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Chairman of the Board of Directors
Roberto RoyChairman of the Board of Directors
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During this period, the Canal has tackled a new and signicant challenge, the designation of
the team that will lead the organization towards the Canal expansion. The appointment of the
Administrator and the Deputy Administrator dened the message of the Canal Authority to the
Panamanian people, clients and stakeholders, of assuring that the management of the waterway
will maintain its vision of offering quality and excellence in the services rendered to customers
while providing economic well-being to the country and benets to the worlds economy, and
ensuring best practices for environmental protection. The selection is representative of a certain
institutional continuity that shows the Board of Directors commitment to achieving high standards
for which this waterway has been recognized.
In addition, we identied the need to align the organizational structure of the Panama CanaAuthority to suit our customers and clients evolving needs, prepare to manage an expanded
Canal, and reect best business practices. As adaptability to change has always been a
characteristic of the interoceanic waterway, we have intensied the efforts to diversify ou
services,and simultaneously strengthen the core business of the organization.
The execution of the Expansion Program, which is almost midway of its completion, is only one
of the projects that are currently underway to continue providing better services every day
The Panama Canal has also continued to implement an aggressive modernization program
comprised of projects aimed at increasing the present Canal capacity, through the widening
and dredging of the entrances. These works are currently in progress and will also contribute to the
operation of the expanded Canal. This complementarity shows the Canals high professionalism
standards in carrying out two parallel functions, the successful operation of the existing Canal, and
the development of a agship mega-project in the engineering eld, as was clearly validated by
the Panama Canal 2012 International Engineering and Infrastructure Congress.
The nancial results for this period have been outstanding. Despite the global economic outlook
the efforts of the Panama Canal Authority to improve the services our route offers resulted in
greater throughput during this scal year, setting a new tonnage record for total revenues
while maintaining high standards of service. These results reect the tireless efforts of a workforcecommitted to the development of the organization and the growth of our country.
Message
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Rafael E. Brcenas P.Director
Guillermo O. Chapman, Jr.Director
Nicols CorcioneDirector
Jos A. Sosa A.Director
Ricardo De La Espriella T.Director
Marco A, Ameglio S.Director
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Jorge L. QuijanoAdministrator of the Panama Canal
Administrator of the Panama Canal
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Message
I am proud to present the Annual Report of the Panama Canal Authority (ACP) for scal year 2012. As required by our
practices of transparency and accountability, we have made every effort to accurately reect how the Panama Cana
fullls its mission of contributing to the sustainable development of the country, while expanding its leading role in the
worlds maritime trade.
At the end of scal year 2012, for a second consecutive year, the Panama Canal has set a new tonnage record of 333.7
million Panama Canal/Universal Measurement System (PC/UMS) tons. Beyond its historical signicance and the fact tha
it represents an operational indicator, this record demonstrates the countrys sustained effort and reiterated commitmen
to keep its most strategic resource, its geographical position, at a competitive edge and at the forefront of progress.
It is important to emphasize these operating results are the outcome of the determination of 10,000 men and women
who are aware of the responsibility that we embody, not only in managing and operating the Canal in an efcient, cos
effective and safe manner, but also our responsibility with the environment, our social environment, our customers, our
users and Panama.
Together with the new tonnage record, other indicators show that the Panama Canal provides quality service and it
is reected in the tonnage percentage and a reduction in Canal Waters Time. Direct contributions to the country also
maintained a positive rate for a second year in a row exceeding B/. 1,000 million for a total of B/. 1,032.3, which surpassed
by 8.6 percent the amount budgeted for scal year 2012.
While the Panama Canal implements operational actions that result in the efcient administration of the Canal, our
organization also prioritizes its environmental and social management. Specically this report, documents the many
education, water quality, reforestation, sustainable development and other projects that aim to have an impact on the
quality of life of the residents of the Panama Canal Watershed, as we work together to preserve it.
Sustainability also has a signicant role in ACPs human capital management and labor relations, pursuing to maintain
high equity and well-being standards for the Canals most valuable resource, its people. For instance, during this sca
year over 8,000 employees were trained.
Parallel to the effort to maximize the benets of our geographical position, we continue to reafrm our commitment
to support the principles of the United Nations Global Compact through various activities and examples of our daily
activities. Examples of this are contained in this document as are our responsibility towards each of our stakeholders, ou
environmental commitment, the community relations programs, the visitors centers- and I want emphasize the opening
of the new Center of Observation of the Canal Expansion on the Atlantic side as well as the communication strategies
aimed at our shareholders.
In the course of 2012, ve years of work in the Expansion Program have gone by and the progress and milestones are
included in this annual report. In abidance of Law 28 of July 17, 2006, which approvest the proposal for the construction o
a third set of locks in the Panama Canal, key steps have been taken to build a new bridge over the Canal on the Atlantic
side and the construction will begin next year.
As expected, the impact of the Panama Canal Expansion already transcends national boundaries. For Panama the
results are tangible. There is still a way to go, and a lot of potential to consolidate the Panama Canal in the developmen
of Panama.
I would like to highlight the administration of three distinguished Panamanians who contributed to the Canals history
and strengthened the pillars of this great Panamanian organization. They are Dr. Rmulo Roux, Engineer Alberto Alemn
Zubieta and Engineer Jose Barrios Ng. Thanks to their work at the Panama Canal during great part of this scal year
we managed to exceed the goals and achieve a transparent and seamless transition to a new administration. The
organization and all its employees owe them our deepest gratitude.
Along this path, I hereby commit to the promise of all Panama Canal workers to continue working in compliance with the
highest standards of excellence, discipline and passion for our country.
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Administration
Jorge L. QuijanoAdministrator
Manuel BentezDeputy Administrator
Luis AlfaroEngineering
lvaro A. CabalGeneral Counsel
Francisco Loaiza B.Human Resources
Ilya MarottaEngineering and Program
Management
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Esteban G. SenzOperations
Francisco J. Miguez P.Administration and Finance
Rodolfo SabongePlanning and
Business Development
Carlos VargasEnvironment, Water and Energy
Manuel DomnguezCorporate Communications
Ana Mara P. de ChiquilaniCorporate Affairs
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For ve centuries the route through Panama has been an important path for global
trade and transportation. Currently, the railroad, airports, highways, the pipeline, optic
ber communication cables, international techno parks, ports and the Panama Canal
jointly comprise the key infrastructure that interdependently and complementarily,
simultaneously exploit the unique geographical position of the Panamanian isthmus.
On December 31, 1999, after 85 years of U.S. administration, the Republic of Panama
assumed full administration, operation and maintenance of the Canal, in compliance
with the 1977 Torrijos-Carter treaties.
The waterway is now managed by the Panama Canal Authority (ACP), an autonomous
government institution with a constitutional mandate that makes the Canal an efcient
and cost effective entity that provides continuous and efcient services to world
maritime trade.
The more than 10,000 highly skilled employees that work in the Canal constitute the driving
force behind the Canals excellence. The Panama Canal is an inalienable patrimony
of the Panamanian nation and; therefore, it may not be sold, assigned, mortgaged
or otherwise encumbered or transferred. By law, after covering operating, investment,
modernization and expansion costs, surplus funds are awarded to the National Treasury.
During the 13 years of Panamanian management, direct contributions have exceeded
B/.7,609 million.
The Canal is a shortcut water passage to reduce shipping distances, and save time and
cost in the transportation of all types of goods. With about 80 kilometers in length, the
waterway connects the Atlantic and Pacic oceans at one of the narrowest points of
the American continent.
The Panama Canal, a two-way canal, operates three sets of locks that work as water
elevators that lift the ships to the level of Gatun Lake 26 meters above sea level to cross
the Central Mountain Range, and later lower them again to sea level on the other side
of the Isthmus of Panama.
