- Thank you.
Thank you all for being here.
I have to tell you,
I'm looking around
and I don't see any empty seats,
and so we appreciate all
of you're being here.
I'm sure you will
enjoy the presentation
from standing in the
back of the room.
We really appreciate
you're being here.
My name is Juan Zabala,
I'm Vice President
for University
Advancement at Lamar,
and it's my pleasure
to welcome y'all
to this presentation today.
Welcome to Lamar University
to one of most important
programs of the year
in the brand new
Center for Innovation,
Commercialization
and Entrepreneurship.
And this program is
sponsored by the brand new
Center for Advances
in Port Management.
We have many, many Lamar
University executives,
deans and academic leaders,
and I want all of you to know
that we appreciate
your presence here.
We have a very large
number of students
and faculty joining us,
and we're grateful for
your presence here also.
I also look around and
see a lot of leaders
from our business community
and from the Beaumont community,
and again we appreciate
your presence here.
I do want to
recognize the members
of the advisory council
for the Center for Advances
in Port Management.
They met this morning
and then they've stayed.
One of their members is doing
our presentation this afternoon,
so we appreciate all
of you being here.
Right before we get
moving to the program
I want to take just
a moment to recognize
only two individuals
in the audience.
It's always nice
for for us to have
a regent of the Texas
State University System
with us at our meetings.
We're especially
happy today to have
the Vice Chair of the
board, Bill Scott,
to joining us today.
(audience applauds)
Bill Scott is an
alumnus of Lamar,
arguably one of the most ardent
supporters of Lamar.
When we talk about
new or renovated
or improved or enhanced,
you can guarantee
that Bill Scott
had a hand in that.
So we're grateful
for you being here.
We're also really
fortunate to have with us
State Representative
Joe Deshotel.
(audience applauds)
Another Lamar University alumnus
and an ardent support of Lamar
and we appreciate
your being here.
And now to begin our program,
I'd like to introduce
to you Erik Stromberg.
Erik is Director for
the Center for Advances
in Port Management.
(audience applauds)
- Thank you all very much.
Well, I'm happy to talk
about my favorite topic,
the Center for Advances
in Port Management.
But let me start by
saying how honored we are
to have as our inaugural speaker
for the Center's
symposium series,
Senor Jorge Quijano
(speaks foreign language).
I will not steal the
President's thunder
as he will soon be introducing
our most distinguished guest,
but we are indeed
setting a high bar
for subsequent
symposia speakers.
The Center for Advances
in Port Management
was set in motion
through an appropriation
by the Texas legislature
and signed into law
by our governor in late 2015.
The mission of the
center is simple,
focused and sublime.
Preparing the port
and marine terminal
operating industries
for the challenges
and opportunities
that lie ahead through
education and research.
Our mission will be achieved
through the engagement
of the entire university
led by the colleges of
business and engineering.
Partnering and collaboration
are our bywords.
The center has established
a memorandum of understanding
with the American Association
of Port Authorities
to further our mutual interests
in the training and education
of the next generation
of port leaders.
We are working with the
General Stevedoring Council,
the training arm of private
marine terminal operators
in North America
and internationally.
Of course, we are
closely affiliated
with the ports,
marine terminals,
and transportation interests
in southeast Texas and
throughout our state.
Through our digital
remote learning platform,
we can reach students,
adjunct faculty,
and research opportunities
anywhere in the world.
Ours is after all
a global industry.
Please go to our web
site to learn more
about our program,
and let me know
how we can add value
to your enterprise.
I have been so
incredibly impressed
with the faculty here
at Lamar University,
and with the commitment
of the university
and the state of
Texas to this center
and its mission,
which brings me to my
next responsibility.
It is now my great
pleasure to introduce
the President of
Lamar University,
Dr. Kenneth Evans.
It's my great pleasure
partly because
it is because of Dr.
Evans that I am here
as the Center's first
executive director.
Dr. Evans, with empathy
and far-sightedness,
realized the importance
of waterborne commerce
to southeast Texas,
and the importance
of the ports and
marine terminals
that serve our region's
connections to world markets.
He asked questions,
which is his won,
and surmised one of
the ways his university
could connect with
community would be
to provide educational
and research opportunities
for the port industry.
He tested the market
and found his idea
was well received by industry
as well as in Austin.
But perhaps even Dr.
Evans couldn't anticipate
the overwhelmingly
positive reception
his idea would receive
in the port industry.
The establishment
of the center has
been truly a landmark occasion
in an industry that
throughout my career
has bemoaned the lack
of an advanced degree
in port management.
Now we have one.
Thanks to you, Dr. Evans.
I welcome you to the podium
to introduce our
distinguished guest.
(audience applauds)
Well, thank you
Erik, and clearly
it takes a village
to do all this stuff,
so there's a tremendous team
that made all of this possible.
I want to thank you all
for being here today.
This is most likely probably
the most interesting
timely and vital programs
that you're gonna hear
regarding global
trade logistics.
It's an amazing moment
in time we're able
to make this confluence
possible for you.
I continue to be intrigued
by the complexity
and I'm just
absolutely fascinated
by the port system.
Not only in the role it
plays in national defense.
I think you know that.
We're the largest
volume port player
in the country here in Beaumont.
But also in terms of its
impact in global trade
and certainly on bulk
movement of freight,
which we're also known for
here in the port system.
But beyond that, there
are within stone's throw
around this area
somewhere in the vicinity
of 50 private ports, and
then all the modalities
that interface with
the ports that also
obviously have to
understand the port system
and the dynamics that
make that possible.
I mean in short, really,
ports need to be understood.
And the truth of
the matter is today
the way in which you
moved into advancing
in a leadership role
in the port industry
is you hitched your pants
up and you walked around
and you talked to
a lot of folks,
and hoped to god you got
the information you needed
to be able to do your job.
That's changing,
and it's changing because
of the commitments
we're making here
at Lamar University.
I'm gonna turn now
to introduce to you
Lamar University's
own Jorge Quijano.
He sits atop one of
the major enterprises
that dictates the fate of
global freight movement
and he has done so
for quite some time.
He reports to the
President of Panama.
He reports to a
variety of investors
all over the world, but
the truth of the matter
is the most important
person he reports to
is sitting right here,
and that is Marcia, his wife,
and we're so pleased
that you are here
with us today.
And Jorge would admit
that immediately.
In fact, he knew who
I was talking about
when I was mentioning it.
He is CEO of the
Panama Canal Authority
as well as an alumnus
of the University,
graduating with his
bachelors degree
in Industrial
Engineering in 1973,
and earning his
masters in engineering
the following year.
Jorge has worked with
what he proclaimed
eighth wonder of the
world for 41 years,
having begun as an engineer
and product forecaster
at Panama's Texaco oil refinery
before joining the Panama
Canal in late 1975.
After progressing
through several
important engineering
and managerial positions
within the
organization, he became
the maritime operations
director of the canal,
and then moved to head
the expansion program
as Executive Vice
President for Engineering
and Programs Management.
In 2012, he was promoted
to Chief Executive Officer
of the Panama Canal Authority,
bringing the expansion
project to conclusion
with its first
commercial Neo-Panamax.
Try that one on for size,
transit in June 2016.
I might add that he has
been an amazing host
to students, faculty,
and friends of Lamar
many times in Panama
over the past few years
of which we're
greatly appreciative.
