Rodolfo De La Guardia President, The Logistics Business Council of Panama (COEL)

COEL believes that logistics saved the world over 2020, and it is certainly the hope upon which much of Panama’s economic fortunes rest.

• Interview

What is your view on certain logistics trends—such as an evolving US-China trade relationship and rising demand for regional transshipment—and how they relate to Panama? How can the country benefit from these changing dynamics?

Logistics is a sector that is constantly changing. Improvements in port efficiencies have pushed logistics into the realm of true competition. Ports are now partnering with logistics service providers to give carriers and shippers additional space to compete. Nowadays, port calls are not only selected by geography, but also by the existence of additional services and, most importantly, by its connectivity to global value chains. New trends in logistics, such as digitalization and automated deliveries, will continue to push the envelope. Geopolitical trends, such as the tensions in China-US relations, will also push the envelope. Pragmatically, while there will be some changes in the supply chains due to the frictions, these will be mostly artificial, and possibly, temporary, since these are based on stances like national security or human rights, which could change in terms of policy, and not values. When we look at production costs, just the sheer size of China’s economies of scale makes alternative production for some products uncompetitive. Panama, a point that connects 144 maritime routes and 1,700 ports, is well suited to remain an important node in global val

“Already, we see some manufacturing

shifting out of China, although much of it is moving to Southeast and South Asia, but some part of shift is moving to Mexico, Colombia, and Brazil.”

ue chains and thus benefit from these changes. Panama can capitalize on its positions and new environment to attract investment from the US as well as from China to push the envelope and generate sufficient income to promote its development. The choosing of a port is becoming more complex due to increased port efficiency. In this ecosystem, some ports will win, and others will lose; however, Panama is well suited to win. It should continue to be a top actor in all maritime forums offering its competitive and comparative advantages to multinational firms in order to attract investment.

What is your outlook for Panama’s logistics sector by the end of 2021 and the role that this sector will play in the country’s economic recovery from the COVID-19 pandemic?

The logistics sector saved the world in 2020. Given the great uncertainty with respect to protectionism, many analysts, including those at WTO, were expecting falls between 11% and 32%; however, the response from the logistics sector was swift action, and consequently, in hand with economic stimulus measures in developed countries, the sector is helping global trade rebound and help exporting countries to earn income to compensate for fiscal unbalances due to COVID-19 expenditures. For 2021, we expect the sector to continue to grow, albeit restricted by the extent of the evolution of COVID-19 and the economic measures used to mitigate its impact.

What would be your final message to international companies or investors looking at Panama today, particularly regarding its connectivity?

We are one of the most important nodes in global value chains. We have the Panama Canal, which is a top driver of maritime activity, Tocumen Airport, which is the aerial hub of the region, and we are pushing to become a top regional hub for data services. It is a great opportunity for any firm wanting to access regional markets. Panama can provide an excellent location and economic benefits to any firm that wants to access regional markets. It has many special regimes and economic zones that allow logistics firms to provide enhanced services to the cargo while getting lucrative margins in the operations. Its global banking center and the use of the dollar also serve to enhance Panama’s value offer and, consequently, its location as a center for world logistic services. Companies interested in locating in Panama or finding out more about Panama should not hesitate to contact COEL or PROPANAMA.