I'm no expert on logistics, but writing about international business has required me to learn a bit more about the way goods move around the world. Strange, tangled trade routes stretch like spiderwebs across the globe, linking unlikely nations in lucrative commercial partnerships. Shipping companies, air cargo freighters and railroads coalesce in transportation lines that bring Chinese-made toys to American Christmas stockings, Peruvian asparagus to American dinner tables, and outdated and unsafe American school buses to Panama for use as public transportation.
Panama, a nation of only about 3.2 million inhabitants, sits at one of the main crossroads in worldwide trade. The narrow, east-to-west isthmus of land between Costa Rica and Colombia separates the Pacific and Atlantic oceans by only about 50 miles at its narrowest point. The Panama Canal, one of the most impressive engineering feats man ever conceived or achieved, provides a shortcut between the two, allowing ships laden with cargo to skip about four weeks of sailing around the southern tip of South America and save millions of dollars in operating costs. The canal has three sets of locks - the Miraflores, Pedro Miguel and the Gatun.
I learned on a recent trip that the Canal is the magnet that draws business through a country that doesn't have much of its own consumer market to speak of. More than 80 percent of the goods flowing through Panama will never actually touch Panamanian soil or land in the hands of a consumer there. A $5.25 billion expansion project will add a new set of locks, allowing it to handle the largest vessels in the world, known as "Post-Panamax" ships. But the Canal is not the only logistical advantage the country has to offer. As it has drawn the world's attention - and money - Panamanians, with the help of foreign investors, have learned to make a few bucks off of auxiliary logistical enterprises.
Three ports - Cristobal, Evergreen and Manzanillo International Terminal - operate on the northern - Panamanians call it the "Atlantic" - coast of the country. Cristobal is run by Hutchinson, an international ports company with operations in 22 countries. Evergreen, a massive American shipping agency, runs its own port to manage its considerable inflow of goods. Manzanill International, or MIT, is a Panamanian-owned company housed in a beautifully remodeled building that served as a high school when the American military still guarded the area. And all of these ports have the advantage of the Colon Free Zone, where $16 billion of goods are traded annually. MIT and Cristobal have expansion plans in the works.
The same is true for the Port of Balboa, the only one on Panama's southern, or Pacific, coast. Also operated by Hutchinson, Balboa is gearing up for some major additions. An inlet is being filled with imported sand and more cranes are on the way.
The Panama Canal Railroad, which is half-owned by Kansas City Southern through a joint venture with MI-Jack, links the two ports, providing a cost-effective alternative to the hefty Canal fees for ships that would have had to off-load cargo on the other side anyway. One passage through the Canal can cost from $250,000 to more than $330,000, depending on the ship's cargo capacity.
The country is improving its air service as well. Tocumen International Airport has injected millions of dollars into remodeling projects. Two years ago, the customs counter in Tocumen was a cave. Now it's airy and freshly painted. Customs officials sit at wood-veneered counters and smile at passengers as they stamp passports and visa paperwork. Copa Airlines offers regional connectivity with flights to nearly 40 destinations.
Not bad for a country with a total population smaller than the metropolitan area of Houston.