This expansion is already
greatly influencing
how the world conducts
maritime trade.
He currently manages
an organization
with 10,000 employees
with different backgrounds
performing a myriad
of operations.
And the expansion
involved at its peak
an additional 14,000 workers
from 36 different nationalities.
Jorge came to Lamar
University from Panama City
on a tight budget
allotted by his father.
He chose our institution
out of four schools
to which he had been accepted
because of its
diverse curriculum.
In addition to his bachelors
and masters degrees
earned at LU, he is a graduate
of executive management programs
from the Federal
Executive Institute
and Northwestern University.
He is a member of
Lamar University's
civil engineering
advisory council
and he has often returned
to campus to lecture
to the college of
engineering and to share
with business,
industry and government
representatives from
across the state
and neighboring states
on Panama Canal expansion
and its impact on
trade, as he is again
doing so today.
In 2013, he received
the Lamar University
Industrial Engineering
Lifetime Achievement Award
in recognition of his dedication
and professional
excellence as an engineer.
Jorge has conducted tours
as I mentioned earlier
on a variety of
different occasions
for Lamar University
students and faculty,
has received many
awards and distinctions
throughout his
successful career,
and if I tried to go
through his extensive list
I'd have to start
serving you all dinner
and potentially even breakfast,
and our budget is tight.
It's a tight
legislative session.
Come on, guys.
So just to highlight a few,
he was named Honorary
Citizen of Texas
by the Texas Senate and received
the Texas Industrial
Engineering Lifetime
Achievement Award by
the University of Texas
Arlington, the University
of Texas El Paso,
Texas A & M University,
Texas Tech University,
and the University
of Houston, 2013.
Of course, that all
happened after Lamar did it.
(audience laughs)
And this past December,
he was included
on Lloyd's list of 100
Most Influential People
in the World in Shipping.
Jorge and his wife,
Marcia, live in Panama City
where their son, a graduate
from Cardiff
University in Wales,
has practiced maritime
law for more than 15 years
and their daughter a
Purdue University graduate
in industrial engineering
works in marketing
for a multi-national
company in Panama.
Jorge loves his diverse
career in Panama Canal
and now drives a
diversification strategy
with promoting the development
of his local logistics
activities to reap
the most benefits
from Panama's enviable
geographic position so
that it can further evolve
as a hub for the
hub of the Americas.
I look forward to
hearing, as I know you do,
his comments about the
canal's overall expansion
and we're so excited
that you were able
to finally get here.
Since I arrived, I couldn't
wait to meet this man.
I am so stoked.
So, welcome.
(audience applauds)
- Let me get the
technical aspects
of this going first.
Oops.
What happened?
Oh.
(men mumble)
Hopefully.
(computer beeps)
Gotta wait there.
I think it's booting up.
Well, while we get
this thing going.
First of all, thank you
for the introduction.
Thank you for the
invitation to be here.
It's really a
pleasure to be back.
It's not the first time
I come back to Lamar.
I've been here a
couple of times.
I've been here a couple of times
since I graduated.
At least three times.
And I enjoy coming back,
and not finding my way around.
(audience laughs)
It's either my
Alzheimer's or the fact
that you have changed
it so much for the good.
To me it's a thrill
being back here,
bringing my wife.
As you said, the lady in charge.
Just a little bit of history.
I graduated, like
you said, in 1974
final with a masters
of engineering degree
in industrial engineering
and went back to work.
My wife was also studying here
in Texas Women's University,
a little bit further
up in Denton, Texas
during the same period
of time that I was here.
So we have known each
other for a long, long time
and we enjoyed also
coming to Texas
and spend some time
in our studies.
And I thank you for
giving us the opportunity
actually on a tight budget
to make it through Lamar.
That in itself was
a big challenge.
My father was one that
was very strict on money
and he said, "Here's a check
"for the whole semester.
"Don't call me,
I won't call you.
(audience laughs)
"I'll send you the
airplane ticket
"at the end of the semester."
But it was that in itself was
also a learning experience.
And I think I have done
well in that sense.
But it's a great
opportunity for today
because I was here back in 2013
and I talked about what
would be the expansion.
We're working on it.
It's coming along.
It's not done yet,
but it's coming along.
So finally I get to
come here and talk about
what we have done.
So that's what I'll try to do.
And also I'll try to
connect it to the ports
because there's no
point in having a canal
if there are no ports
to take the ships to, right?
So the first thing that
you need is the ports
and then canals.
We recognize that and
that's why we have
a very, very close relationship
with most ports of the world.
We have very close relationship
with the port of
Houston, of course,
because you have the big
ships actually coming in
from Panama to the
port of Houston
and we actually do
marketing trips together
to talk to the
owners of the cargo.
Not just the line, but
to owners of the cargo.
And that's very important
that we continue
to do that.
And those of you
that are in ports,
you have to look at that.
So I'll talk a little bit about
why the expansion.
Why did we want to
get into such a mess
because it can get really messy
on a project.
One off project.
If you're in civil engineering,
anybody in civil
engineering here?
Well, if you do a
repetitious project
one that you have done before,
it's, yeah, do it better,
a little better each time.
But when you have to
do a one off project,
that's really something.
And I tell you, we lived
through a lot in nine years.
It was gonna be a
seven year program
and it ended up being
almost a two year,
a nine year program.
I'll talk about the
expansion itself,
then about the impact
that it has had
in general on us and
also in the area,
some of the ports here
and some of the
business here have been
very important to us.
I just came this morning.
I went to Sabine Pass
to the Cheniere plant
who is a major user
of the Panama canal.
I was yesterday with
Shell, who is also
a major user of the
expanded Panama canal,
so for us it's real thrill
to talk a little
bit about the impact
on the area.
The diversification
strategy, we the canal,
everybody looks at
the canal and says,
"Well, you better just stick
"to just transiting vessels."
But there's more than that.
The business is almost like
a vertical integration.
You've got a lot of
land on both sides
and you need to put it to work.
And that's what the
diversification strategy is.
And finally, what have we done
since June 26 of last year
when we started our operations.
So how do we see Panama?
Panama right now, and
this is not just because
of the expansion project,
because Panama has
always been growing
in achieving or dealing
with different ports
of the world.
144 trade routes
we touch base with.
We have 1,700 ports
around the world
in 160 different countries.
But Panama has also grown.
If you're in logistics,
which is more
of a military term, now
somehow commoditized
and made more domestic.
It also ties in with air
and land transportation.
So Panama has also
evolved into an air hub,
and together with
the canal, we have
what we would like to call the
Transportation and Logistic
Hub of the Americas.
And with that, of
course, it entails
a lot of free zones that
we have within Panama
so that we can
import and export.
Panama is a very small country,
only 4 million people.
We don't have much
manufacturing,
basically almost nothing.
So we export what we
import and distribute.
It's a place where you
can consolidate cargo.
It's a place where you
can distribute cargo from.
And because we are a
very central location,
it's very, very efficient.
So we found that from
both the maritime aspects
but also from the
air cargo aspects.
To give you a perspective
of transits and tonnage,
we have basically
not moved from 1965.
Basically we have the
same number of transits
that we have had
until last year.
We've never gone
over 15,000 any more
since the 1960s,
but the reason is
because of the size of vessels.
