Panama Canal Outlook

Jorge L. Quijano

Administrator/CEO

Panama Canal Authority

Japan – November 21, 2014

Yesterday

PANAMA AT A GLANCE

GDP growth rate – last 10 years 7.5%

GDP (P) 2013 (billion of dollars) $42.6

GDP per capita - 2013 (P)(in US$) $10,032

Population (million) 3.8

Unemployment Rate (%) 4.0

Inflation Rate 2013 (%) 4.1

Source: ACP/INEC (Contraloría General de la República) 2014.

The Panama Canal Trade and Main Users

* Measured in Million of Long Tons

Total Cargo Movement FY 2014 Total Cargo Movements

224.9 Million Long Tons USERS FY 2013* FY 2014* 2014 (%)

United States 136.5 154.1 68.5

China 46.4 51.5 22.8

Chile 29.0 29.5 13.1

Japan 20.0 21.7 9.5

Colombia 17.5 19.2 8.6

South Korea 16.8 19.1 8.5

http://rds.yahoo.com/_ylt=A9G_RtrEkmRGbEEBeyeJzbkF;_ylu=X3oDMTBwa2ZnYm5rBHBvcwMxBHNlYwNzcgR2dGlkA0kwNzNfOTU-/SIG=1i88ra2i4/EXP=1181082692/**http:/images.search.yahoo.com/search/images/view?back=http://images.search.yahoo.com/search/images?p=bandera+de+chile&ei=UTF-8&fr=yfp-t-501&x=wrt&w=365&h=243&imgurl=images.encarta.msn.com/xrefmedia/sharemed/targets/illus/flg/T048922A.jpg&rurl=http://es.encarta.msn.com/media_201619321_761572974_-1_1/Bandera_e_himno_de_Chile.html&size=5.1kB&name=T048922A.jpg&p=bandera+de+chile&type=jpeg&no=1&tt=342&oid=2632d356587c7214&ei=UTF-8http://rds.yahoo.com/_ylt=A9G_RtvqkmRGInoAXFaJzbkF;_ylu=X3oDMTBwa2ZnYm5rBHBvcwMxBHNlYwNzcgR2dGlkA0kwNzNfOTU-/SIG=1g56kiv0p/EXP=1181082730/**http:/images.search.yahoo.com/search/images/view?back=http://images.search.yahoo.com/search/images?p=bandera+de+china&ei=UTF-8&fr=yfp-t-501&x=wrt&w=452&h=302&imgurl=www.andrew.cmu.edu/user/fjk/bandera china.gif&rurl=http://www.andrew.cmu.edu/user/fjk?M=D&size=4.2kB&name=bandera+china.gif&p=bandera+de+china&type=gif&no=1&tt=211&oid=13a6ae925bedbc18&ei=UTF-8http://images.search.yahoo.com/search/images/view?back=http://images.search.yahoo.com/search/images?p=bandera+de+korea&ei=UTF-8&fr=yfp-t-501&x=wrt&w=160&h=101&imgurl=www.hapkidomex.com/bc/_borders/skoreaf.jpg&rurl=http://www.hapkidomex.com/bc/Korea.htm&size=4.2kB&name=skoreaf.jpg&p=bandera+de+korea&type=jpeg&no=1&tt=26&oid=da143e5b56112fd0&ei=UTF-8