The Canals three sets of locks, have two lanes, operate as water lifts to elevate ships 26
meters above sea level to the level of Gatun Lake, In their transit of the channel across
the Continental Divide, and the lower them back on the opposite side of the Isthmus.
Since its opening in 1914, more than one million vessels from around the world that reach
more than 80 countries through 144 maritime routes, have transited the waterway.
The Third Set of Locks, currently under construction as part of the Panama Canal
Expansion Program, will be ready by the year 2014. This project will double the
waterways capacity to meet the growing demand of world trade and to maintain the
Canal as the route of choice for international trade.
Company Profle
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Honesty / Transparency / Competitivenes / Loyalty / Responsibility / Reliability
l
l
Vision
MissionProducir en forma sostenible el mximo benecio de nuestra posicin geogrca.
OUR BUSINESS - This enterprise is charged with operating, maintaining and improving the Panama
Canal so that it remains the route of choice for our customers.
OUR COUNTRY - We bring wealth to Panama and contribute with our efforts to the nations welfare
its development and its progress, and to an improved standard of living for all Panamanians.
OUR CUSTOMERS - We build lasting relationships with our customers, understanding and anticipating
their needs, adding value and offering quality service.
OUR PEOPLE - We recognize that the Canal employee is the most important resource in achieving
service excellence. We recruit and promote the very best.
WORLD LEADER in services to the maritime industry and in sustainable development for the
conservation of the Panama Canal watershed.
CORNERSTONE of the global transportation system and driving force for the progress, developmen
and growth of Panama.
MODEL of excellence, integrity and transparency in our conduct; committed to the integra
development of our human resource team.
Corporate Values
Objective 1 - To increase protability in a sustainable manner for the benet of the country.
Objective 2 - To expand the range of services and products in order to exploit markeopportunities.
Objective 3 - To implement business practices that enhance good corporate governance.
Objective 4 - To efciently manage the volume and quality of the water resources of the PanamaCanal Watershed.
Objective 5 - To increase productivity through excellence in performance and the wellbeing ohuman resources.
Estrategic Objectives
During scal year 2012, the Ofce of General Counsel has received 660 informationrequests.In the category of alimony, 178 were received, out of which 176 have been resolved andtwo are in process for revision.In the general requests category (which encloses unions, employees, governmenentities, and general public) 482 were received. Of these, 456 have been resolved and26 are in process, waiting for information to answer requesters.
Inormation Request
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Operaciones
Operations
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The Panama Canal reached a new PC/UMS (Panama Canal
Universal Measurement System) tonnage record during scal year
2012, when it reached 333.7 million PC/UMS tons. This historic
milestone was the result of the determined effort of all Canal
employees, the effective management of its operations, and the
important role the route through Panama plays in international
maritime global trade by always providing world-class services to
its users.
The year 2012 was characterized by a global economic slow
down consequential of scal adjustments made by advanced
economies, nancial systems instability and the economic
uncertainty triggered by the crisis in Europe. At the same time, a
reduction in the demand in the leading economies affected the
emerging markets through a reduction in international trade.
The economy of the United States, the main user of the Canal,
showed signs of improvement, but at a less-than-optimal level.
Retail and vehicle sales, as well as exports have improved
signicantly; however, the 7.8 unemployment rate recorded in
September keeps the economy increase from developing to
desired levels.
On the other hand, China, the second most important user of the
Panama Canal and the worlds foremost exporter, is affected by
Europe and the United States low demand for imports. From the
beginning of 2012, economic indicators show a downward trend,
Operating Results
A N N U A L R E P O R T 2 0 1 2 13
which culminated in a decline of the increase
projections by the Chinese government, from
8.5 per cent to 7.5 per cent.Regardless of the
measures taken by the Chinese governmento stimulate its economy, such as more libera
credit policies and the development of massive
construction projects, their sustainability may be
put to test if European and American economies
do not improve. Nevertheless, China remained an
important player in the maritime ow through the
Canal during scal year 2012. If there is a recovery
in world trade in 2013, it is expected that Chinas
increase projections will be revitalized and the
transportation of cargo through the Canal will rise
The Panama Canal ended scal year 2012 with
14,544 transits, a 0.95 per cent decrease from the
previous year. Panamax vessel transits were 7,241
56.3 per cent of oceangoing vessels The PC/UMS
tonnage at the end of scal year 2012 was 333.7
million, a 3.6 per cent increase compared to sca
year 2011. The total cargo through the Cana
registered at 218.1 million long tons, a slight 1.9 pe
cent decrease compared to the previous yearToll revenues reached a record B/.1,852.4 million
a 7.1 per cent increase, as a result of larger vesse
transits.
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A N N U A L R E P O R T 2 0 1 2
Full Container Vessel
SegmentThe full container vessels segment performed well during scal year
2012, showing an increase in trafc gures as compared for scal
year 2011.A total of 3,331 container ships transited the Canal, with
a volume of 119.9 million PC/UMS tons and 12.2 million TEU (twenty
foot equivalent unit) invoiced. These gures reect a 2.9 percent
increase in transits, a 5.4 percent increase in tons and a 5.6 percent
increase in TEU volumes as compared to the previous year. Of
the total transits, 74 percent are in the 100 feet or more in beam
category; and vessels with over 900 feet overall length accounted
for 47.3 percent.
During scal year 2012, the full container vessels segment
accounted for B/.960.1 million in toll revenues. From this total, 93.9
percent correspond to TEU capacity and 6.1 percent to 7.4 million
loaded TEUs which transited effectively. It is noteworthy that this
segment comprised 51.8 percent of the total Canal toll revenues
in scal year 2012.
Containerized cargo imports at major ports on the East Coast of
the United States, the main country of origin and/or destination
of containerized cargo that transits through the Panama Canal,
increased in scal year 2012 compared to the previous year,
which contributed positively to increase cargo
volumes transits. Likewise, the global demand for
containerized cargo grew 3.4 percent in 2012.
The number of liner services in the route through
Panama remained fairly consistent, with 33
services at the end of scal year 2012, a one
service increase from the previous year. However,
the average deployed vessel size increased from
3,952 TEUs in 2011, to 4,078 TEUs in scal year 2012,
leading to an increase in TEU capacity, and thus
higher revenues.
Reefer Vessels SegmentIn scal year 2012, the reefer vessel segment
registered 1,116 transits, which represent 9.9
million PC/UMS tons and B/.50.6 million in revenues
from tolls. Transits, tonnage and tolls were down
24.5 percent, 20.8 percent, and 12.9 percent,
respectively, in comparison with scal year 2011.
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A N N U A L R E P O R T 2 0 1 2
The main driver for the downward trend is the transition of
cargo transportation from conventional refrigerated cargo
vessels to refrigerated containers on container vessels.
During 2012, three liner container services were introducedfor the transportation of refrigerated cargo from the west
coast of South America. These services are ECUMED
service of Maersk Line, as well as MSCs Ecuador Express
and Andean Feeder service, which compete directly for
the transportation of bananas in conventional vessels.
Low temperatures in countries like Ecuador and diseases
such as black sigatoka affected the quality of some banana
plantations during several months in scal year 2012. This
curtailed the supply of exportable bananas, which allowed
countries such as Colombia, Costa Rica and Panama to
increase their share in consumer markets.
Liquid Bulk SegmentFiscal year 2012 was an excellent year for the liquid bulk
segment. This segment registered 2,478 transits, 51.6 million
PC/UMS tons and B/.212.2 million in toll revenues, which
amount to increases of 6.7 percent in transits, 5.4 percent
in PC/UMS tonnage, and 8.1 percent in toll revenues over
scal year 2011.