Tonnage for us, which
is why we charge by,
and that's why it's important,
has actually continued to grow.
And we see, like in any business
you will see dips, and
the dips you probably can
all relate to if you look at
what's happening in this area.
That's 2008 and '09 and '10.
Then we pick up.
And normally what happens
is if you see our trend
we always pick up
and do better after
about two, three years.
So the canal has always
had a positive trend
and we expect that
to be even more so
now that we have expanded it.
And the reason for that was
how vessels have actually grown.
And that then
forced us to go into
what we would have
to do is an expansion
to be able to accommodate them.
Here, so you look
at the segments
because the canal
doesn't only tend
to one segment.
It tends to container
trade, dry bulk,
tankers, vehicle carriers,
refrigerated cargo,
which is a little bit
on the down trend now,
general cargo,
passengers, and others,
including yachts that go
through on a regular basis.
Some people in our area
call them nuisance boats,
because they take
up a lot of space,
a lot of resources, and
they don't pay much.
So, $700 and they take
up the locks for it.
So for us, we'd rather
handle all of these others
especially the containers.
As you've seen,
since China joined the
World Trade Organization
back in 2000-2001,
they picked up as the main
segment of the Panama canal.
And today, so to
give you an idea,
it represents 50% of
the revenue of the canal
is in the container segment.
And it has dipped, like
you saw there, 2007-08.
Sorry, '08, '09, and '10.
But it has picked up
and came down again,.
But then it picked
up again in 2015
breaking all kinds of records.
In 2016, we had a small dip.
What I want to point out here is
that dry bulk was forever
the strongest segment
of the canal prior to 1998-99
when it started to come down.
A lot of stuff is now
being shipped in containers
which was not shipped before.
Now in 1995,
Maersk decided they were
gonna build their first
post-Panamax vessel,
a container vessel.
And that created a slow wave,
which then took off in
the late 90s, early 2000,
which then was the
main prompter of us
involving ourself
in an expansion.
Another thing that you see
a little bit highlighted
at the bottom is when
we started to study
the expansion programs.
So it wasn't something
that we came up with
in one or two years.
We started studying in 1997.
We even had an inter-oceanic
canal conference
in Panama, where people
from all over the
world participated.
From there on to about 2005 is
when we concentrated
all of our efforts
coming out with a proposal
that it's different
than it is here.
Our proposal for an
expansion of this size
had to go to a referendum,
a national referendum,
which means that you
have everybody having
and opinion about whether
you should expand or
not your activity.
So how can you convince
people to do this
without educating them in
the business that you're in?
So we had to go out there
for a whole six months,
all of our managers,
all the people who had
worked on the studies,
go out and talk to
everybody they could
all over the nation.
Because everybody had one vote.
And at the end, on
October 22, 2006,
we had the go ahead by 77%
vote of the people.
But it was only because
we talked to them
personally to each one of them
and convinced them that this
was something we needed to do.
So it was a project
that entailed
a lot of planning and
then the execution started
with a promotion
with the people.
Just so you have an idea
what the canal serves,
it serves primarily the
Asia - U.S. east coast,
and that's vice versa both ways,
west coast South America,
that's our second
strongest route.
South America to
U.S. east coast.
West coast of South
America again to Europe
and west coast central America
to east coast of United States
with a little bit
from Europe to U.S.
and west Canada coast.
One important thing is that
you see here in tonnage.
And this is actually
just weight.
This is how much merchandise
is moved in weight
through the Panama canal.
51.2% actually comes or
goes to the east coast
of the United States.
In essence, when you
add everything up,
it's 77%, I'm sorry,
68.8% of what goes
through the Panama canal either
comes or goes from the US.
So US is our primary customer.
China is our number
two customer.
Chile, who wasn't in the
ranks back in the '90s
is now number three.
Peru has recently
come up the ranks
with a lot of exports
and imports as well.
And Japan, which was
our number two back
in the late '90s, have
become now number five.
And South Korea is our
number six customer.
So the importance
of the United States
to the Panama canal
is overwhelming.
People say well, what happens if
too much protectionism?
Is it gonna affect
the Panama canal?
I says, if it happens,
yes, it's not gonna affect
only the Panama canal,
it's gonna affect
everybody's pocket in some way
because people will
transfer the cost.
And the people I've
talked to in Europe,
I just came back from
talking to our customers,
they are all concerned
about what's gonna happen.
They feel that if things
are more or less the way
they are right now,
the shipping industry
have seen the bottom of it
and we should start seeing
in 2018 a better year.
The United States I
think will do better
this year than
they did last year.
And I think, I'm an
optimist, so I think
it will actually do better
next year, of course.
We'll see what
happens with the more,
with the political
aspects of how to handle
the debate of how
much protectionism
is good for the country.
But let me tell you,
if it affects you,
it will affect us as well.
Going back to how the
size of vessels impacted
on our decisions, and you
started analyzing here.
The green line is the
largest container vessel
in the world fleet.
That means the largest
size of vessel.
And as you see, the
jump starts in 1995.
Everything else was staying
within four to
5,000 TEU vessels,
and slowly began to come up,
and then you see some jumps.
And the major jump was in 2005
when they started building
8,000 TEU vessels.
Eight to 10,000 TEU vessels.
And then the next jump
was when Maersk decided
to go with a big
14,000 TEU vessels
later on in 2013,
they went again
with the Triple E With
18,000 TEU vessels.
There have been
some others closer
to 20,000 TEU vessels
that have been
also built, but the
numbers as you see now
on the average size of
vessels being delivered,
it went up all
the way up to 2015
and is now starting
to creep back.
So that's a good indication.
That means there will be
some that will continue
to be built of those very
large container carriers,
but we feel that most will
stay within 14,000 TEU,
which is what we built
the expansion for.
I think that the
building of the expansion
actually put a mark on
what the right size was
for flexibility.
That way you could put
it anywhere you want.
These others, they
can only serve
the long, long route from
Asia through Suez Canal
to Europe, and maybe east coast,
but the east coast it
not ready to handle
that size of vessel.
Even the west coast,
I was talking to
the CEO of CMA CGM
and he says, "You know
"we tried bringing in
the Benjamin Franklin
"18,000 TEU vessel
to the west coast,
"and we did have to
reconsider because we couldn't
"continue to have it full
and go back full as well."
That in essence
is making people think again
about the right size of vessel.
It's like in the oil
business if you recall
you had the ULCCs and
then all of a sudden
the ULCCs disappeared.
And now what you really
have is really the VLCC.
So from a 450,000 dead
weight ton vessel,
440,000 dead weight ton
vessel carrying crude oil
we went down back to 300
to 320 and that's now
the work horse of the industry
because that's the right size.
So we feel that
eventually we'll see
the right size as
well being more
around the 14,000 at the peak.
For now, the canal
we're looking mostly
8,000 to 8,500 TEU
vessels going through
the expanded canal.
So why did we do this?
Not only because of
the size of vessels
but we wanted to
add more tonnage.
We have projections of
demand that would take us
to 508 PCUMS tons for us.
That's actually a
volumetric measurement.
And that's what we charge by.
One volumetric ton, a PCUMS ton,
is equivalent to 100 cubic feet
of revenue earning
space on a vessel.
So for us to get to
508 with the present
or the original canal,
we would have never made it.
We would have stayed
at a bout 340.
We actually did that in 2015.
