link between the ports of Colón and those of Panama City, while a popular tourist service allows visitors to pass from ocean to ocean through the jungle. An important development in recent years was the construction of Central America’s first metro system in the capital, at a cost of approximately $1.8 billion. The first line of the project, completed in 2Q2014, has a capacity of up to 170,000 commuters per day.

IMPORT/EXPORT

The Panamanian maritime system is well developed thanks to the canal, but the country fell to second place in Latin America in terms of containers moved in 2013, with an overall figure of over 6.5 million TEUs. In total, the Port of Balboa, on the Pacific end of the canal, moved over 3 million TEUs, while the ports of Cristobal, Manzanillo International Terminal (MIT), and Colón Container Terminal (CCT), all on the Caribbean coast, recorded combined movements of approximately 3.5 million TEUs. These latter ports serve the Colón Free Trade Zone, the second largest such facility in the world. On the whole, these numbers reflected a significant drop in relation to the 6.9 million TEUs handled in 2012, ostensibly the result of strikes and unpaid debts, which could be more than $1 billion, from Venezuelan businesses following the devaluation of the Bolivar as a result of political unrest.

Though this continues to represent a bilateral issue, container movements in the first half of 2014 grew by 1.4% in relation to the same period in 2013, showing renewed promise for the sector. The highly anticipated expansion of the Panama Canal will once again breathe life into Panamanian shipping when it is completed. Since 2008, the ports of Balboa and Cristobal have received heavy investment worth around $1 billion, while MIT aims to invest a further $200 million to prepare for the new traffic.

A car ferry service to Colombia, which would pass around the Darién Gap (impassable for vehicles), has been in the works for several years. However, progress on the route continues to be stalled by bureaucratic hurdles and permit issues.

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