Composition of Top 40 Customers by Country – In Tolls and Transits

239

210

162

109 107 97

88 87 80 77

57 54

28 23 19 19 9

1,140

0

200

400

600

800

1,000

1,200

0

50

100

150

200

250

300

Tran

sits

Tolls

in M

illio

n D

olla

rs

Tolls Transits

Main Commodities to and from Japan in FY 2014

Total of 21.7 million long tons

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

Origin

Destination

• 3.0% of world maritime trade

• 10.6% of grains

• 5.8% of chemicals

• 4.7% of containers

Panama Canal’s share of global seaborne trade

The Panama Canal’s Performance

2014 Transit Revenues (thousand of US dollars) $2,323,931

2014 Other Revenues (thousand of US dollars) $305,220

2014 Total Revenues (thousand of US dollars) $2,629,151

Employees 10,016

14,544

13,660

13,482

0

5,000

10,000

15,000

20,000

2012 2013 2014

Vessel Transits

333.7 320.6 326.8

0

200

400

2012 2013 2014

Vessel Tonnage In millions of PC/UMS

1,852 1,850 1,910 395 374 414

163 187 305

2,411 2,411 2,629

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014

Mill

ion

s o

f d

olla

rs

Fiscal Year

Revenues

Toll Revenues Transit Related Services Revenues Other Revenues

The Panama Canal’s value added service

The Panama Canal Service Offer

Reliability

Sustainability

Connectivity

Economies of Scale

Reliability

• Operates 24 hours a day, 7 days a week, 365 days a year

• Safe and secure

• 98% customer satisfaction

• Predictability: Published tariffs and fixed transit date with reservation

Sustainability – The Green Route

• The actions taken by ACP: Environmental management in operations and Canal Watershed sustainability programs

• The CO2 emission reduction in the planet as

a result of the Panama Canal route

• Become carbon neutral

Sustainability – Capital Investment Program

Fuel Pipeline and Tank Farm Tugboats Ground dams

Bridge over Atlantic side

Dredging

Launches

102 211

350 463

600 750

912 1,027

1,194 1,262 1,360

1,548

1,869

2,232 2,403

2,914

102 109 139 113 137 150 162 115 167 68 98

188 321 363

171

511

FY 2000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Accumulated Investment – Capex

(USD millions)

Panama: The Transportation and Logistics Hub of the Americas

Achieving the maximum potential of its geographical position

• 144 trade routes • 1700 ports • 160 countries

Panama’s Air Hub • 69 destinations • 30 countries

Connectivity

Economies of Scale

4,400 TEU’s 33.5 m (110’)

32.3 m (106’)

12.8 m (42’)

12.04 m (39.5’)

Existing Locks Max Vessel:

55 m (180’)

13,000 – 14,000 TEU’s

Beam 49 m (160’)

18.3 m (60’)

15.2 m (50’)

New Locks Max Vessel Size:

Dimensions of Locks and Vessels

Atlantic Site Post-Panamax Locks

Pacific Site Post-Panamax Locks

Atlantic entrance deepening and

widening

17.66 M m3

Pacific entrance deepening and widening

8.7 M m3

Increase of Gatun Lake’s maximum operating level

26.7 m 27.1 m

Gatun Lake widening and deepening and widening of Gaillard Cut ‘s navigation

channels

Pacific Access Channel 49 M m3

New

Locks ►

Access

channel ►

Existing Locks ▼

Existing Locks ▼

Expansion Program Components

BENEFITS FROM TRANSPORTATION COST SAVINGS

EXPORTERS SHIPPING LINES IMPORTERS CONSUMERS

Economies of scale; efficiencies in the supply chain; connectivity

Container Vessels

13,000 to 14,000 TEU

New volumes from:

- Latin America

Market Recovery from:

- West Coast United States

- Suez Canal

Dry Bulk

Up to 170,000 DWT - Coal from Colombia

- Metalurgical coal from Vancouver

- Iron Ore from Brazil in Minicapesize (85,000-120,000 DWT)

Liquid Bulk

Up to 150,000 DWT

- Tankers

- Petroleum Products

LNG/LPG

- LNG Up to 177,000m3

and VLGC

Rotterdam Antwerp

Bremerhaven Hamburg

Guayaquil

Callao

San Antonio

Cartagena

Long Beach

Kingston

P. Caucedo

Manzanillo P. Cabello

Chiwan

Shanghai

Ningbo

Kaohsiung

Qingdao

Hong Kong

Galveston

Miami

Brunswick

Charleston

New York

Napier

Noumea

Tilbury

San Juan PR

Antofagasta

Taipei

Yokohama Port Hueneme

Oakland

Baltimore

Melbourne Tauranga

Port Kembla

Auckland

Vancouver

Balboa

Seattle

Lázaro Cardenas

Pto. Quetzal

Buenaventura

Vancouver

Singapore

Tacoma

Inchon

Masan

Kobe Nagoya

Fremantle

Brisbane

Zarate

Rio Grande

Paranagua

Santos

Vitoria

Veracruz

Newark

Darwin

Muara

Manila

Jakarta

Jacksonville

Halifax

Freeport

Roundtrip:

• Panama Canal: 22,000 nm

• Suez Canal: 26,600 nm

• Approx. 14 days less

• Savings of 4,600 nm

• 2 Vessels less required

84 Days Roundtrip.

Weighted Avg.