We got to 340.8 and
it was unsustainable.
We had vessels waiting
11 days out there
before transiting.
So the number, the magic number
is really not 340.
It's around 330, 325.
That's what we would
have been able to
have without the expansion.
So we knew there was demand.
The demand was growing
and it was also growing
in a different package.
And we had to do both.
We needed to have
an additional lane
but also offer a new product.
And that was the largest lock
so that we could then take on
that additional tonnage
with the expansion.
We also saw Latin
America would grow.
And it will grow
and it will grow
in the way that they can
actually acquire more.
So the middle class
will have more power,
more buying power
in the next years.
It's no longer just the US.
We are looking at region
and what we can
sell to a region.
Well, we don't sell it,
but get it through to our region
both coming from
the United States
or coming from Europe
to the west coast
or from the east
coast of South America
going to west coast of US
or west coast of
Central America,
or even west coast
of South America.
We saw the potential
and by 2030,
the population will be
probably around 700 million.
That's a 19% growth
in population,
and you know very well
that trade is driven
by population.
There's no population,
nobody buys anything.
And that's why the
concentration of the population
in the eastern part
of the United States,
when I say eastern,
it's like from Texas
then it goes down a
little bit and goes up,
all the way to the east coast,
that's where 68%
of the population
of the United States is,
and that's what our
market is focused
in tending to.
And when we look at
some of the markets
that we serve, Ecuador
depends heavily on the
seaborne trade and 30.7%
of the seaborne trade
has to go through
the Panama canal in
either direction.
And you look at Peru with
28.4% and Chile 26.7%.
The United States is only 11.9.
So it is important
for the countries
around the region, the
fact that we have a canal
and the fact that we have
now an expanded canal.
And we've seen how other ports
have been developed
around the mouth
of our canal be it Buena Ventura
Santa Marta and
Cartagena on the Atlantic
and they have both
gained significant cargo
from the expansion
of the Panama canal
without investing a single cent.
That's the best way to
do business, isn't it?
(laughs)
Just to give you a
little bit of background
and remember a little bit,
this is the country of Panama.
This is really the heart,
and you see here this
is our manmade lake,
Gatun Lake, which is where
the vessels travel through.
And the program, the
expansion program
contemplated a lot of efforts,
significant efforts.
We had to build, of
course, we had to dredge
the Atlantic entrance.
We had to dredge the
Pacific entrances.
We had to build two
neo-Panamax locks.
The largest and the
most difficult project
of the whole lot.
We also had to build
a channel totally
through hills, and
that's why you see here
down on the left, you
see all those hills?
We eliminated those hills.
We actually, the original plan
of the United States
was to go around
and build another lock
behind that big hill,
and we decided that that wasn't
going to be too effective.
We wanted a direct connection
to the Culebra cut.
So the new locks
on the Pacific was
connected directly to the
lake by cutting through
two majors hills in the
middle of that channel.
And it has worked very well.
We also had to dredge
the channels in the lake
and that we did
mostly ourselves.
We have a dredging operation
with four dredgers.
And we have also drilling
and blasting platforms,
so we dedicated about
1,100 employees of ours
dedicated only to doing
that part of the work.
We complemented it
with other contractors,
but we did 2/3 of
all of the dredging
at the lake level.
And especially in
the Culebra Cut,
which is this section here,
which is the hardest
rock in the canal.
So we also increased
that we had to fix a lot
of the existing property
or existing infrastructure
to be able to raise
Gatun Lake another
foot and a half
so that we would then
have enough draft
to get down to the 50
foot fresh water draft
that we promised.
Altogether, this is what
this project entailed.
And primarily looking
at what we had,
was a locks that
could only accommodate
4,400 TEU vessel.
Now we can accommodate
vessels that go
all the way to 14,000 TEUs.
We haven't seen the
13,000 or the 14,000 TEU
but they will
surely cascade down
in the next few years.
Right now, as I mentioned
earlier, we are running
8,000 to 10,500 TEU
vessels regularly.
Just a short video if it works.
Let me see.
Is it paying?
Oh, no audio.
It is playing.
You have the audio there?
It's just music,
but I can explain.
This is the construction
on the Pacific lock
on the Pacific end.
Would it be this one here?
And this is over five years ago.
And as you see,
slowly coming up,
but most of that area was rock.
Basalt, that had to be blown up
and then dug up, and
then start to build.
Now this is on
the Atlantic side.
The is the lock on
the Atlantic side.
So we had to build two
identical structures.
They only difference
between them was
the geology where
they were sitting on.
So the design had to be
a little bit different
because of the difference
of that different
site conditions.
This is looking onto
Atlantic, as well.
The sea that you
see on the far end
is the Atlantic.
And the one that you see here,
this is also still
on the Atlantic.
But interestingly, you
will see here very soon,
the gates were built in Italy.
They were shipped
as one piece each,
and they had to be brought in
into the locks and crawled in.
Actually crawled in very slowly
into a very tight fit
into the lock heads.
So each one, each
of the two locks
has a total of eight gates
to isolate the three chambers.
And here you see how
it was being filled up.
And that's the
connection to the lake.
And that's the first
trial on the Pacific.
And then you'll see
the inaugural transit
just went through.
So that's a little bit
faster than the nine years
that we spent on it,
but it was a good day
on the 26th to see that
first ship go through
and see that everything
came together rather well
for getting some of the
frustrations that we had
in the background.
But I think that in the
end what is important
is that we made it
and that it works
and is now serving
not only Panama,
but it also serving the world.
Important to know
is that the volumes
of excavation and dredging.
They were very close,
78% of what the
original canal entailed.
So there's a lot.
It wasn't just a
minor expansion.
It was a major expansion
from the standpoint
of volumes of
excavation and dredging.
But from the concrete
side, it was 132%
of what the original
construction was.
3.4 million cubic meters
of concrete were poured
in the original construction.
And that was a dual lane lock.
This is only a single lane lock.
And we had 4.5
million cubic meters
of concrete poured
on rainforest as well
in the new locks.
So it's a major undertaking,
not to be taken lightly.
$5.5 5.6 billion.
We've got still some
claims remaining
with one of the contractors.
The rest have all been cleared.
Everything was on budget except
the major contractor
of the locks,
which we will not
know exactly what
that's going to be
until all of the claims
have been resolved
with our arbitration,
which is probably where
we're gonna end up
because the differences
are substantial.
But we had estimated
that, yeah it would take
about seven years to do it.
We took a little bit
longer than that.
We had several work stoppages,
but we recovered.
The important part of it
is that we got up again
and we continued working.
Never give up.
Keep on pushing, and
you'll get it done.
And we had a great team
that pulled it all together.
Important how many
people actually worked
in the expansion.
A total of about
41-42,000 people worked
at any given time.
Some of them moved
from project to project
so they were working
for one contractor
at one time.
They moved to another
contractor at another time.
But at the peak of all
of the contracting,
we had 14,000 workers
working concurrently.
So that was like one year
of the whole project.
One and half years
of the whole project
we had 14,000 people working.
And these were all
of the countries
that actually participated.
Some of them had maybe one
or two people in there,
but some of them had even more
that came from all
over the world,
including the US.
A lot of the heavy
equipment came
from the United States as well.
And so that you have an idea,
I mentioned this.
The canal when it
was built originally,
it connected two oceans.