These results are due to a 30.2 percent increase in transits
by vessels of 80 to 90.99 feet or more in beam, which was
reected in a 27.4 percent PC/UMS tonnage rise and
30.9 percent increment in toll revenues. In addition, the
volumes of cargo on board of these vessels also increased22.4 percent over the previous scal year.
Diesel, gasoline and miscellaneous petrochemicals are
among the main products that account for the increase in
trafc gures for this segment during scal year 2012. Diese
registered its biggest ows mainly in the routes from the Gul
of Mexico to Chile and Ecuador, while gasoline was driven
by exports from the Gulf of Mexico to Mexico, Guatemala
Chile, Japan, and Ecuador.
Chilean diesel imports, mainly from American reneries
located in the Gulf of Mexico, continued their remarkable
increase. This trade increased by 45.7 percent compared
to scal year 2011, which was already a record yea
for Chilean imports of this product. Chile continued to
endure hydroelectric generation problems due to a
lengthy drought, which along with the economic increase
prompted the increase in diesel imports to supply for the
rising electric generation demand.
Regarding the supply of distillate products such as diese
and gasoline, American reneries, mainly located in the
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A N N U A L R E P O R T 2 0 1 2
Gulf of Mexico, maintain large commercial inventories as a result
of a decrease in the demand and prices of these products in that
country. This situation allowed setting attractive export prices;
countries such as Chile and Ecuador took advantage of this
circumstance.
On the other hand, gas carrier ships, despite being a small sub
segment, registered good trafc indicators-41 additional transits-
22.0 percent over scal year 2011. In addition, this segment
was above the previous scal year in PC/UMS tonnage and toll
revenues, recording increases of 16.3 percent and 19.0 percent,
respectively.
Over the last scal year, the increment in trafc gures for the
gas carrier ships was driven by a 62.9 per cent increase in the
transit of vessels of 80 to 90.99 feet of beam, which replicated in
a 56.8 percent PC/UMS tonnage increase and 62.4 percent in tolls
revenues. These vessels carried mostly LPG (Liqueed petroleum
gas) and miscellaneous petrochemicals.
The amount of cargo transported by gas carrier ships through the
Canal during scal year 2012 was very similar to the levels of the
previous scal year. The 36.8 percent and 32.2 percent increase
in cargo for vessels of less than 80 feet and from 80 to 90.99 feet in
beam, respectively, helped offset the 14.3 percent cargo decrease
transported by vessels with 100 feet or more in beam.
The products which increased over the previous scal year were
the ammonium compounds (ammonia) originating in Venezuela
and Trinidad and Tobago with destination to Chile; and LPG from
Trinidad and Tobago bound for El Salvador, transported primarily
on ships with less than 80 feet and from 90 to 90.99 feet in beam.
Drybulk Carrier SegmentDuring scal year 2012, the drybulk carriers
segment recorded 83.4 million PC/UMS tons, the
highest level in vessel capacity tonnage since
scal year 1996. PC/UMS tonnage increased 4.2
per cent compared to 80.0 million tons of scal
year 2011. For the third consecutive year, dry bulk
carriers recorded the highest number of transits
of all vessel types transiting the waterway, with a
total of 3,339 transits.
Total toll revenues were B/.337.7 million, an 8.2
percent increase compared to scal year 2011,
mainly as a result of the transiting vessels increased
PC/UMS tonnage.
Cargo tonnage totaled 98.6 million long tons
without greater variations. On the other hand,
tonnage of in ballast vessel capacity increased 12
percent, which contributed to PC/UMS tonnage
increase for the period. Vessel transits with beams
over 100 feet accounted for 69 percent of total
dry bulk transits. In general, the average vessel
size increased 3 percent.
Grains remained as the top commodity
transported in bulk carriers, with 36.0 million long
tons; however, the cargo level was 8.1 percent
below the 39.1 million long tons recorded in scal
2010 2011 2012
Dry-Bulk Carriers
Full ContainershipTanker
Miscellaneous
Refrigerated Cargo
General Cargo
Vehicle Carrier
Container/Break-Bulk Vessel
Liquid-Gas Carrier
Fishing Vessel
Passenger Ship
Roll-on/Roll-off
0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Transit by Vessel Types(in thousands of transits)
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A N N U A L R E P O R T 2 0 1 2
year 2011. Exports from Brazil and Argentina increased
their participation in the Asian market in the period, with a
negative impact on U.S. exports, the main source of grain
moving through the Panama Canal.
Coal shipments remained stable at 13.9 long tons. The
main coal routes were from: Colombia to Chile and from
the U.S. Gulf of Mexico to Mexico, Chile, and Asia. Iron ore
from Brazil and Venezuela to China also remained at with
about 4 million long tons, while the route from the U.S. Gulf
of Mexico to China doubled to 1 million long tons. Strong
shipments of coke were also reported from the U.S. Gulf of
Mexico to Asia, as well as iron metal on the same route in
the opposite direction.
Vehicle Carriers SegmentThe main trafc indicators exceeded last scal years
gures. Vehicle carrier transits totaled 669 at the closing of
scal year 2012, 5.7 percent over scal year 2011. PC/UMS
tonnage registered 37.7 million, an 8.6 percent increase
from the previous year. Consequently, toll revenues
totaled B/.153.9 million, a 12.8 percent increase over scal
year 2011 for this segment.
The demand for maritime vehicle transportation rose
during the rst half of scal year 2012, due to the increase
in global car production and the restoration of vehicle
inventories in Asia. In addition, vehicle sales in the United
States and inventory restocking of Japanese and Korean
brands, which had slipped signicantly since the Japanese
earthquake, combined to spur the vehicle car carrier
demand.
For the second half of the scal year, the high demand
for maritime vehicle transportation, alongside intense
competition between South Korea and Japan for world
leadership of vehicle production and sales, were important
elements towards global recovery. These optimistic
projections were based on a stronger than expected
recovery in vehicle demand in the United States. As aresult, segment trafc remained dynamic, along with the
rise of vehicle ows in the main maritime trade routes.
Passenger Vessels SegmentAt the end of the 2011-2012 season, passenger vessel trafc
experienced a downward trend. The decline of this trafc
through the Panama Canal was mainly due to a strategic
decision by one of the major cruise lines to redeploy some
ships to Europe and Asia, in response to demand in these
destinations.
Passenger vessel transits were 211 at the end of scal yea
2012, a 6.2 percent decrease from the previous year
Furthermore, the vessels passenger capacity decreased
to 248,674. In contrast, vessel tonnage was 1.5 million, a
0.3 percent increase over the 2010-2011 cruise season
as a result of an increase in transits of vessels with beams
under 80 feet.
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A N N U A L R E P O R T 2 0 1 2
Toll revenues totaled B/.39.8 million, a 13.7 percent decline from the
B/.46.1 million in scal year 2011. The revenues for billed passenger
capacity represented 83.7 percent of the amount collected during
scal year 2012.
Throughout this season, ships of the major worldwide cruise lines
fullled their navigational itineraries through the Panama Canal. In
turn, smaller vessels also contributed to the Canal trafc statistics;
in general terms, the itineraries of these ships are of short duration
between the Caribbean islands and the east and west coasts of
Central America. It is worth mentioning that as in previous seasons,
the Canal destination maintained its tourist appeal, attracting
vessels with itineraries that included passage through Panama on
their maiden voyages.
Transit Operations PerformanceIt has been mentioned that the Panama Canal registered 333.7
million PC/UMS tons in scal year 2012, 11.6 million tons more than
for scal year 2011. This was accomplished at an operating cost
of B/.1.22 per ton, less than the established goal of B/.1.29. This is
the result of the improved quality service rendered to our clients
in terms of Canal waters time, the appropriate management of
resources, and the effort and dedication of the more than 10,000
Panama Canal employees.
