Interview with Jorge L.Quijano, Panama Canal Authority

SAFETY4SEA Team met Jorge L.Quijano, CEO, Panama Canal Authority at Posidonia 2016, June 6-10, Metropolitan Expo, Athens for an interview on Panama Canal expansion project . You may view video interview on YouTube

Q1 Tell us few words about Panama’s Canal Expansion project?

The Panama Canals Expansion project has actually started a long time ago. A lot of planning has taken place since 1998, looking at the possibility of the expansion and after a series of studies through 2006, we went to a National Referendum which then confirmed that we should expand the canal. This is the major expansion since its construction. It has two new locks and entails new channels which are the existing channels that have been made deeper by dredging and also wider for safety reasons. Therefore, we have a deeper and wider canal and the new locks can accommodate Post- Panamax vessels that we call them Neo-Panamax vessels.

Q2 Why is the expanded Canal considered as such a major project for North American trade?

Well, the major routes that the Canal serves are basically Asia to North America but also South West Coast of America to East coast of the US and the Gulf ports. So that’s why the two major routes of the Panama Canal are related to North America. The number one customer of the Canal is the US (about 70% of what goes through the Panama Canal comes to the US). China is the number two customer and Chile is the number three customer. So, the Canal is important not only for the US but also for all of Latin America.

Q3 With the expansion of the Panama Canal higher traffic is expected. What does it mean for navigation and safety of ships?

We have maintained a very good safety record, we feel that Panama Canal is a very safe route and we take full responsibility. Our pilots when going on board, they take full responsibility of the vessel and even if any damages done, this is the only Canal in the world where the pilots are fully in charge and responsible. Also, the pilots as well as the tugboat fleet are part of the Panama Canal, they are not owned by a private company, therefore, all of the services provided are under the responsibility of the Canal meaning that in case of anything happens, we are responsible and we pay. All things considered, we take very good care to make sure that nothing happens and we of course strive for having a very safe operation.

Q4 What is your experience /comments you would like to share with respect to the expansion project?

This is the first time that we undertake such a long project; it took 6 years to complete. Also, it is considered as a very complex project regarding the construction of the locks. However, it is very important that it involves water saving basins because our Canal is a fresh water Canal. It uses rain that is accumulated in two major reservoirs, so we have to save water. And what we have implemented here is the only lock in the world for ocean going vessels that has water saving basins. Actually, we save 60% of the water of all vessels that are transiting. Although this is not really a new idea, it is an innovation in the sense that for the first time it is applied to a lock of this size.

For us, the project is being considered as a great engineering feat that has been accomplished. The Canal not only offers more capacity but also, due to the third lock, it offers a new product: a much larger vessel. So, it brings in economies of scale resulting in economies in the way of fewer emissions as our route is shorter. This is the reason why we call the route to the East Coast of the US a ‘Green Route’; we can save 15 days of sailing in different routes that compete with the Panama Canal. It is a much greener route because of those 15 days of fewer emissions.

In addition, the fact that one vessel can also have two to three times the same tonnage onboard contributes to consuming less fuels and emitting less contaminating emissions. Therefore, the expanded Panama Canal opens up new markets; it opens up a new market for the LNG market coming out of the Gulf ports off the US. In few months we’ll see the first LNG transits coming from the Gulf port. Starting maybe once a week but between now, however, the year 2019-2020 we should have almost three LNG vessels going through the Panama Canal to Asia per day. The big size of the locks actually opens new markets including the LNG. We had never passed one cubic meter of LNG before. We’ve managed all the gases like LPG but now, for the first time, we have gained the opportunity to enter the LNG market.

Q5 What are your goals and aspirations for the expanded Canal?

Well, as I have already mentioned, our main goals are to serve new markets and with the new locks and the new technology to save on the water consumption. We also expect not only energy market to boom but also expect shifting from smaller vessel to larger with respect to container trade. Today, container trade for the Canal is basically very close to 50% of our revenues; going now to the largest vessels, we will be able to handle the 90% of today’s container fleet. We are bringing in some very good opportunities for our customers to use the expanded Canal for their benefit specifically in regards to the economies of scales and also fewer emissions by using Panama’s route.

Q6 What is your message to the shipping industry with respect to upgraded capabilities of the Panama Canal?

A message to our customers is that are delivering what we had promised. With the new locks, we are now offering new opportunities and we expect them to move very quickly into using it. We will maintain the same standards that the Panama Canal always had; fully transparency and publicity; all of our information is publicly accessed ;we maintain transparency in all of our processes so that when they use the reservation system the priorities are given to those that have used the most of the Panama Canal. Therefore, the more you use the Canal the better pricing structure you will get. I hope that customers will make use of that and built up deeper relationship with the Panama Canal over the next years because the new toll structures for the first time entice new customers to come back and use the Canal.

The views presented hereabove are only those of the author and not necessarily those of  SAFETY4SEA and are for information sharing and discussion  purposes only.