Panama: Gateway to the Americas
Enterprise Florida Export Development Mission to Panama
By Kevin Brady, International Trade Specialist, FSBDC, Florida Gulf Coast University
Last week I attended the State of Florida Export Trade Mission to Panama with a delegation of 95 people including Florida-based companies, state economic development officers, port officials, and other international trade representatives from various state agencies. Our SBDC in Ft. Myers had 3 clients on the trade mission with a total of 4 SW Florida companies attended. My role throughout was to advise our clients regarding these new distribution opportunities and offer guidance/support. One client, Municipal Sign & Supply Co. from Naples, FL, had participated in the export marketing plan program and had Panama as a recommended market.
The program started with a briefing from the US Embassy regarding the marketplace and opportunities for Florida-based companies. This was delivered by Sr. Commercial Officer, John Coronado of the US Embassy and touched on many key points regarding the Panamanian market. Key points included:
- Strong GDP, moderate inflation, service driven economy w/ population of 3.5 million.
- Logistics hub for the Americas, dollarized economy, established banking
- Stable economy, affinity for US made products
- Best markets include: infrastructure, energy, food, manufactured goods
- Free Trade Zone Colon is largest in Western Hemisphere
- Services account for 80% of businesses, Industry 10%, Agricultural 6%
- Free Trade Agreement with United States since 2012
- More than 30% of imports are from the United States
- United States has seen 20% increase of exports to Panama since FTA implementation
- Public education system is lacking, private programs are OK
- Uneducated workforce cannot fill void for skilled labor
- Country does not have a military, only police. Security could become a possible issue
Free Trade Agreement
- Tariffs dropped 10-15% to 0%
- Strengthens Panama’s goal of being much like Singapore
- Made political statement globally that country is open for business
- Had very smooth implementation
Opportunities for US Companies
- Infrastructure: mass transit, roads, airport projects, bridges
- Ports and railway additions and projects
- Energy: generation and transmission
- Mining: Panama to invest 5.5 billion in copper mining
- Consumer retail: designed to reach all of LATAM thru FTZ
Mr. Coronado’s briefing was followed by a full day of matchmaking meetings scheduled by the US Commercial Service and coordinated by Enterprise Florida. Each of the companies had several appointments and my clients were pleased with the quality of clients they met with throughout the day.
Kevin Brady pictured with Mr. John Coronado, Sr. Commercial Officer, US Embassy Panama
Our evening was completed with a welcome reception hosted by the Chamber of Commerce of Industry and Agriculture of Panama.
The following day started with a trip to the Panama Canal to view the construction of the new Gatun Locks. Upon arrival we were briefed by the Canal Authority regarding the project. Some key takeaways from this meeting included:
- Canal completion scheduled for December 2015 with first ships coming thru in January 2016
- Currently run by Panama, much like when US had control
- Project will expand canal capacity from 4,500 TEU container vessels to 12,000 TEU
- Currently 2/3 of container capacity can’t fit in current canal
- 44% of United States cargo lands in Long Beach, CA port and 60% of cargo goes East of Rockies
- Ancillary projects include Corozal Port, water ferry station, Ro-Ro vessel terminal, LNG facility
- FTZ in Colon is haven for 3PL logistics companies. Gateway to Central & South America
- FTZ mainly used by multinational corp. with consumer goods or by capital equipment suppliers
The effect on future Florida container traffic is unclear at present. Much will depend on steamship schedules and the ability to fill vessels. It does seem logical that some Asia to West Coast container business will head into Florida. If we can secure that traffic and make the destination a Florida port, it will give us an opportunity to distribute along the Eastern Seaboard and beyond.
Construction on new Gatun Locks, Caribbean Sea/Atlantic side of Panama Canal. Slots are for custom gates. Gates are being fabricated in Italy and will travel via barge to Panama for installation. Original locks are on the other side of this construction.
We continued onward to the Pacific side of the Canal to view the Miraflores Locks. The canal itself traverses a total of 80km thru Panama and the project encompasses a number of key components including:
- Deepening of the Pacific and Atlantic entrances
- Widening and deepening of Gatun Lake navigational channel, and deepening of Culebra Cut
- Building of the new locks and water reutilization basins for Atlantic and Pacific
- Raising of Gatun Lake maximum operational level
- A new 6.1 km Pacific access channel
The group toured the Miraflores locks which included a museum dedicated to the building of the Canal, observation decks, and restaurant. We had lunch at the facility and was briefed by a Florida based company operating in Panama. He discussed some of the advantages and challenges facing companies when doing business in the country. His main note was to establish a strong relationship with your partner(s) and to visit the market often.
Shortly after this photo we watched a CMA-CGM container vessel pass thru the locks
Our day was capped off with dinner at the residence of the US Ambassador to Panama, Mr. Jonathan Farrar. Mr. Farrar welcomed us to his home and thanked us for proactively looking at Panama as a key trade partner. We were also joined by staff from the US Embassy and other Panamanian trade diplomats
Kevin Brady with Mr. John Benkert, CEO of CPR Tools, Ft. Myers, FL
The trip was a success in many ways and my clients will benefit greatly from their new distribution opportunities. A couple of the companies stayed for additional days to meet prospective clients at their offices. From a personal perspective, I cannot say enough about the quality of the trade mission and the level of professionalism exhibited by our entire delegation. I was proud to represent the FSBDC, Florida Gulf Coast University, State of Florida, and extend my sincere thanks to our FSBDC State Office and FSBDC- FGCU for the opportunity.