Tolls Revenues and OtherMaritime ServicesTolls and other maritime services totaled B/.2,248.9
million, 5.5 percent higher than the revenues
recorded for scal year 2011, which were
B/.2,130.6 million.
Revenues for other maritime services (OMS)
amounted to B/. 395.4 million, 1.3 percent less
than scal year 2011 (B/.400.72 million), as a result
of less utilization of the transit reservation system.
322.1333.7
300.8350325300275250225200
1751501251007550250
Vessel Tonage(in millions of PC/UMS)
2010
2011
2012
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A N N U A L R E P O R T 2 0 1 2
Transit of Oceangoing VesselsA total of 12,862 oceangoing transits were registered (not including
small vessels), a reduction of 126 vessels or 1 percent compared
to scal year 2011 (12,988 transits). From this amount, 8,479 transits
were super-size vessels with a beam equal to or more than 91
feet, 315 more than the previous scal year (3.9 percent). Similarly,
4,383 were regular-size vessels with a beam of less than 91 feet,
a reduction of 441 transits (9.1 percent) compared to scal year
2011. Small vessels had a slight drop of 14 transits (from 1,696 to
1,682 transits) or 0.8 percent less compared to scal year 2011.
Transits of Panamax VesselsIn scal year 2012, a total of 7,241 transits of Panamax vessels were
recorded (beam equal to or more than 100 feet), an increase of
323 transits (4.7 percent) compared to scal year 2011 (6,918).This
increase is mainly perceived in the container ships (+147), dry bulk
(+88), and tankers (+56) segments. Panamax vessels represented
56.3 percent of oceangoing transits, compared to
53.3 percent in scal year 2011. Similarly, Panamax
vessels with overall length equal or more than 900
feet totaled 1,658, an increase of 114 (7.4 percent
when compared to scal year 2011 (1,544). These
vessels represent 12.9 percent of oceangoing
transits, compared to 11.9 percentof the previous
scal year. Panamax vessels, especially those with
overall length more than 900 feet, require more
time and resources. Despite the increase in the
complexity of the operations this represents, there
was an improvement in the service level provided
to our customers.
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Panamax Vessel Transits
6,918 7,2416,231
2010
2011
2012
Oceangoing Transits
12,989 12,86212,591
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0 2
010
2011
2012
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A N N U A L R E P O R T 2 0 1 2
Service Rendering PerformanceThe service level rendered, measured based on PC/UMS
tons that transited within the time expectations for Canal
Waters Time (CWT), was 86.28 percent, higher than the
results for scal year 2011 (85.2 percent). This reduction is
mainly due to improved processes and, in a lesser extent,
to a reduction in the average arrival of vessels and a
reduced backlog, which allowed accomplishing transits in
less time than programmed.
Canal Waters Time and InTransit TimeCanal Waters Time (CWT), the time elapsed since a vessel
arrives at Canal waters, averaged 25.66 hours, a reduction
of 4.0 percent compared to scal year 2011 (26.74 hours).
This is the result of an improvement in our transit processes,
which allowed us to reduce both waiting and transit times.
The average CWT for booked vessels was 14.97 hours,
while for non-booked vessels this average was 34.49 hours.
In scal year 2011 these results were 15.20 and 39.02 hours,
respectively.
The average In Transit Time (ITT), the time elapsed since the
ship arrives to the rst lock until its departure from the last
lock, recorded 10.70 hours by the end of scal year 2012, a
26.81
Canal Water Time (CWT)Monthly Average and CumulativeAverage
36.0
30.0
24.0
18.0
12.0
CWT Monthly 2012
Oct. Nov. Dic. Jan . Feb. Mar. Apr. May. Jun. Jul. Ago. Sep.CWT Cumulative2012
Hours
23.72
27.0928.48 28.0627.32
28.26
25.6625.9326.20
25.63 25.98
26.7426.7927.2728.88
29.7729.1330.21
32.00
33.87
26.41
26.7027.40
CWT Monthly 2011 CWT Cumulative2011Percentaje of CP/SUAB Tonswith Good Service Level95%
90%
85%
80%
75%
70%Oct. Nov. Dic. Jan. Feb. Mar. Apr. May. Jun. Jul. Ago. Sep.
Percentage
79.08%
80.60%81.39% 82.19%
83.50%
84.85%85.73% 85.68%
85.20%84.85%85.10%84.38%83.91%
84.47%
80.78%83.51%
82.70%
85.56%
Accumulated 2012Accumulated 2011
81.09%
81.36%
82.30%
82.74%
86.28%
89.78%
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1.33 percent increase over scal year 2011 results of 10.56
hours.
This cumulative average was slightly affected by theincreased number of larger ships (Super and Panamax),
especially those with overall length of more than 900 feet,
in addition to the programmed maintenance performed
at the locks, which required closing lanes in Gatun and
Miraores locks.
Customer SatisfactionAt the end of this scal year, the customer satisfaction
index was registered at 97.82 percent, 1.22 percent above
last scal year results (96.6 percent). Several efforts were
made to improve customer service and promote a change
in our organizational culture in customer satisfaction
matters.
We are conducting a survey among the Ship Masters
after each transit to gather their impressions on the service
received as well as their suggestions for improvement. We
have also improved the process for handling complaints
resulting in a more expedited response.
Maintenance ManagementPerformanceAs part of the Expansion Program, 98 deliverables (section
inside the navigational channel) were completed in the
Culebra Cut. This represents an execution of 140 percent
compared to the programmed goal. This success was
the result of a combined strategy of working concurren
In Transit Time (ITT) MonthlyAverage and Cumulative Average
12.0
11.5
11.0
10.5
10.0
9.5
9.0
8.5Oct. Nov. Dic. Ene. Feb. Mar. Abr. May. Jun. Jul. Ago. Sep.
Hours
10.71
11.49
11.05 10.95
10.7810.72 10.68 10.71
10.5610.5610.5210.5810.61
10.68
11.23
11.25
11.41
10.69 10.69
ITT Cumulative 2012ITT Monthly 2011ITT Monthly 2012ITT Cumulative 2011
10.8310.90
10.71
11.13
10.70
Oct-10 Nov-10 Dic-10 Ene-11 Feb-11 Mar-11 Abr-11 May-11 Jun-11 Jul-11 Agt.11 Sept.11
Dredging Operations ProgressReport (Expansion Works) FY2012
108.6%
127.1%
150%
140%
130%
120%
110%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
18.6%
8.6%
22.9%
38.6%
42.9%
54.3%
124.6%
64.3%
77.1%
%
o f P r o g r e s s t o D a t e a n d A n n u a l
100.0%
118.2%
84.2%
100.0% 100.0%
111.8%
104.7% 105.9%
114.3%
Goal FY2012Percentage of Progress Annual Percentage of Progress to Date
91.4%
140.0%
134.8%140.0%
Deliverables
18
16
14
12
10
8
6
4
2
0
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drilling and blasting and dredging activities, followed by shoal
removal (small areas above design level) to nish the deliverables.
The inclusion of dredge Quibin I and the utilization of chartered
dredge Cornelius in the removal of shoals helped to achieve these
results.
The Dredging Division excavated 1.189 million cubic meters, of an
estimated total of one million cubic meters 118.9 percent of the
expected results, as part of the works under the Modernization
Program.
This outcome was due to the high production of chartered dredge
Cornelius, and the work of dredge Rialto M. Christensen, which
was working at the limits of the Expansion Program and was able
to remove material for both projects.
In September 2012 the new backhoe dredge was baptized with
the name of Alberto Alemn Zubieta. This ceremony was held at
NMC in Niew Lekkerland Shipyard, Holland, and it is estimated that
it will be arriving at the port of Cristobal in Panama on January
2013. Initial tests will begin in February to formally put it into service
in late March 2013.
