Sea Sure


Panama's port infrastructure has long been a strength, and new investment aimed at increasing efficiency through technological innovation should reap long-term rewards.

Since the opening of the Panama Canal in 1914, Panama has been one of the world’s most important locations for maritime trade. The canal’s status as the connector between the East and the West placed Panama at the forefront of the industry for the 20th century, making it a central location for the growth of the global shipping industry and the new logistical connections that formed as a globalized world looked to bring new products to new markets. It is no surprise, then, that Panama’s port infrastructure ranks among the best in the world. Decades of experience have made the sector one of the cornerstones of the Panamanian economy, and the government is working hard to ensure that it will continue to remain so for years to come. The expansion of the Panama Canal was the flagship project, but billions of dollars of investment in the surrounding container ports speak to the nationwide commitment to infrastructure development that will keep Panama’s maritime industry a global leader.

While the canal may get all the attention, Panama’s status as a hub for the global shipping industry has resulted in the development of a robust port network equipped to handle both container and general cargo. Through a combination of private, state, and concessionaire ports on both the Atlantic and Pacific coasts, Panama firms service the many shipping companies that come through the country. While there are dozens of active ports, a handful of major ones located close to the canal handle the bulk of container traffic. Manzanillo International Terminal (MIT), located at a former US naval base, is the largest port on the Atlantic Coast. One of the most technologically advanced ports in the region, it handles containers, general cargo, and Ro-Ro cargo at a facility that has a logistical park and access to ground, railroad, and air transportation services. In 2015 it moved 1.97 million Twenty-Foot Equivalent Units (TEUs), down 4.8% from 2014 but still the second-largest volume in the nation’s ports.

Privately operated through a concession granted through the Panamanian government, MIT has become a cornerstone of the largest transshipment port in Latin America thanks to its well-maintained infrastructure. With storage capacity of over 66,000 TEUs, its size and ability to transport goods easily to and from the Colón Free Zone and rail have made it a leader in Latin American shipping. Through its actions, MIT has become a leader in Panama’s maritime industry both as an example of the logistical expertise needed to grow and as an example of the social role ports can play in the nation. Moving forward, its challenge will be to adapt to the conditions created by the expansion of the canal through smart investment and optimization of its labor supply. Juan Carlos Croston, MIT’s Vice President of Marketing and Corporate Affairs, believes that technology is key to lowering costs: “The trick is to create capacity in a way that can match demand without spending a large amount of money.” “What we have done in many cases in our terminal is to use the same footprint that we have and add more technology…We seek to do a little bit through more advanced technology equipment to lower costs.”

On the Pacific side of the canal, Balboa is one of the single-largest ports in Latin America, handling 3.1 million TEUs in 2015. Privately operated, its status as the only fully operating container terminal on the western side gives it significant importance in the Panamanian shipping industry, and its modern and flexible construction allows it to handle all types of cargo. Like MIT, Balboa’s operators have taken care to invest heavily in upgrading infrastructure, allowing it to meet the needs of the modern shipping industry. Paul Wallace, Executive President of port operator Panama Ports Company (PPC), notes that Balboa installed the capacity needed to accommodate Post-Panamax ships well before the expansion of the canal. “While ports in the US are all scrambling at the moment to be able to handle large vessels, PPC is already there,” Wallace told TBY. “We were perceptive and prudent enough to invest early and have the capability to take the world’s biggest vessels, even though these cannot go through the canal. We can already take 18,000-20,000 TEU vessels at PPC. We have the water depth, the outreach on our cranes, and the infrastructure and yard capacity to handle the vessels of tomorrow.”

Though well established by now, new arrivals on the maritime logistics scene have kept competition high and encouraged new infrastructure investment. Singapore-based PSA International, the world’s largest port operator, opened a port terminal on the Pacific side of the canal in 2010. PSA Panama began container operations in 2012, and has since grown to handle more than 157,000 TEUs in 2015. Though well below the volume of Balboa, PSA’s organizational size and logistical experience have already made it an attractive destination for East Asian firms looking for another shipping hub on Panama’s western coast.

Panama’s government is also using its maritime experience and international connections to construct a new port on the Pacific primarily for cruises. With the expansion of the canal, government officials expect more than 230 cruise ships to transit the new wider locks. Long a key source of tourism, cruise passenger numbers dropped from 182,000 in the first nine months of 2014 to 45,000 in the same time frame in 2015 and 32,000 in 2016 due in part to fewer routes to Panama. Government officials are confident that improved infrastructure for cruise ships and the expanded canal will return some of this lost tourism. To ensure that the new port is a success, Panamanian officials have been in contact with the Port of Hamburg, Germany’s largest port and a major European cruise ship hub. “We signed a cooperation agreement with [the Port of Hamburg] to emulate its operations and facilitate the technical capabilities and regulations for the successful operation of this new maritime port in Amador,” Minister of Maritime Affairs Jorge Barakat Pitty told TBY. Connections such as these instill confidence in cruise industry operators and should help maintain the strength of this key tourism industry.

Moving forward, the maritime sector is not without its challenges in the short run—shifting demand patterns and a lack of support infrastructure have kept volume numbers from rising as quickly as expected after the expansion of the canal. Yet through it all port infrastructure remains a fundamental strength, as evidenced by the World Economic Forum ranking Panama’s ports seventh in the world in its 2015 global competitiveness index. “Panama has proven its technical capability and strength as an international service platform,” Pitty told TBY, and these same strengths should keep the maritime industry a pillar of the Panamanian economy for years to come.

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