And as I said in my speech
on the 26th of June,
I said now we're
connecting the present
with the future.
And what I mean is
the opportunities
that open up now.
Because the canal has already
been connected to two oceans.
And I think this is
what we're seeing now,
what we're seeing with China
using the Panama canal,
some of the ports
that will very soon
here be receiving
very large vessels.
And you see a picture here,
very similar pictures.
These are actually the
same place these pictures
were taken, one in
1914 with the Ancon
going through, and this
is the inaugural transit
of the Cosco
Shipping Panama going
through the same area.
That hill in the back
here, that is Gold Hill,
that's the name of the hill.
Of course and you
see the channel was
only 300 feet.
Now you're looking
at 715 foot channel,
and you see this hill
in itself has been cut
back several times,
not just during this expansion,
but several times.
So we've come a long
way from 102 years ago.
And this is how it looks
on a nice day for us.
You have the old locks
pushing really two vessels
plus one that's
coming in on the back.
And these other two
that you see in the lake
are ready to go in.
And we have a full
Neo-Panamax container vessel
coming, I don't know
whether it was coming
to Houston or it was coming
to Miami or New York,
but full.
So that was coming rom Asia.
And you see an LPG
tanker in the back.
And that LPG tanker in
the locks on the left
on the back, that is
coming right here.
So we have a lot of LPG
coming out of Houston,
coming out of the area
here, Sabine Pass,
and also in Lake Charles.
Actually it's the
second largest user
of the expanded canal right now,
the LPG coming from the
Texas-Louisiana area.
So we're making your day.
Let's talk a little
bit about the impact.
Of course, the impact
of the Panama canal expansion,
number one it actually impacts,
the Panama canal
it impacts Panama
more than just the Panama canal,
it strengthens its
service offering
by improving route
competitiveness.
The economies of
scale are now working
in favor of our customers.
And you see this
large MOL vessel
going through the expanded canal
right in the center.
And it also works
for the liners.
It increases the
flexibility and productivity
of now their Neo-Panamax fleet.
All of these vessels
were before in Suez.
Now they cascaded
into the Panama Canal.
It allows them also
to negotiate better
with both canals.
That actually takes
place quite a bit.
Local and regional ports.
It has a major impact,
especially around the
mouth of the canal,
we've seen the
emergence of new ports
and very strong ports operated
by important foreign companies
that are major
players in this area.
But we also see the
impact that it had
on the east coast and
some of the dredging
that was done, Miami
was one of them.
Savannah is trying
to work on it.
Norfolk already had enough depth
so that was not a problem.
Baltimore did some dredging.
Of course all of those
ports on the east coast
some of them are at
a different stage
of progress, but eventually
they will all have
to accommodate some
of these vessels
with deeper drafts.
And the supply chain.
Now we're trying to
change the more you move
through Panama, we have
77% of all of the vessels
the container
vessels that transit
through the Panama
canal stop at ports
on either on the
Atlantic or the Pacific.
Discharge containers
and pick up containers
that are fed into those ports.
Some of these
containers are opened up
and some accessorization
takes place,
so it adds value and it goes
into different containers
and then goes somewhere else.
We want to push that.
So the supply chain
should actually enhance
further by doing that.
And we're counting that
with some of the other
things that we've been
doing in the canal
we will actually be
able to have a better
distribution and added
value to the cargo
that goes through Panama.
And that will then lead us into
what I said originally,
that Panama is the logistic
hub of the Americas,
headed by our
diversification strategy,
which I will talk
to you in a second.
So the way it's happening now is
that this big ship
comes through the canal,
it stops on either the
Pacific or Atlantic
and then it goes to
ports like Savannah,
Charleston, Norfolk, Houston.
And from there the brown
routes that you see
are really the feeder routes.
You do this with
a smaller vessel.
You don't have to bring
in a 10,500 TEU vessel
all the way from
China and have them go
all the way to the end
of the world in Chile,
and San Antonio and then
come back half-loaded.
This way you can optimize.
You keep those vessels loaded
to the highest degree
by going to the canal,
dropping off,
picking up the cargo
that has come in
from the feeders.
And then going on to
the United States,
which is the main
user of the canal
as a country.
And here you see all of the
activity I just mentioned.
What has been happening.
But we keep track of everything
that's happening on ports
that have something
to do with the canal.
And this is very
important as you have now
a program for ports management.
I was talking to Erik here,
and I said, you have to
focus on information.
You have to have a
lot of information,
collaborative
information, and you also,
when you look at jobs,
don't focus just on
the management side.
One of the things that
we have in Panama,
one of the problems
that we have in Panama
is that we lack
maintenance people.
We have a lot of managers,
but where's the welder?
Where is the hydraulics
guy that knows how to
not just operate
but actually repair
the hydraulic motors on a crane,
on a shore to ship crane?
These are the kinds of
things that you have
to somehow complement
into your program.
Maybe the Lamar
Institute of Technology
takes care of that, but
I think it has to be
somehow structured in a way
that one talks to the other.
And we're doing a little
bit of that in Panama
because everybody in Panama,
nope everybody in Panama
wants to be an engineer,
a doctor or a lawyer.
I don't know whether
that's the case here,
but in Panama,
nobody wants to be
a crane operator, even
though you can get
more money maybe
than an engineer.
Nobody wants to be
a crane operator.
Nobody wants to
be any, a welder.
But you have welders
and crane operators
in Panama make
more than engineers
coming out of
engineering school.
So, and that's a
necessity not just
for the port, that's
also for all industry.
And you've got tons
of requirements here,
I'm sure, from all of the
plans that you have across.
We have, of course,
less than that,
but we have been
impacted with lack
of skilled man power.
So no matter if you
have the best manager
in the world managing your port,
if you can't
service your cranes,
you're up a creek.
So, just a suggestion.
The connectivity of Panama.
Here you see the
Panamax Panamax.
That means the old locks.
Liner services.
We have 19 liner services.
By that I mean you have
two vessels going through
the Panama Canal per
service every week.
So you have 19 of those.
And you see the average
size of vessel here
on average is about 3,878 TEUs.
On top of that, now that
we've opened the canal,
oops, sorry.
The expanded canal,
we have another 10.
So that means we have additional
plus we had some conversions.
Some that were using
the 4,000 TEU vessel
or 4,400 TEU vessels
have now converted those
to 8,000, to 9,000 to
10,000 TEU vessels.
And we also have a few
that are additional
that have come from
the other routes.
Some of it principally
coming from Suez.
But together with that,
and I just mentioned
the feeders, this is important
because our feeder
network from Panama
both on the Atlantic
and the Pacific
is 39 services.
That's 39 weekly services
coming out of Panama.
25 of those on the
Atlantic, 14 on the Pacific.
And so we do need a
little bit more space
on the Pacific.
Box space on the Pacific,
and we're working
trying to achieve that.
So this network is what
you have to analyze.
What do you have here?
Of course you've got
a much bigger area.
We're a very narrow country,
and we have ports on both sides
at 80 km apart, 50 miles away.
So it's like having a
port on both oceans.
And you have a railroad
that's only 50 miles long.
Who'd say that a railroad
that's only 50 miles long
would ever make any money?
Normally you need at
least 200 to 300 miles
so they start making
some money, but it does.
It is part of that connectivity.
It is part of that
network with the ports,
with the canal.