Preparation for the Operation of theExpanded CanalSeventy three pilots (104.3 percent) and 28 tug captains (127.3
percent), which together represent 109.78 percent out of
the established goal of 92 employees, have been trained in
maneuvering Post-panamax vessels at the SIDMAR Simulation
Center. As part of the preparation for this training, negotiation
was undertaken with the Pilots Union and a variety of tests were
placed in the simulator with the different types of vessels, which
were validated for the pilot and tug captain training.
Specic Tasks ProgramA high level committee was created to identify
and follow up on specic tasks required to operate
the expanded canal.
Some of the tasks completed by the end of scal
year 2012 include establishing restrictions and
requirements for vessels to transit through the
new set of locks, based on the results of lockage
tests without locomotives and comments from
pilot unions and tug ofcers. The risk analysis for
the operation of the expanded canal was also
completed and presented to the Advisory Board,
and we continue following up on the identied
mitigation measures.
A contract is being prepared for the extraction of
submerged logs from Gatun Lake to expand the
anchorage area, which will be reduced by the
crossing of the navigational channel to the new
Atlantic locks.
Human resources needs and structures
requirements (docks, workers waiting areas,
landings, equipment, and power plants) are
being analyzed to handle the operations for the
expanded canal and to meet maintenance and
fuel supply requirements for oating equipment.
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On the other hand, we are analyzing the infrastructure required
for the Maritime Trafc Control Center as well as transit processes
in order to improve the maritime services management, based on
a Service Oriented Architecture (SOA). We are also evaluating the
implementation of new transit support technologies.
With regards to dredging, we are developing a plan for the
day to day maintenance and improvement of the navigational
channels, and to tackle the sedimentation accumulated during
the expansion program.
Regarding safety, we are assessing the capacity required to respond
to emergencies, considering the new hydrocarbons that will transit
through the Panama Canal and the requirements to be ready for
a Tier-2 in the new facilities. We are also analyzing the safety tariffs
for the new Post-Panamax vessels, based on the increasing spill risk
factor, and a new tariff required for hazard materials. We are also
working in the changes required to provide re protection remen
response for facilities, equipment and systems, and as identifying
the resources needed to respond to new hazardous materials
(LNG).
Capacity Model for the Expanded
CanalWe continue developing a capacity model for the presentand the expanded Canal through a contract with Paragon
Consultora Ltda., from Brazil. Phase I of the model was completed
and it included the development of a scenario manager and a
scheduling model for the operation and vessel scheduling based
on information from the demand model for the
current, as well as for the expanded Canal.
This model will allow analyzing the Canals
operational capacity in different demand
scenarios, the infrastructure conguration and
navigation rules for both the present, as well as fo
the expanded Canal.
Beginning September, 2012, we proceeded with
Phase II of the project, which will include thesimulation of tugs, launches, line handlers, lane
outages, and full convoy scheduling mode (a
ships going in one direction and in the opposite
direction the following day).
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Five Years LaterSkills, knowledge, challenges, commitment, and achievements are
just some of the many day-to-day factors that make the Panama
Canal Expansion Program possible. The teamwork betweencontractors and ACP workers is a key element that together
with the design, construction, excavation, dredging, quality
assurance, good environmental management, documentation,
and occupational safety have made it possible to get to this point
meeting with world-class quality standards in all of the Programs
work fronts.
In its fth year, the Expansion Program, with over 12,000 active
employees working day and night shifts, reached a 47
percent progress rate at the end of scal year 2012. Signicantaccomplishments that were achieved during this year include
awarding 96 percent of the contracts; removing 42 of the 49
million cubic meters through dry excavation for the Pacic Access
Channel; and dredging 46 out of 53 million cubic meters from the
navigational channels. With regards to the combined excavated
and dredged total volume of 33 million cubic meters of the
projected 47.5 in the Pacic and Atlantic sides for the construction
of the new set of locks; structural concrete placements added
up to 1.2 of the 4.2 million cubic meters; and 115 tons out of the
foreseen 197 tons of rebar have been received.
Post-Panamax LocksThis component comprises the construction of two locks complexes,
one on the Pacic and another on the Atlantic side; each with
three levels and three water saving basins. This
project has a 33 percent progress rate. Grupo
Unidos por el Canal S.A. (GUPCSA), the consortium
in charge of this activity, has focused its efforts on
fabricating electromechanical components such
as valves and gates; conducting excavation and
dredging activities in the areas where the locks
are built; and, just as important, developing and
obtaining approval for concrete mix designs and
placement. During this period, the contracto
met all design requirements for the locks
gates, and valves, and obtained the necessary
certications to start fabrication. This enabled
GUPCSAs subcontractors Hyundai Samho
Heavy Industries Company Ltd. in South Korea
and Cimolai S.p.A. in Italy to proceed with the
fabrication of lock valves and gates, respectively
Hyundai for instance, has manufactured 47 valve
bodies and conducted factory acceptance
tests on 34 culvert valves; while Cimolai makes
progress welding and assembling blocks fo
the 16 gates now in process. These fabrication
activities are monitored by GUPCSAs resident
inspection services subcontractor SGS S.A. and
by ACPs Program Administration consultant
CH2M Hill Panam S. de R.L., which carries out this
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task through its subcontractor, NDE Associates Inc. Meanwhile,
Hyundai subcontracted Bosch-Rexroth AG to fabricate hydraulic
cylinders for the valves.
Another major effort by GUPCSA is the excavation and dredging
activity. On the Pacic sector, the contractor reported the
removal of a cumulative volume of approximately 15.9 million
cubic meters from the area for the three lock chambers; lock
heads 1, 3, and 4; the middle and lower water saving basins;
the north wing walls and approach channel; and the dams.
The cumulative volume removed from the main excavation on
the Atlantic sector is about 14.8 million cubic meters and the
cumulative volume reported for the Atlantic entrance channel
is nearly 2.3 million. These activities are conducted at the locks
footprint where they are about to conclude- the lower and
middle water saving basins and at the Atlantic entrance channel.
No doubt one of the contractors main tasks has been pouring
structural concrete, with a total of 580,000 cubic meters poured
on the Pacic site. By the end of the scal year GUPCSA had
submitted and ACP approved two new structural marine concrete
mixes. For the Atlantic sector, this activity reported a cumulative
volume of about 652,000 cubic meters. The placement of lean
concrete as foundation treatment on the Atlantic site is nearly
complete, with only small sections remaining.
As part of the measures to improve its performance,
GUPCSA hired the Consorcio Borinquen S.A.to
build three dams and excavate the north Pacic
approach channel. This consortium completed
the excavation for the rst dam to the west as well
as the mapping; and cleaning of its foundation.
It also started the treatment of the exposed
foundation and applied dental concrete and
backll, based on its geological features. On
the second dam to the east, the consortium is
conducting dewatering activities and remove
overburden material to reach the design
excavation level for the foundation.
Another important task is the transportation of
aggregates from the Pacic to supply the Atlantic
site, where it is processed to obtain the ne
aggregates required to prepare concrete. By the
end of the scal year, the contractor has mobilized
a cumulative volume of 2.8 million cubic meters.
Likewise, the reinforcing steel supplier contracted
by GUPCSA, Mexican company ArcelorMittal,
has delivered a total of approximately 67,000 tons
to the Pacic site and about 48,000 to the Atlantic
site.
The quality assurance, environmental
management, and occupational safety efforts
Design and Construction of theThird Set of LocksDredging and Excavation Volumes
Actual vs Programmed through September 2012
Programmed Accumulated
50
45
40
35
30
25
20
15
10
5
0
AccumulatedVolume(Mm3)
Jan.