Total Cost per TEU 5,000 TEU $1,430

8,000 TEU $1,254

12,000 TEU $1,138

70 Days Roundtrip.

Weighted Avg.

Total Cost per TEU 5,000 TEU $1,356

8,000 TEU $1,200

12,000 TEU $1,095

Average roundtrip utilization: 60% full TEU

• Headhaul: 80% full TEU

• Backhaul: 40% full TEU

Full Containership Services Northeast Asia – East Coast of the United States

Dry Bulk Grain Trade Grain Belt New Orleans, USA to Dalian, China

Fremantle

Brisbane

Darwin

Jakarta

Sources: ACP Route Choice Model

Norway Oslo Tórshavn

Rotterdam Antwerp

Denmark

Santa Marta

Los Angeles

Chiwan

Shanghai

Ningbo

Kaohsiung

Qingdao

Hong Kong

New Orleans

Charleston

New York

Napier

Noumea

London

Taipei

Yokohama San Francisco Baltimore

Melbourne Tauranga

Port Kembla

Auckland

Vancouver

Seattle

Vancouver

Singapore

Inchon

Masan

Kobe Nagoya

Fremantle

Brisbane

Darwin

Muara

Manila

Jakarta

Boston

45 Days

55K DWT: $77/MT

95K DWT: $67/MT

Panama Canal

Sea distance: 10,069 nm

Dalian

Savings of 5,284 nm

Approx. 16 days less

61 Days

55K DWT: $86/MT

95K DWT: $73/MT

Cape of Good Hope

Sea distance: 15,353 nm

30 Days

55K DWT: $103/MT

95K DWT: $98/MT

Vehicle Carrier Services Northeast Asia – East Coast of the United States

32 Days

Shipping Cost 6,500CEU $454/CEU 8,000CEU

$440/CEU

Panama Canal: 10,859 nm

Suez Canal: 14,490 nm

Approx. 8 days less

Savings of 3,631 nm

40 Days

Shipping Cost 6,500CEU $532/CEU 8,000CEU

$512/CEU

Miami

Rotterdam Antwerp

Bremerhaven Hamburg

Guayaquil

Callao

San Antonio

Cartagena

Long Beach

Kingston

P. Caucedo

Manzanillo P. Cabello

Chiwan

Shanghai

Ningbo

Kaohsiung

Qingdao

Hong Kong

Galveston Brunswick

Charleston

New York

Napier

Noumea

Tilbury

San Juan PR

Antofagasta

Taipei

Yokohama Port Hueneme

Oakland

Baltimore

Melbourne Tauranga

Port Kembla

Auckland

Vancouver

Balboa

Seattle

Lázaro Cardenas

Pto. Quetzal

Buenaventura

Vancouver

Singapore

Tacoma

Inchon

Kobe Nagoya

Fremantle

Brisbane

Zarate

Rio Grande

Paranagua

Santos

Vitoria

Veracruz

Newark

Darwin

Muara

Manila

Jakarta

Jacksonville

Halifax

Freeport

Masan

{

Lower 48 States Shale Plays

Source: Energy Information Administration, May 9, 2011.

LNG Trade – U.S. Gulf to Fukuoka, Japan

22 Days

Shipping Cost

LNG 155,000 m3: $33.7/m3

Panama Canal: 9,623 nm Savings of 4,494 nm

Approx. 10 days less

32 Days

Shipping Cost

LNG 155,000 m3: $47.56/m3

Suez Canal: 14,117 nm

LPG Trade – U.S. Gulf to Chiba, Japan

Panama Canal: 9,229 nm

Savings of 5,754 nm

Approx. 15 days less Cape of Good Hope:

15,765 nm