And what did the
expanded canal give us?
This was the frontier.
To the green, this
was our frontier.
This is what we had with
our Panamax size vessels.
When we went then
to a larger vessel,
the per unit cost allow
us now to compete better
with the west coast ports.
Okay, so that actually did this.
So we shifted a little bit more
and we gained
almost all of Texas.
So to us it has
been very important
that movement not only
from the point of Texas
but also up north
because it's a lot
of consumption in that area.
We are now per unit cost
lower than going
from the west coast
to the east coast of
the United States.
And what's important
in the area, of course,
and you know it
better than I do,
is the interconnectivity
that you have
with the railroads going
everywhere from here.
You have three
class one railways,
BNSF, Union Pacific,
and Kansas City Southern
which actually runs,
Kansas City Southern
actually runs
the Panama canal
railroad in Panama.
So you have trucking here.
Of course there's talk,
and I think we had
the discussion earlier,
there's a lot of people
doing a lot of business
around Houston that want
to shift it to Dallas.
And then put it on
railroad and go west.
My reason I'm here today is
of course to talk to you,
but I was here also
talking to some owners
of cargo in Houston
to try to see what they could do
to further load up
on what's available
on sea, like CMA CGM, Maersk,
MSC, Cosco who call on Houston
and see what they can do
to fill up those containers
so that they will
convert eventually,
and I say before
the end of the year,
they will convert to the
larger vessels very quickly.
What you see here,
you see that these are
the services form
Panama to Houston,
you have Maersk with
MSC because they are
in the two, I would
say, arrangement.
They have 4,000 to
5,000 TEU vessels.
All those are Panamaxes.
And then CMA CGM has
one service that has
like one, one or two of
them are Neo-Panamaxes
and the rest of
them are Panamaxes.
So the rest will be
eventually be converted.
Then CMA CGM has another service
that also calls on Houston
and then goes all
the way to Europe
and those are very
small vessels.
We expect them to
at least be upgraded
to Panamaxes and eventually
go to Neo-Panamaxes.
And last but not least,
Cosco who's running
Panamaxes at this time.
All of those I
have talked to them
and they're just
waiting to convert
as soon as the cargo is there.
So those that have
cargo, the plastic resins
there will be a
future capacity there
to ship out.
And it's cheaper than going
to the west coast by rail.
At least that's our perspective.
When we looked at the
statistics for port ranking
by tonnage, 2014
is the most recent
that is actually out there.
South Louisiana ports
is the number one
in tonnage, Houston
in number two,
New York, New Jersey
is number three,
Beaumont is number four,
which is an interesting number.
When I was looking
at it, I said, wow.
This of course, there's
a lot of military cargo
that actually goes
on there as well.
You see there's another
slide that covers that.
And Long Beach is number five.
Everybody would have
said something different.
Said, oh, LA, Long
Beach are the big ones.
From a tonnage
standpoint, weight
and remembering
that you have a lot
of petrochemicals
coming out of here.
You have a lot of
also grain coming out
of this area and all of
that has a lot of weight.
So from a tonnage perspective,
these are the top in the US.
And of course we keep track
of how the Texan ports
have with regard to drafts.
And we see that Houston
is doing fairly well.
Beaumont I think
still at 40 feet,
but both Houston,
Galveston, Texas City,
Freeport, and Corpus Christi are
in the 45 foot range.
And this is what they're
carrying basically.
And like I said, Beaumont
is forest products,
military cargo,
steel project cargo,
and that's an
opportunity there as well
because there's a
lot of activity now
with all of the
conversions of the inbound
LNG now becoming export LNG.
There's going to be
a lot of transport
of steel materials
coming in from abroad
and so I feel
there's going to be
a lot of activity in Beaumont
and Port Arthur as well.
Corpus Christi, it's
now become a nucleus
of a lot of investments
in that area,
and with Cheniere building one
of their LNG trains already,
we should see also
improvement from them
probably shop shipments of LNG
from Corpus to the Panama canal.
Potential trades that
we see, mostly grains
are coming out of Louisiana area
in a slightly larger vessel,
95,000 dead weight ton vessel.
It saves 16 days by going
around the Cape of Good Hope
so we'll see that in the future.
We haven't seen it yet.
We're still running
Panamaxes through the canal.
One thing that I want
to point out to you,
how important the Panama
canal is for the US
is the fact that we are running,
Panama canal serves
44.1 million metric tons
of the grains of the
United States exports.
31.2% of US grain
is being exported
through the Panama canal.
So it is very, very important,
that route for the US
to stay competitive,
especially in the Asian market.
And if you look at everything
that's going to Asia,
that is even more relevant
because when you put
all of the shipments
that are going to
a relevant route,
we are looking at 51.7
million metric tons,
which amounts to
85.2% of the volume
that goes through
the Panama canal
of the United States'
exports of grain.
We see new cargo opportunities
which have already taken place.
The LNG LPG exports, crude oil.
Actually we saw a
crude oil shipment
to Nicaragua last year
going through the canal.
It was like the
first shipment coming
from Houston
going to Nicaragua.
It was something that
we couldn't decipher,
it hasn't happened again.
But it did.
So there's future there,
of course with Shell.
We will probably see
a lot more crude oil
eventually being exported.
Grains of course
important both for the US
from Panama as a route.
Containers is the
most important to us.
Resins in containers I
think is a great future.
Talking to some of
the end suppliers
in Houston yesterday, they
said that they foresee
going from like 25,000
TEUs of exports of resins
to maybe in the next
two to three years
all the way to 90,000 TEUs.
So it's something to look at.
And the project cargo
that I mentioned
in all of those different areas.
And here just we have an
idea of the time savings
if you're exporting anything
from the United
States going to Asia,
you save 28 days time.
I'm sorry, total days
is 28 days, so you save
a lot of time
going to Hong Kong,
going to Tokyo, and
Santiago is only 10 days
away, Santiago,
Chile, from US Gulf.
And I mentioned earlier the fact
that we've seen a lot of LPG.
Twice as much as LNG and UC
in some of the figures
that we've had.
But here we see
that Targa Resources
at Galena Park
LPG has definitely
come online very strong.
Enterprise Products as well
in the Houston Terminal.
And we see Cheniere and
Sabine Pass with the LNG,
they have two trains
right now working.
One should be coming
online next month,
or April at the latest,
and the other one by midyear.
So in essence, in a few months,
they will be able to
double their capacity
to export, which is
important for the US
and for Texas, but
is also important
for the Panama canal.
And I was there recently
visiting that facility
this morning, actually
they had two vessels there,
not just one as I
show in the picture.
And here, just so
you have an idea,
and I don't have
the numbers for 2017
which are even more
interesting, but
look at how it has been growing
through the canal the LPG.
We've had between 2015 and 2017,
we've had a 100% increase.
That's a twofold increase in LPG
going through the Panama canal,
all going to Asia.
We also have
inorganic chemicals,
ammonia, that's a little bit,
and some organic
chemicals as well.
So LPG, propane and
butane have become
a very important
commodity for us.
Looking at the
LPG routes, we see
everything from Asia to
west coast South America
to Central America
including Mexico
on the Pacific end,
and also not from the US
but from the West Indies
from Trinidad Tobago,
some of it going
to Chile as well.