10
Mar.10
May.10
Jul.10
Sep.
10
Nov.10
Jan.
11
Mar.11
May.11
Jul.11
Sep.
11
Nov.11
Jan.
12
Mar.12
May.12
Jul.12
Sep.
12
Nov.12
Jan.
13
Mar.13
May.13
Jul.13
Sep.
13
Nov.13
Jan.1
4
Mar.14
May.14
Jul.14
33 Mm3
Actual Accumulated
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have continued without interruptions by means of
audits, inspections, regular meetings, and a constant
presence on both the Pacic and Atlantic construction
sites. In order to keep Expansion Programs historical
documentation at the forefront of technology, this year
a remote control axial recording system was used while
ying over construction worksites to record progress on
high-denition video as if viewed from the helicopter
pilots viewpoint. This recording system was fabricated
by Canal specialists, who put their resourcefulness
and determination to test in order to manufacture the
device. The Panama Canal has held high level meetings
with senior management of the companies form the
consortium responsible for this project to follow up on
its performance, always stressing the importance of
complying with contract requirements and encouraging
the contractor to take any and all appropriate corrective
actions. GUPCSA submitted a schedule that estimates
the contract completion date in April 2015 (six months
after the contractual completion date), and they are
working to reduce delays.
Pacic Access ChannelA dry excavation is underway to connect the Pacic Locks
with the Culebra Cut through a new 6.1 km-long access
channel. Three of the four phases to accomplish this
work have been completed successfully; and the fourth
phase reected a 67 percent progress rate at the end o
scal year 2012. As part of this last phase, several majo
structures have been built, including a 1.8 km-long cellula
cofferdam and two cut-off walls, which consist of a 500
meter-long cement-bentonite structure and a 144 meter
long jet grouting wall, to reduce potential see page from
Gatun and Miraores Lakes, respectively. The purpose o
these structures is to allow dry excavation works for the
channel and the construction of a dam.
During this scal year, the contractor responsible fo
these works, the consortium ICA-FCC-Meco, comprised
27
Pacifc Access Channel (CAP4)Excavation Volumes Actual vs Programmed throughSeptember 2012
28
26
24
22
20
18
16
14
12
10
8
6
4
2
0
AccumulatedVolume(Mm3)
A
pr.10
May.
10
Ju
n.
10
J
ul.10
Ago.
10
Sep.
10
O
ct.10
Nov.
10
D
ic.
10
Jan.
11
Feb.
11
M
ar.11
A
pr.11
May.
11
Ju
n.
11
J
ul.11
Ago.
11
Sep.
11
O
ct.11
N
ov.11
D
ic.
11
Jan.
12
Feb.
12
M
ar.12
A
pr.12
May.
12
Ju
n.
12
J
ul.12
A
go.1
2
Sep.
12
O
ct.12
Nov.
12
D
ic.
12
Jan.
13
Feb.
13
M
ar.13
A
pr.13
May.
13
Programmed Accumulated Actual Accumulated
19.3 Mm3
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of Ingenieros Civiles Asociados S.A. de C.V. (ICA), Fomentos de
Construcciones y Contratas S.A. (FCC), and Constructora Meco
S.A., removed a total of 7.8 million cubic meters of unclassied
material, for a cumulative volume of 19.3 million from the start of
the project. This volume represents a 74 percent progress rate.
The material was excavated from the access channel and the
footprint of the rst dam to the east.
The contractors most demanding task has been the construction
of the previously mentioned dam. The contractor is focused
on dewatering the area and the underground water level was
lowered in several areas of the dam footprint preparing the
foundation; placing rock ll in the inboard dam shell; placing
backll concrete in areas requiring leveling; and the stockpiling
and processing of rock from the projects excavations to produce
lters, chimney drains, and blanket lters for the dam, among
others. Further dam-related tasks included the construction of a 3
meter-deep concrete cut-off wall at the dams axis, of which 1,100
square meters have been completed, and grout-jetting works to
create a curtain below the dam to prevent seepage.
On the other hand, construction works have concluded for the
support operations building located west of Pedro Miguel Locks,
as well as the construction of additional drainage systems and the
paving of the existing ones west of the access channel. These
contracts lie on the main excavations footprint, making their
execution relevant to the project.
Navigational ChannelImprovementsWith the purpose of providing Post-Panamax
vessels the necessary draft to transit safely, another
component was included in the Expansion
Program, which encompasses the widening and
deepening of the existing navigational channels
in Gatun Lake and in the Pacic and Atlantic
entrances, as well as the deepening of CulebraCut. The work in Gatun Lake and Culebra Cut
includes dredging operations to remove 26.5
cubic meters of material and 8.7 million from
the Pacic entrance; whereas about 17.9 million
cubic meters must be dredged and excavated
for the Atlantic entrance.
Gatun Lake and Culebra CutThese works have been assigned to the Panama
Canals Dredging Division and contractors, who
have joined in the effort to reach the design depth
required to meet the Programs objectives. The
ACP has removed nearly 12.5 million cubic meters
from the beginning of the project with cutter-
suction dredges Mindi and Quibian I, dipper
dredge Rialto M. Christensen, and the chartered
backhoe dredge Cornelius. These works have
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resulted in the completion of the Culebra and Chagres
Crossing reaches, both located in the Culebra Cut. On
the other hand, in March 2012, Dredging International de
Panam S.A. concluded its contract to dredge Gatun
Lakes northern reaches according to schedule.
This work included dredging the Bohio, Buena Vista,
Gatun, Pea Blanca and Balsa reaches, where a
cumulative volume of 4.0 million cubic meters were
removed with cutter-suction dredge DArtagnan.
In the meantime, Jan De Nul n.v.continues with the
dredging operations under its contract at the northern
entrance of the Pacic access channel, where abou
3.2 million cubic meters of material have been removed
In this way, the Panama Canals and its contractor
combined production reached a cumulative volume o
20.2 million cumulative cubic metersof removed materia
volume, a 78 per cent progress rate by the end of sca
year 2012.
Pacic Entrance
Close to 300,000 cubic meters are left to be dredged a
the sea entrance on the Pacic side. Dredging operation
Gatun Lake Deepeningand Widening and Culebra CutDeepeningDredging and Dry Excavation Volumes Actual vs Programmed through September 2012
VolumeAccumula(Mm3)
Fe
b.
07
May.07
Ago.
07
Nov.07
Fe
b.
08
May.08
Ago.
08
Nov.08
Fe
b.
09
May.09
Ago.
09
Nov.09
Fe
b.1
0
May.10
Ago.
10
Nov.10
Fe
b.
11
May.11
Ago.
11
Nov.11
Fe
b.
12
May.12
Ago.
12
Nov.12
Fe
b.
13
May.13
Ago.
13
Nov.13
Programmed Accumulated Actual Accumulated
20.2 Mm3
28
26
24
22
20
18
16
14
12
10
8
6
4
2
0
Pacifc Entrance Deepeningand WideningDredging Volume - Actual vs Programmed throughSeptember 2012
8.4 Mm3
AccumulatedVolume(Mm3)
Ago.
08
Oct.08
Dic.
08
Feb.
09
Apr.09
Jun.
09
Ago.
09
Oct.09
Dic.
09
Feb.
10
Apr.10
Jun.
10
Ago.
10
Oct.10
Dic.
10
Feb.
11
Apr.11
Jun.
11
Ago.
11
Oct.11
Dic.
11
Feb.
12
Abr.12
Jun.
12
Ago.
12
Oct.12
Dic.
