PANAMA - Transport
CEO, Hutchison Ports Holding Panama
Bio
Aitor Ibarreche is a Mechanical and Electrical Engineer graduated from Universidad Iberoamericana, México. Additionally, he holds an MBA and MSPM from the University of Miami. He has over 18 years of experience in the port industry, 13 of which have been with HPH Group, where he began his career in 2001 with HPH México. Since then, he has held several key positions including Executive Director and Commercial Director, where he created, developed, and successfully implemented a great number of commercial projects that are now running with remarkable and effective results. Aside from his successful career, he supports teamwork and enhances the talent and values of his employees and co-workers.
We certainly believe that we have done nothing less than open a gateway for container transport on the Pacific side of the Panama Canal. We are also pleased to be the largest container operator in the country, operating more than 3.6 million TEUs in total in 2013, and directly employing over 4,000 people. Over the past 17 years we have invested over $800 million, and in 2014 we are seeing growth rates of 5% to 7%.
The Panama Canal is a prime tool that the shipping industry has to its advantage. The connectivity that it provides for the trans-Pacific and trans-Atlantic trades, connecting the east and west coast of the US, as well as the east and west coast of South and Central America, is a tremendous asset. Most of the world was experiencing port privatization 17 years ago. Hutchison Ports Holding (HPH), the largest container operator in the world, saw the opportunity to invest in Panama since the government was undergoing the privatization process of a port concession, which represented an opportunity to develop container terminals at both ends of the canal. Today, HPH Panama is considered the most important port operator in the country. With operations on both ends of the canal, a major initiative for the company is to further assist in this connectivity in order to develop a more efficient manner for crossing the canal. This, in turn, will reinforce the process to logistically make Panama the best network in the world.
Our operations in Panama, at the Port of Balboa and the Port of Cristobal, are both equally important for us. We envision a system that utilizes diverse modes of transportation, such as barges, trucks, and rail to provide a high-value service structure to fulfil our client’s needs. The Hutchison portfolio is very solid with an extensive history in Asia, where some of the largest ports are located. The company operates 52 ports in over 26 countries and strategic cities such as Rotterdam, Felixstowe, and Barcelona; nonetheless, Panama has two of the most important ports for the group.
We are currently reengineering our container operations, which represent a solid business with room for further development. We will therefore have greater capacities and new licensing ideas, similar to what we have implemented in other countries, such as automation; between the two ports we handle about 3.5 million TEUs per year, but have the capacity to reach a total of 6.5 million TEUs per year. We are also focusing greater efforts in areas such as automobiles, general cargo, agricultural grain, and minerals. We have considerable capacity available in the Atlantic, an area that has not been fully developed, and are currently working on a master plan to do so.
The trans-Pacific route is the most important, connecting Asia to the west and east coast of South America. On the other side, there is the trans-Atlantic route from Europe to the east coast of North and South America. A smaller portion is destined for the Caribbean and the west coast of South America.
Containers depend extensively on trade, which we expect to steadily grow. For example, 2009 and 2011 were years where global trade dropped and immediately impacted shipping lines. Survival in the shipping industry at that time depended on reduced costs, which has consequently resulted in the rapid increase of ship sizes over recent years. We invested in cranes that normally would last for 15 years, but were obsolete within five years due to the fact that ship sizes grew so rapidly. Although we do not see triple-E class vessels coming through Panama, we will eventually see larger vessels coming through such as 12,000 to 15,000 TEUs in capacity, which requires additional infrastructure. Approximately 17 years ago when we started, the largest vessel was around 5,000 TEUs, but today are closer to 20,000 TEUs. Meanwhile, the longest ships were less than 200 meters, and have now been replaced by those of 360 meters in length. Ships of that magnitude affect your business strategy and force you to make higher investments.
For Panama it will undoubtedly be beneficial, although for us it will have a limited benefit. This alliance is designed to increase and foster international trade. For our ports, the majority of business involves transhipments, with only 5% of local cargo going through Panama. Global trade is much more important for our business, where China plays a very important role.
It will have a major impact because of the increased container (trade) volume. Although our ports already have the capacity to handle vessels of up to 15,000 TEUs, it is very probable that a good amount of these vessels, which nowadays aren’t able to cross the canal, will eventually be able to cross, reducing the amount of containers operated in the ports.
In Panama we have around five competitors in the country, which results in quite a competitive market. Additionally, shipping lines can vary transhipment operations very easily.
The port infrastructure in Panama is excellent. We are prepared to receive vessels of 15,000 TEUs and our ports are equipped with the newest Super Post-Panamax cranes on both sides of the canal. The current capacity in Panama is over 10 million TEUs and the total throughput in the country is approximately 7 million containers.
It is an excellent time for Panama to assume the role of logistics hub for the Americas, if not the world. The high demand and traffic of vessels and aircraft gives Panama an incredible opportunity to literally connect your business with any part of the world.
© The Business Year – July 2014
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