Ten years after assuming control of the Panama Canal, Panamanian authorities can boast a highly efficient and lucrative operation.
BY JOACHIM BAMRUD
When the United States handed over control of the Panama Canal to Panamanian authorities on December 31, 1999, there was widespread concern among many Panamanians and Americans alike that the waterway would be plagued by mismanagement, corruption and lack of proper maintenance.
After all, the track record of other property handed over by the United States to Panama – including the ports on each side of the canal, the canal railway and real estate along the canal – did not have a good track record.
At the least, the 48-mile (77-kilometer) waterway would be run less efficient than the Panama Canal Commission (PCC), the U.S. agency that ran the canal from its opening in 1914 until the handover in 1999, many shippers feared.
A decade later, the facts have proven the harshest pessimists wrong. The Panama Canal Authority (ACP), the Panamanian agency that assumed day-to-day management of the canal, has not only avoided mismanagement, but also made the operations more lucrative.
The tenth anniversary of the handover comes as the canal is expanding to the tune of $5.2 billion to allow it to handle lager ships.
“The successful operation of the Canal does not surprise me,” says Robert McMillan, a former chairman of the PCC and author of Global Passage: Transformation of Panama and the Panama Canal.
Paul Bingham, Managing Director, Global Commerce & Transportation at U.S.-based consultancy IHS Global Insight, agrees. “I am not surprised given the focus of the management of the ACP to run the Canal as a serious business, planning for growth while managing to their bottom line,” he says. “The financial performance of the Canal reflects prudent decisions by management regarding how to serve their customers and the exercise of appropriate market power to earn value from their assets. Canal traffic has increased over the ten years, but toll restructuring, toll increases and other fee assessments have all contributed to the good financial performance of the Canal on behalf of the people of Panama.”
Richard Wainio, the CEO of the Port of Tampa, was involved firsthand in the transition as a planning director at the PCC. He traveled worldwide ...
Keywords: Aleman, Challenges, Outlook, Profits, Revenues, Tolls
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