12
10
9
8
7
6
5
4
3
2
1
0
Actual AccumulatedProgrammed Accumulated
29
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by Dredging International de Panam S.A., covered around 11
km of the navigational channels;1.8 km north of the Bridge of
the Americas; and the rst kilometer of the new access channel
to the third set of locks. All dredging works were performed with
dredge DArtagnan, upon completion of its assignment in Gatun
Lakes northern reaches. The project has reached a 95 percent
progress rate with the conclusion of the widening and deepening
of control sector 7, that of sector 2A at design depth, plus the
extensive completion of sector 6, and the beginning of dredging
activities in sector 4.
Atlantic EntranceJan De Nul n.v., a Belgian company in charge of dredgingoperations at the sea entrance on the Atlantic side, ended
operations in control sectors 3A, 4A, 2B, 3B, and 5B with support
from the Filippo Brunelleschi, Charles Darwin and Al Idrisi hopper
dredges. All sectors were delivered prior to established contract
date on the projects schedule. Signicant progress has also
been made in the removal of the remaining volume in sector 3C.
This project registered a cumulative volume of nearly 17.4 million
cubic meters of removed material, for a 98 percent progress rate.
Raising Gatun LakesMaximum Operational LevelWith a view to guarantee an adequate water
supply for human consumption, as well as for the
expanded waterway, this Program component
consists in raising Gatun Lakes maximum
operational level 45 centimeters. The works
required to accomplish this goal continued
during this period and increased the projects
progress rate to 9 percent.
Atlantic Entrance Deepeningand WideningDredging and Dry Excavation Volumes -
Actual vs Programmed through September 2012
Fe
b.
10
Abr.10
Jun.
10
Ago.1
0
Oct.10
Dic.
10
Fe
b.1
1
Abr.11
Jun.
11
Ago.
11
Oct.11
Dic.
11
Fe
b.
12
Abr.12
Jun.
12
Ago.
12
Oct.12
Dic.
12
Fe
b.
13
Abr.13
20
18
16
14
12
10
8
6
4
2
0
AccumulatedVolume(m3)
Actual Accumulated
17.4 Mm3
Programmed Accumulated
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One of the most signicant activities under this project, which
is performed by the Panama Canal,focused on extending the
Gatun spillway gates, completing 13 of the 14 gates. Review
and nal adjustment works were also completed on two new
gates fabricated by the ACP with the required dimensions. The
spillway has 14 gates, but the project includes a total of 16 so
as to have 2 additional gates available for maintenance and
emergency purposes. Additionally, raising Gatun Lakes level
requires other modications to structures in Pedro Miguel Locks
as well as Gatuns upper chambers. For this reason, proposals
for the acquisition of 32 submersible hydraulic cylinders are
being evaluated; designs have been made to modify other
components such as the conductor-slot drainage system, miter
gates, and yoke seal, among others; and specications for new
water level sensors are being prepared.
Administration and FinancingThe program management effort continued as planned with the
support of international experts in various areas. For instance,
CH2M Hill Panama R. de S.L., the program management services
consultant, worked jointly with the ACP on all construction aspects
for the new locks. Additionally, they continued providing supervision
and inspection services in South Korea and Italy
during the fabrication of the lock valves and
gates, respectively. With regard to legal advisory
services for international contracts, Mayer Brown
LLP provided guidance on several topics related
to the locks contract. Other contractors, such as
Shearman & Sterling, Willis Limited, Consorcio Post
Panamax, and URS Holding Inc., also provided
the respective project management support on
nancial legal issues; risk management; technica
consultancy on geotechnical aspects, dams
and concrete mixes; as well as dam construction
The ve credit facility lenders that provide
part of the funds required to execute the
Expansion Program continued receiving nancial
operational, environmental, and progress reports
as established in the common terms agreement
Meanwhile, the ACP complied with its paymen
commitments and debt service fees in Novembe
2011 and May 2012, respectively. Pursuan
to the agreement, in February 2012 a visit to
Expansion Program sites by credit facility lenders
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representatives was prepared and coordinated. In June
2012, the ACP requested a B/.100 million disbursement
from the Interamerican Development Bank.
Projects Occupational SafetyWith the responsibility shouldered from the beginning,
for occupational safety management sets the norm to
keep work areas free of accidents, injuries, and diseases.
Monitoring contractor activities in the implementation of
safety and hygiene measures at work sitessuch as the
use of personal protection equipment; fall protection;
unhealthy (noise, dust) work conditions control; and
ergonomic risk evaluations, among others, is the constant
of these efforts. This task also includes reviewing safe
work procedures and plans, as well as specic audits.
To support this commitment, and as a corporate initiative,
the Program management consultant launched the
Dont Walk By campaign to raise workers awareness
regarding the need not to ignore or walk by an evident
risk without correcting or reporting it. On the other
hand, in an effort to draw attention to the importance
of occupational safety among ACP and contractor
employees, the second annual seminar under the slogan
Excellency in Safety Management at the Executive
Level was carried out. Another effort of the occupational
safety projects team was a workshop to promote
accident-prevention innovations. As a result from this
event, new initiatives were taken such as the visible
participation of senior management in health and safety
activities, and regular workshops for ACP employees
and contractors to promote benchmarking between
ACP and contractor personnel on the subject. The ACP
continues to permanently stress the consideration that
should be given to this component in order to preserve
the health and life of each and every worker playing a
part in the Programsexecution.
The Panama Canal Expansion Program received Spains
Consejo General de Relaciones Industriales y Licenciados
en Ciencias del Trabajo Prever 2011 Award under their
international category; an award that highlights labor
risk-prevention initiatives.
Environmental ManagementRelentlesswould be the appropriate term to describe
the effort that goes into environmental management.
Follow-up on the mitigation measures included in the
environmental impact study and the resolution issued
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by the National Environmental Authority (ANAM for its
acronym in Spanish) which approved it, entails several
components, such as monitoring water and air quality,
and noise; managing solid wastes and hazardous
materials in work areas; working conditions; erosion
control; siltation migration; secondary containments for
fuel and lubricant storage; wildlife care and protection;
and ecological compensation, among others.
The reforestation program is executed in coordination
with ANAM and the Authority for Aquatic Resources
(ARAP for its acronym in Spanish) in the provinces of
Colon, Panama, Cocle, Herrera,and Chiriqui. At the end
of this scal year, the mangrove of the Chiriqui Viejo River
was included in the reforested areas, which amounted
to 565 planted hectares, 515 hectares of forest and 50
hectares of mangrove. All Expansion Program plantations
have been established and are in their maintenance
phase, which requires a 4 year period and includes yearly
cleanups, re protection, and replanting; among many
other activities. A new contract was awarded in February
2012 for the reforestation of 61 hectares of land within
the Tapagra hydrological protection zone, in Chepo,
Panama, with a reported 45 percent progress by the end
of the period. As it is generally known, the environmental
effort also involves rescuing and relocating wild life from
areas where the vegetation has been removed during
the waterways expansion works.
The independent consultant for this component
Environmental Resources Management Panam S.A.
made two scheduled semi-annual visits to project sites
and reforestation areas; and prepared the respective
reports on the verication of the implementation, and the
effectiveness of mitigation and social and environmenta
follow-up measures. These reports render account to the
credit facility lenders and ANAM.
Paleontological andArchaeological StudiesAs a result of the required excavation and dredging
activities during the Programs execution, some areas and
part shave become exposed that would not be visibleotherwise. This allows for performing paleontologica
rescues, and evaluating artifacts and other identied
cultural remains.
