Supply Chain Frontiers issue #33. Read all articles in this issue.
A major logistics hub is taking shape in Latin America. Panama has embarked upon a far-reaching development plan, and is widening its famous canal to keep pace with the growth in international trade. Students from a new logistics program offered by the Center for Latin American Logistics Innovation (CLI) recently visited Panama to learn about its expansion plans, the implications for global supply chains, and the country’s future educational and research needs.
The 14 students are enrolled in the recently introduced Graduate Certificate in Logistics and Supply Chain Management (GC-LOG) program (see “Unique Certificate Program from CLI” news item). Hosted by the logistics research and education organization LOGyCA in Bogotá, Colombia, the program was jointly developed by CLI and the MIT Center for Transportation & Logistics (MIT CTL).
For the GC-LOG class of 2009–10, the goal of the visit was twofold: to gain firsthand experience through one of the world’s most fascinating engineering projects and to understand Panama’s logistics potential. The students also had the opportunity to consider these developments in light of their organizations’ logistics strategies.
After 86 years under United States government administration, responsibility for the management of the canal was returned to the Panamanians in 1999. Up until that time, the canal’s main customer had been the United States, initially for military purposes and later for transporting goods from East Asia to the Eastern United States.
To decide on the best way of optimizing the competitive advantages offered by the canal — 5 percent of global trade passes through the trade artery — 23 World Bank consultants participated in the creation of a strategic plan that defined the guidelines for the Panamanian government to follow over the next 40 years. The plan was approved in 2007 and rolled out in 2008.
The aim of the Panama Pacifico project is to develop close to 1,400 hectares of land west of the Panama Canal, generate 40,000 jobs, and build 20,000 housing units within the framework of a special economic zone. Panama wants to establish the zone as a major business hub for Latin America.
Another large-scale project to expand the Panama Canal is under way in the country as well. In the words of Nicolas Solano, canal fleet administrator, “freight growth will exceed the canal’s capacity by 2012. Although the current financial crisis has slightly delayed freight growth, the canal must be ready to face the new challenges of global trade.”
The expansion project involves the construction of a set of locks at the canal’s entry point on the Pacific Ocean. The design of the locks will be similar to that of existing structures (Miraflores, Pedro Miguel, and Gatun), which raise vessels above sea level so they can pass through the waterway. To allow for the passage of larger vessels, the new locks will be wider and deeper than the current ones.
Expected to generate close to 7,000 jobs, work on the canal locks should be completed by 2014. Such is the magnitude of the project that it will be necessary to remove close to 74 percent of what was originally excavated to build the waterway in 1904.
Another interesting feature of the project is that citizens approved it in a national referendum in 2006. Since Panamanians decided what they wanted to do with the reverted area that is being developed, strong social and environmental controls have been built into the project.
The Panamanian government wants to turn the country into a regional logistics center in much the same way that Singapore functions as a hub in Asia. Realizing such an ambitious agenda requires substantial work to develop the required skills in key areas such as logistics and transportation, shipping services, high-tech manufacturing, and tourism. Also underlining the importance of education is the national goal to foster the training of highly qualified personnel who can provide logistics services at various levels. Taking all these factors into account, CLI has identified Panama as a strategic location for the development of top-level research and education on maritime logistics. This is an area of expertise that is crucial to fulfilling the canal’s business potential on both national and regional levels.
Given this huge potential, the CLI has started working with two academic partners in the country: the International Maritime University of Panama and the Technological University of Panama. The partners are in the process of identifying the country’s main educational and research needs and developing programs to meet those needs.
For more information on CLI’s education courses, contact Maria del Mar Hermida, mhermida@logyca.org .