Executive Briefings

An Insider's View of Panama's Colon Free Trade Zone

Nelson Cabrera, director of business development at Lilly and Associates, provides first-hand information on the operation of Panama's Colon Free Zone.

About 300 traders operate within Panama's Colon Free Zone, moving everything from food products to electronic and automotive parts to apparel, says Cabrera, whose Miami-based shipping and logistics company has extensive operation sin Colon.

Many of these traders use the Free Zone as a hub to serve Latin America and the Caribbean, taking advantage of Panama's shared language and its geographic proximity to these regions, Cabrera says.

The average transit time from the Free Zone to Latin America is three to six days compared with a transit time of 10 days from Miami, he notes. Costs also are less. "Look at Venezuela as an example," he says. "Venezuela is a big export market for Panama and Miami, but ocean freight from Miami would typically be $5000 for a 40-foot high cube container; from Panama the cost is $1500. So it is one-third the cost and much faster delivery."

The Free Zone has a good supply of unskilled workers, who earn $10 to $15 per day for typical warehouse jobs, Cabrera says. This is in contrast to a shortage of skilled labor in Panama, where the unemployment rate is about 5 percent. This has brought stability to the economy, but it also means that wages are increasing and competition for skilled labor is great.

Stability also comes from the fact that Panama's economy is based on the U.S. dollar, says Cabrera. Panama has more than 10 years of political stability as well. "There have been different governments during this time but continuity as far as macro economic policies are concerned," he says.

The Colon Free Zone has plenty of room to expand distribution operations and anticipates continued growth, thanks to the expansion of the Panama Canal and to "the situation in Asia," says Cabrera. "It takes a long time to import products from Asia and Asia doesn't easily grant credit terms to Latin American and Caribbean importers," he explains. "Panama has taken advantage of that by becoming a major finance center. Importers in Latin America and the Caribbean can very easily go to Panama and get their product financed for 90 days and do business in the language of their choice.

"From the standpoint of cost, transit time and carrier options, Panama is an excellent distribution hub," he says.

To view video in its entirety, click here


Keywords: supply chain, supply chain management, international trade, inventory management, supply chain management scm, value chain, 3pl, global logistics, transportation management, third party logistics, logistics management, logistics & supply chain, logistics services, supply chain jobs, supply chain planning, supply chain services

About 300 traders operate within Panama's Colon Free Zone, moving everything from food products to electronic and automotive parts to apparel, says Cabrera, whose Miami-based shipping and logistics company has extensive operation sin Colon.

Many of these traders use the Free Zone as a hub to serve Latin America and the Caribbean, taking advantage of Panama's shared language and its geographic proximity to these regions, Cabrera says.

The average transit time from the Free Zone to Latin America is three to six days compared with a transit time of 10 days from Miami, he notes. Costs also are less. "Look at Venezuela as an example," he says. "Venezuela is a big export market for Panama and Miami, but ocean freight from Miami would typically be $5000 for a 40-foot high cube container; from Panama the cost is $1500. So it is one-third the cost and much faster delivery."

The Free Zone has a good supply of unskilled workers, who earn $10 to $15 per day for typical warehouse jobs, Cabrera says. This is in contrast to a shortage of skilled labor in Panama, where the unemployment rate is about 5 percent. This has brought stability to the economy, but it also means that wages are increasing and competition for skilled labor is great.

Stability also comes from the fact that Panama's economy is based on the U.S. dollar, says Cabrera. Panama has more than 10 years of political stability as well. "There have been different governments during this time but continuity as far as macro economic policies are concerned," he says.

The Colon Free Zone has plenty of room to expand distribution operations and anticipates continued growth, thanks to the expansion of the Panama Canal and to "the situation in Asia," says Cabrera. "It takes a long time to import products from Asia and Asia doesn't easily grant credit terms to Latin American and Caribbean importers," he explains. "Panama has taken advantage of that by becoming a major finance center. Importers in Latin America and the Caribbean can very easily go to Panama and get their product financed for 90 days and do business in the language of their choice.

"From the standpoint of cost, transit time and carrier options, Panama is an excellent distribution hub," he says.

To view video in its entirety, click here


Keywords: supply chain, supply chain management, international trade, inventory management, supply chain management scm, value chain, 3pl, global logistics, transportation management, third party logistics, logistics management, logistics & supply chain, logistics services, supply chain jobs, supply chain planning, supply chain services