Panama, Hub of the Americas

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Panama,Hub of the Americas
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Panama, Hub of the AmericasAgenda

• Why a Hub? Why Panama?
• Panama Hub areas
• Panama Logistic Service Provider Market Study
• Major Take-Aways

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Why a Hub?

• Reasons why a Hub model might be right for your
  business
• LCL or Airfreight based distribution model
  (Distribution costs savings through
  consolidation)
• Short time-to-market requirements
• Supply chain covers multiple continents
• Add-value during the supply chain while goods
  remain outside local duties and tax regimes until
  country of destination
• Global Logistics companies have a Latin American
  Hub in Panama
• DHL
• Maersk
• Panalpina
• UPS

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Why Panama?
European Union (495 Mln)
NAFTA (387 Mln)
CARICOM (14 Mln)
APEC (2.5 Bn)
MCCA (30 Mln)
CAN (100 Mln)
MERCOSUR (212 Mln)
Source Minestério de Indústria y Comercio
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ATLANTIC
GATUNLAKE
Panama Canal
Railroad
Transithmic Highway
Panamerican Highwah
Ports
Airports
PACIFIC
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Panama Hub Performance
Source Doing Business 2009
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Panama Hub Performance
Source Doing Business 2009
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Panama Hub Performance
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Panama Hub Performance
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Panama Hub Areas

• Colón Free Zone
• Panama Pacific Special Economic Area
• Export Processing Zones
• PANEXPORT EXPORT PROCESSING ZONE
• FORT DAVIS EXPORT PROCESSING ZONE
• PROINEXPORT TOCUMEN
• ZONA PROCESADORA DE EXPORTACION ALBROOK
• MARPESCA ZONE (COROZAL)

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Panama Hub Areas Colón Free Zone

• Mostly Retail, Apparel and Consumer Electronics
• Many Regional Distributors for US, EU and Asian
  brands
• Consisting of a large showroom area and a
  Warehousing area
• In proximity to Colón Container Terminal,
  Manzanillo International Terminal and Cristóbal

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Panama Hub Areas Colón Free Zone

• Entry Modes

gt5 local employees gt60 Re-exportation Rental
lease of building, lot, or Public Warehouse
space Proof of liquidity
Representing company Service fee No own buildings
or offices
No local presence
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Panama Hub AreasPanama Pacific Special Economic
Area

• Special Economic Area built around the old
  American Howard Airbase
• Geared towards a more Value-Added Hub model
• Extremely favorable environment in terms of
• Tax
• Customs
• Labor regulations
• Immigration

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Panama Hub AreasPanama Pacific Special Economic
Area

• Caterpillar investing 25 million in building
  regional Corporate HQ, Training Center and Call
  Center
• 3M Headquarters its new technology manufacturing
  and distribution center investing 15 million
• Dell Latin American Call Center and Small/Medium
  business Sales Operations employing over 2000
• HP Global Services Delivery Center employing over
  1000
• Proctor Gamble relocate Latin American
  Headquarters from Venezuela and Guatemala to
  Panama

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Panama Hub Areas Export Processing Zones

• Companies involved in light manufacturing,
  assembly, technology and logistics
• Exemption tax, duties and other charges on
• Import/export
• Sales,
• Profits and Assets
• Specific labor and immigration provisions
• PANEXPORT EXPORT PROCESSING ZONE
• Glaxo Smithkline
• FORT DAVIS EXPORT PROCESSING ZONE
• Government of Taiwan
• PROINEXPORT TOCUMEN
• (Tocumen National Airport)
• ZONA PROCESADORA DE EXPORTACION ALBROOK
• (Maersk Logistics)
• MARPESCA ZONE (COROZAL)
• (24.000 m3 of Cold Storage)

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Panama Hub areas compared

• High-Value, High-Rotation Consumer goods
• Entry via established distributor
• Relatively expensive difficult to find location

Colón Free Zone
Panama Pacific

• High Value-Added, Service-Intensive businesses
• Still in early stages of development Mostly
  Greenfield
• Labor, Immigration and Legal Facilities

• Smaller and older facilities
• Location based on logistics profile (airport,
  rail, port)
• Relatively economic but higher inland transport
  costs

Export Processing Zones
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Panama Logistic Service Provider Study
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Panama Logistic Service Provider StudyInterview
Structure

• Footprint in Panama
• Ownership structure
• Key Operational Data
• FTE
• TEU in/outbound
• Airfreight in/outbound
• m2 Warehousing
• Growth of the company since establishing
• Client / Markets
• New client implementation approach
• Account Management structure
• IT capabilities WMS / EDI / Visibility tools
• Growth perspectives (Financial Crisis)

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Major Take-AwaysTrends among the Global
Logistics Service Providers

• Most global players have some form of local
  shareholding or partnership
• Investments in Logistics Real Estate in the Free
  Zones are dominated by a small number of
  Panamanian dynasties that divide the business
  amongst them
• Panama Pacific Economic Area is on most agendas
  concerning next investments
• 2 LSPs that left Panama during Noriega are
  currently buying back their assets
• LSPs leverage international network to acquire
  business
• Growth rates over the last 10 years averages
  range 10-30
• Growth of Panama as a Hub is considered to come
  from Miami and Venezuela
• 2009 volumes are still expected to grow

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Major Take-AwaysFrom a Logistics Buyers
Perspective

• Most organizations have experience in providing
  Hub services for (EU, US) clients
• Sufficient command of English is rare at the
  operational level
• Follow-up or handling non-standard request is
  extremely poor
• Logistics advice and pricing of Warehousing and
  Distribution vary significantly

Quotes based on the same shipping profile
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Conclusions

• Panama is very well positioned to take over the
  role as Hub for Latin America from Miami. It is
  the most economic and efficient option for
  pan-regional logistics
• Major areas for development
• Skilled labor
• Infrastructure
• Depending on type of goods, Value-Added Services
  and Logistics Profile Panama has a number of
  options to fulfill the Hub role of many
  businesses
• The Logistics Service Providers are (still)
  experiencing high growth, therefore client care
  and service quality can be relatively low (take
  it or leave it)
• Your current LSP might not be the right choice in
  Panama
• Most LSPs leverage their International Networks
  therefore tariffs highly differ. Hence, it pays
  of to shop around
• Although better developed to facilitate
  international trade than most of its neighbors,
  local market knowledge and presence are
  prerequisites to succeed

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Panama Hub of the Americas

• Thank you for your attention