Panama Canal
CEO Says Auto Shipping Showing Recovery
By Andrea Jaramillo and Eric Sabo
(Bloomberg) -- The Panama Canal Authority
has begun to see “signs of recovery” in
shipping traffic, including from freighters
transporting cars, said Alberto Aleman, the
authority’s chief executive officer.
Aleman said he expects traffic in the fiscal
year ending in September to total about 295
million tons, up from a previous range he
had given of about 290 million to 295
million tons. Traffic in the 95-year-old
canal totaled 310 million tons in 2008.
Revenue this year will be “similar” to last
year’s record $2 billion, Aleman said.
“Amid the crisis, amid the recession, this
is good,” Aleman, who’s run the canal since
1996, said in a telephone interview from
Panama City. Car shipments have “declined as
was to be expected given the problems that
we’ve seen in the automobile industry
worldwide but we’ve seen signs of recovery
in this segment.”
U.S. auto sales have run at an annual rate
of fewer than 10 million vehicles for each
month this year, after averaging 16.8
million from 2000 through 2007. Domestic
sales through June slid 33 percent for Ford
Motor Co. in Dearborn, Michigan and 40
percent at Detroit-based General Motors Co.,
which emerged from a U.S.-backed bankruptcy
reorganization this year.
The Panama Canal, which connects the Pacific
Ocean with the Caribbean Sea, is undergoing
a $5.25 billion expansion project through
2014 to handle larger vessels. The authority
has secured $2.3 billion in funding from
loans from overseas banks and plans to fund
the rest with cash it generates from
shipping fees, said Aleman.
‘Very Flat’
Shipping traffic through the canal between
October and June dropped 3 percent compared
with the year-earlier period, according to
Aleman. Total transits from April to June
fell 6.4 percent compared with a year ago,
the authority said in a statement today.
Aleman predicted traffic will “stabilize” in
2010 near this year’s levels.
“I see a very flat year, a year very similar
to this year,” Aleman said. “Maybe a little
bit higher, but we’re being conservative in
our analysis.”
The authority in June temporarily cut
reservation fees for larger vessels and
eased penalties for ships that arrive late
in a bid to lure more shipping companies
amid the recession. Aleman said he’ll review
the measures at the end of September, the
original deadline, before deciding whether
to extend them.
Reduced Traffic
A May increase in what the canal charges for
tolls helped compensate for lower income
this year from reduced traffic and the
temporary drop in fees, according to Aleman.
He predicts income from tolls, which
accounts for about 70 percent of the
authority’s total revenue, will rise 9
percent this fiscal year to about $1.44
billion.
The Panama Canal Authority will transfer
some $740 million in revenue this year to
the Panamanian government, up from $700
million last year, said Aleman.
The U.S. is the largest customer for the
waterway, representing about 70 percent of
traffic, almost a decade after it handed
over the canal authority to Panama. China is
the canal’s No. 2 user, the authority has
said. The canal, which shortens the route
for Asian goods destined for the U.S. East
Coast, handles about 5 percent of the
world’s seaborne freight.
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