So it's interesting because
even though Peru has
LNG, because of
political reasons
they don't sell it
to their neighbor,
which is Chile.
So that's good for
us in the canal
because we see them
going both directions.
And we have West Indies
to Central America as well.
These are the Neo-Panamaxes
going specifically
to Japan, South Korea,
China, and Taiwan.
And they have been going
through about 82 of them
I think have gone
through the Panama canal.
Corpus Christi, you
see a lot of activity,
a lot of investments.
It's gonna be a boom
boom years in the future
if that continues.
We keep an eye on
them because we
need to make capacity
available so they can
put them through.
Of all of what you
see here, some of it
will go through the canal,
some of it will not.
But it's important
that it's growing
in that area for us.
And you see here the
Voestalpine Texas
hot briquetted iron production,
we'll see some of
that probably going
through the Panama canal.
But the most important
part of this are
the Cheniere Corpus Christi
liquefactions facility
for additional LNG
to go through the canal.
In our diversification strategy,
what we have done is
looked at all of the land
that the Panama
canal has, and see
what we can develop
that goes in line
with our main
core business.
And we have now focused
on four of them.
The four that you
see in yellow here.
One of them, the one
that's further advanced
is a container terminal
on the Pacific end
to add additional
capacity and logistic part
which is developing somewhere
between 700 to 1200
hectares of land
that were previously
not serviceable
because the US military
presence in Panama
left a lot of unexploded
ordinance in that area.
So you couldn't even
walk into the area.
Because we needed to land
to be able to fill it
with the material that
we were excavating
for locks, we had to go in.
We spent about $30
million to clean it up.
And then deposit material on top
and now all of that
area can be developed.
Yes, we spent $30 million,
but we gained a lot
back by making it
now available for business.
So we plan to build a
logistic park in there.
Most of this will
go as concessions.
We're not planning
to do it ourselves.
We are landlords.
we want to remain that way.
But we want to make
sure they are developed
in businesses that are
related to our main activity.
Not just build houses
or do whatever.
No, we want the to
be part of the sector
so that it actually
promotes more business
for the Panama canal in the end.
We have roll on
roll off terminal
to distribute cars
and heavy equipment
from Panama rather
than sending big ships
to one point and dropping
off maybe 50 cars
and then going to the next stop.
This way you can actually
put more accessories
on it if you need it in Panama,
and send whatever lot you need
on some of the feeder vessels
that feed from Panama.
And last but not least
is the energy terminal.
We have a grant from the USTDA.
And we are working right now
with a consultant to develop
a plan for a facility
that will not only
have the LNG for energy
but will also provide
for bunkering in the
future for vessels
that will be bunkered with LNG.
We see a trend
especially with IMO rules
that come in effect in 2020
that there will be more.
Probably 2022, you
will start seeing
a lot of ships now
powered by LNG.
And we think that's
a possibility for us
to get into that by having
a gas station in Panama.
A good route, it's
an attraction.
It's a point to
have the investment
but we're gonna wait
until about mid-June
when the studies are done to see
what we're gonna
do then after that.
But I think the
possibilities are there
not only for bunkering
but also for distribution
in smaller parcels
to Central America
from Panama as well.
A little bit about
the 1,200 hectares
that I mentioned.
Panama is only 80
kilometers, 50 miles
from one end to the other.
In the area that you see here,
I move that so I
can see that, okay.
This is the area that
was recovered, reclaimed
from the unexploded ordinance.
And that in itself is a project
that we have studied.
And here you see
it on a better map.
Here you see it's
right next to the third
set of locks with a
fourth set of locks
actually put in there
to leave the space
because there's
something that will have
to happen in the future.
And from there,
what we expect to do
is have the roll on
roll off terminal
right here on your right.
This whole thing here is only
about seven kilometers long.
And then you have a port here
which is PSA which
is being expanded
to 2 million TEUs.
This is where the
railroad would be.
You could keep the parts here,
and you could actually do
some light manufacturing as well
in that area.
We're also looking
at the possibility
of Agribulk, perishable
goods as well.
Mostly for Latin
America, not for the US.
But mostly for Latin America.
And we have a
distribution centers
that we want establish as well.
We've been talking to the
Walmart, to the Targets,
to the Lowe's of the
United States to see.
And some from Canada as well.
To see if they have some
interest in this project.
We'll see how that
pans out in the future.
But we are constantly
trying to promote this
because we feel that
there's a lot of potential.
Especially because it's
right next to the canal.
It's right next to very
very important ports.
One last thing that I wanna
mention is the fact that
we also are planning to
put a portable type island
in this area here to get
somewhere around
40 to 50 megawatts
to supply all of the demand
that this particular park needs.
So we're trying to
go as green as we can
in our plans for
development in the future.
And here is just a final layout.
And you see at the top
this whole energy farm
with 70 hectares.
So a total of what
we see right now
is about 736 hectares
that we'll be able to
develop in the near future.
And this is just a
rendering so that
you see how in the
end would look like.
The new locks are here.
These are the old locks.
Still totally operational
as you saw in one of the
first pictures I showed you.
And what's important
like some of you here,
is having ports.
We have ports on the Atlantic,
we have ports in the Pacific.
These are actual operating
ports on the Atlantic.
And then we also have these
operating on the Pacific.
And then we have two
that we're working on.
The railroad is
operating of course.
And they have enough
capacity to handle
twice of what they're
doing right now.
And then there are two
potential new projects.
One is ours, the 5.3
million TEU in two phases.
The first phase would
be 3.2 million TEU's.
And the other one which
is the Panama Colon Port,
which is still on
the conceptual design
and no decision has been made.
We are going along
with the Corozal Port
activity right now
we have a tender.
We're supposed to be receiving
proposals March the 3rd.
So we walked this for
about three years now
and we're at the point
of receiving proposals.
So a total capacity with
the future developments
in Panama, which is like I said,
80 kilometers apart
is like having
a port on two oceans.
It's 19.5 million TEU's.
And last, to close up
how we've been doing
in the expanded canal.
We handle all kinds of vessels.
We handle as you see,
mainly container vessels.
455 Neopanamax'.
277 LPG's.
All of them from here.
And LNG also.
Except for two shipments
from Trinidad & Tobago.
Everything else is
from here as well.
So this was updated this
morning for this presentation.
They sent me the latest
updates so you would see.
Actually this is
what's going on today.
It includes the transits today.
But we have also
used the new locks.
But we have a back
log of vessels
to pump in Panamaxes.
So we've already handled
over 1,000 vessels
to the new Panamax locks.
What happen here?
Kinda slow here.
Who are the operators?
You see Mitsui O.S.K.
line, it's a Japanese line.
It's the number one user.
Not of the canal but
of the expanded canal.
Very close by MSC.
MSC is our number
one user of the canal
reporting 10% of the
income of the canal
comes from just one line, MSC.
Shell, with all of
the LNG transits.
Then you have even Cheniere,
I think it comes
out here somewhere.
Where is it?
SwissMarine Petredec.
I'm missing it here.
Ah here it is,
Cheniere marketing.
So we do have a lot of
activity in the gas area.
But most of the activity
is in the container trade
by the major players.
Even though Maersk is not here,
they are fully using
the Panamax canal.
And they have now
have advised us
they will put a NeoPanamax
vessel on it in April.
For service that's
coming online TP 16.
We'll be seeing it very shortly.
So with that I end
my presentation
and I thank you
for your patience.
And I hope that I have
somehow contributed
a little bit to understanding
not only the Panama Canal,
but maybe understanding
a little bit
the business that we're in.
The ports, how important
they are to canals
and to people.
And the fact that you
do need to have programs
that are totally encompassing.
Both from the management side,
but also from the
technical side.
Because those two have to
come together at the center.
I also express my
willingness always
to incorporate Lamar.
We have a group now going,
I believe next month,
in a couple of weeks.
Going to Costa Rica
and then to Panama.
And we will be hosting
you over there as well.
And I hope since they're coming,
the right time I will be able
to meet with them briefly.
But we've also had at least two
that spend quite a
bit of time in Panama.
We had Jeremy Allen spend
quite some time in Panama.
A great guy.
I think he's coming tonight.
I think he told me he was.
And also Andrea Lamas.
A civil engineer.
A think at that time
she was maybe a junior.
And she went and spent almost
I think like six months
in the expansion project.
So to her it must've been
a very interesting experience.
Because it's a project
that you only see
every 100 years.
I'm really pleased to
be able to cooperate
in any way that I can
with the university.
And I thank the university
for the opportunity.
Not only today, but the
opportunity to come out here
and get my two degrees
and break ground in Panama
and definitely it hasn't
been too bad for me.
Thank you.
(audience applauds)
- Jorge, thank you
so much for your
excellent comprehensive remarks.
You have convinced us all
the canal connects not
only the two oceans
but the present and the future.
We have note cards that
have been passed out.
Ask questions.
So if you have it, can
you please fill them out.
While we're looking and
reviewing those note cards
let me, if I could,
let me ask you
a question about.
I mentioned, we have
incredibly bright faculty.
Across all the colleges
here at Lamar University.
What suggestions would
you have for faculty
to apply their sophisticated
analytical tools
in ways that might help your
operations and your management?
- One of the more
challenging things
that we have to approach
and I think it's not
just the Panama Canal,
but anybody that has a channel
is optimization
of those channels.
And I think here we
have the Houston channel
and we have the Panama Canal.
We have to not only
optimize that resource
but other resources
that also use,
are needed to perform the work.
So what I'd say is
optimization of resources
or operations research
area is where it's at.
It's very challenging,
but you do have to invest in it.
But like I mentioned,
we're investing
six million dollars on a modular
system that will
allow us to do more,
better scheduling.
But not just the
scheduling of the vessels,
but the scheduling of
all the other resources.
We're talking about
manpower, tugboats,
launches, locks.
So I think it is
a big challenge.
And then there's another
aspect of optimization
is also managing or
optimizing the revenue.
Or what you call in the airline
industry yield management.
We are doing a little
bit of that now.
Because of the fact
that you have a vessel
with 10,000 TEU's full.
We pay $900,000 going
to the Panama Canal.
You have an energy
vessel through full,
about $410,000.
You have an LPG Neo-Panamax
vessel going through
it pays 200,000.
And it uses the same slot.
So we have to now
try to optimize.
We wanna leave
space for everyone.
But when there's little space,
then you have to
manage the yield.
And we will have to do that.
In the future, all of those
who are in industrial
engineering especially
will have to work a
little bit more on the OR.
Because it's something
with limited resources
that are typical of channels.
I mean the Houston channel
we were talking earlier.
The Houston channel
has multiple ports
and different materials
going out of those ports.
Commodities coming
out of those ports.
But do they all
talk to each other?
Is there a control house
that really controls them?
Do they have good
information that comes in
so that we can really
optimize the channel?
The channel is the most
important resource.
It's not the port.
Because if you don't
have the channel
you cannot get to the port.
So how can you do the convoys?
Can you have
meetings of vessels?
Where do they meet?
All of that will come out
of those investigations.
So I think in an area to me
that's very close to my heart,
is really the area of
optimization of resources.
And I would focus
on that of course.
We have other areas
that are important
to the canal which
is water as well.
But we are already
working on that.
And when I say water is,
how to get more water.
Because we are an
artificial lake canal.
So we need to make sure
that we always have
enough water to be
able to pass more
and more and bigger vessels.
So that's a challenge
that we have
and we've already taken it on
and I think we're
on the right path
looking for additional
reservoirs in the
area to provide.
Because the canal not
only provides the water
for the vessels to go
through, it also provides
60% of the raw
water that is used
for 60% of the humans
in Panama to consume.
So we are a major water
provider for the country.
And every day they want more,
but from the same resources.
So this is why now we
are involving ourselves
in trying to secure
additional water resources.
Okay.
- Well this is a
straight forward question
about other canals in the world.
Suez canal obviously
provides the gateway,
an alternative gateway.
South Asia for example
to the US east coast.
How do you see the
relationship between
the Suez and Panama Canal
as you move forward?
- We have always had a
very good relationship.
And I've met with Mr. Mamish,
the director of the Suez
canal twice this past year.
The latest one in October.
We have a very
cordial relationship.
A very competitive relationship.
One thing I did
say was I was not
going to compete based
on price, but on service.
So we know that
they have a route
that can compete
because they have,
they can actually run
an 18,000 TEU vessel.
But I know they will
not be an 18,000
TEU vessel going to the east
coast of the United States.
So really, the vessels
that will be going there
will be anywhere
between 12 to 14,000
which is what we can handle.
We are a shorter
route round trip
of about 14 15 days, round trip.
Shorter than going
to Suez Canal.
Suez Canal is a little bit
less expensive than we are.
When they learned
that we were already
going to open up the expansion,
they went on a sales spree.
We thought it was crazy.
Because people then
start asking me,
"Aren't you going to compete?"
I said "No we can't do this."
This is not price
cutting time for us.
We gotta pay all of this.
So we have to
concentrate on service.
And they went with a 30%
discount on the tolls.
And later went to 50%.
They went to 63%.
Now they have gone
to another 3%.
If you put down
three years worth
of advance payment for the tolls
in the central bank of Egypt.
We have been fortunate
that our customers
are looking more favorably
at the Panama Canal
because of the shorter route
and the service that we provide
and the connectivity that
we have with the Americas.
So for us yes it's a challenge.
It's a competitor.
It's an honorable competitor.
But we're not gonna
do price fixing.
Definitely no.
And price cutting,
we can't compete.
That's not something
that we'll come down to.
But we do have enough incentives
in our price structure
that we'll allow
our customers to
remain interested
in using the Panama Canal.
But regard to other competitors,
we have of course
the Intermodal system
of the United States.
LA Long beach.
That's more expensive
than the Panama Canal.
But it's quicker.
So if you wanna move iPhone 8's.
They haven't come out yet,
but when they come out.
If you wanna move
iPhone 8's very quickly
or you have the latest fashion
that needs to be out there
in the east coast, then you
move it to the west coast.
But if you're moving furniture,
or irons, or ovens,
normally they're not
all that fashion.
And they're heavy.
You better take them
to the Panama Canal.
Thank you.
(applause)
- Jorge and Senior Quijano,
it's our great honor
to have you here
and open up the Senator's
Symposium Series.
And you have set certainly
a very high standard.
And we will keep
you in tune for the
next Symposium speaker as well.
Again, thank you
so much and thank
you all for
participating in this
Symposium sponsored
by the Senator.
Thank you all.
(audience applauds)