The required paleontological evaluations are a service
provided by personnel from the Smithsonian Institute fo
Tropical Research, who inspected throughout the yea
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a number of areas on the Atlantic and Pacic sectors, and in
the Culebra Cut.For example, they observed the stratigraphy
of sediments in the exposed rock and found a sh and mollusk
deposit where excavations for the locks are underway on the
Atlantic sector. Additionally, marine fossils have been recovered
at different locations, and a Culebra formation rock layer full
of organic matter found in a particular area in the excavations
for the construction of the Pacic locks. This area also had crab
remains and fossilized leaves, a rare nding that requires specic
research. A layer of freshwater mollusks and bivalve fossils
was found at Culebra Cut, in a Cucaracha formation. This is a
major scientic discovery, as it will help reconstruct the isthmus
environmental conditions during the Middle Miocene Era. Other
discoveries in the Cut included mammal and reptile fossils found
in the area of Lirio; teeth and bones of mammals were recovered
at Hodges; and turtle shells and crocodile teeth were found in the
area of the Centennial Bridge. In addition to recovering remains,
scientists also analyze, evaluate, categorize, and document
each nding for their preservation.
Archaeological inspections were also conducted in different
Program areas, albeit less than before, given that at most
work fronts dredging and excavation design levels have
been reached. A metallic remains deposit with railroad track
fragments, iron wheels with varying diameters, and an iron chain
were found in the construction site for the rst dam to the east
of the Borinquen dam, among others. Other
ndings took place in one of the Pacic locks
projects disposal sites, where there were four
World War II concrete bunkers; a number of mid-
twentieth century bottles; a 1912-1913 stone-lined
trench; an aluminum helmet; an iron ashtray; 12
glass bottles; 2 caskets; and an iron pick. An
archaeological evaluation performed at Dock
45 on the Atlantic sector reported nding a 5
feet-long Decauville wagon wheel axis with its
gear box, from the time of the French Canal. An
inspection conducted in the old Emperador Town
resulted in the recovery of several archaeological
cultural remains belonging to town residents,
such as industrial implements, ceramic, glass
bottles, and metallic artifacts; as well as in the
identication of 13 iron crosses in the cemetery
area, which date back to the French Canal Era
(1880-1903).
Public Relations,Communication, andHistorical DocumentationIf the eld work doesnt relent, communication
and historic documentation of Expansion
Program progress dont stop either. The task
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of informing about the development of this major Program
has become the permanent trend of those who generate all
sorts of communication instruments, such as brochures, iers,
leaets, writings, reports, presentations, photos, videos, and
recordings, among others. The preservation of documents for
future generations is another tremendous effort, one that requires
technical know-how and long-term vision to gure out how the
images and documents prepared today will be interpreted, so as
to ensure that they stand the test of time.
During an assessment of the communication activity from the
beginning of the Expansion, over 37,000 persons have received
assistance, including visits to the new locks construction sites and
to dredging and excavation areas on the Pacic and Atlantic
sectors; speeches and presentations to different international
and national audiences on the progress of the Program; fullling
requests from foreign and local media; responding the toll free
customer care line, 800-0714; and replying to emails received at
Art goes hand-in-hand with the Canal Expansion as it advances.
Various engineering activities have been depicted in oil and
watercolor paintings featuring the movement of heavy equipment
and Expansion workers, by the hands of local artists such as
George Scribner, Carlos Gonzalez Palomino, Jose Inocente
Duarte, Amalia Tapia, and Roberto Vergara.
Honoring the commitment to document the
evolution of this remarkable initiative, the ACP
published a second volume of the book titled
The Panama Canal Expansion: Portraits o
a Historic Undertaking 2010-2011. This book
compiles photos of the work sites, contracto
activities and equipment, and the Panamanian
workforce who contribute with their daily effor
to meet the goal and turn over this project, which
will render tangible benets and place Panama
in a leading international maritime trade position
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Environmental ManagementEnvironmental management refers to how we interact with nature
through instruments keen to making our actions sustainable. In this
respect, thinking of sustainability is thinking of life. This represents,
managing responsibly with balance between human activities,
social equality and environmental protection at different levels.
The Constitution of the Republic of Panama gives the Panama
Canal Authority (ACP) a mandate to shift from concept to action,
mainly to protect Panama Canal Watershed resources through an
integrated management approach. Water is a critical resource for
the sustainability of the business of the Panama Canal; therefore
the effort of the Panamanian society as a whole is required topreserve its quality and quantity. The Interinstitutional Commission
for the Panama Canal Watershed (CICH for its acronym in Spanish),
created in the year 2000, is responsible through close coordination
with State entities to integrate efforts, initiatives and resources for
the Watersheds conservation and management and to promote
its sustainable development. Strategic alliances are made through
the CICH and a community participative framework is established
for the water governance, building a sustainability culture.
The Panama Canals water governance approach is based
on a community structure of 6 Regional Advisory Councils and
30 Local Committees in 23 sub basins is organized under hydric
planning criteria. The year 2012 consolidated the
participatory process in the management of the
Watershed, for the eastern and western sectors o
Gatun Lake, which facilitated the strengtheningof local and organizational capabilities, resulting
in the development of annual action plans.
Part of the process and with the participation o
all interested stakeholders, a 25 year vision maste
plan was approved in the year 2007. It facilitates
a set of organized and concerted actions called
Sustainable Development Plan and Integrated
Management of the Water Resources in the
Panama Canal Watershed (DSGIRH Plan for its
acronym in Spanish).
The results of the plans implementation have
been satisfactory from its formulation. For sca
year 2012, it has facilitated the execution of
54 projects with an active participation of the
community and different government and
non-governmental institutions. The greates
investment has been concentrated in community
infrastructure projects that improve the quality o
life of the Watershed population.
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Education for Sustainable DevelopmentThe Environmental Conservation and Work Training Program
is carried out under a strategic partnership with the National
Institute for Human Development (INADEH), and the Ministry of
Education (MEDUCA). This program facilitates the insertion of the
Watershed population in the national labor market, and at the
same time it develops modules for good environmental practices
and community awareness. In the 2012 period, this program
was implemented in 65 educational and community centers in
training areas such as functional English, electricity, masonry, and
information technology. During six years of execution more than
5,300 youngsters have graduated and 10,368 certicates have
been issued.
It also notes the development of the annual missions and
environmental projects in programs such as Our Canal and its
Watershed (NUCA), Adequate Management of Solid Waste, and
Water Quality Assessment focused on 4th, 5th, and 6th graders,
respectively, in which more than 35,000 students and 1200
teachers actively participated. The capacity building approach
has reinforced the education of children and adults this year 2012.
This is the best guarantee of a sustainable future.
During the Environmental Workdays, which is an annual program
for the participation and interaction of students and teachers,
there were environmental contests, regional and interregional
encounters, as well as camps, and activities.
More than 10,000 students and 900 teachers from
110 schools participated in the activities. We may
conclude that during the 2012 period we hadthe participation of more than 50,000 students,
2,500 teachers for elementary, premiddle, and
middle levels, from 153 schools located within the
Panama Canal Watershed.
Panama Canal WatershedConservationFor consideration purposes, we have divided
the 339 thousand hectares of the Panama
Canal Watershed territory into eight work regions
established under hydric criteria. The Panama
Canal Watershed is one of the most important
areas for the Republic of Panama. It consists
of 42 corregimientos located in 7 districts of the
provinces of Panama and Colon. The Watershed
is an area dened by its sub basins that drain their
water to the Alhajuela, Gatun and Miraores lakes.
Six protected areas occupy 38.5 percent of
the Panama Canal Watershed territory onnatural elements, vegetable cover and the rich
ecosystems which make up the Watershed.
The Panama Canal in close collaboration with
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competent authorities focuses its conservation and
environmental restoration programs.
Watershed Vegetable Cover andSoil Use ProgramIn general terms, the forest cover of the Panama Canal
Watershed has shown a favorable tendency during
the 2008-2012 period, and despitethe extreme natural
climatic phenomena that contributed to the covers
reduction, there is natural regeneration and a positive
impact as a result of reforestation activities performed by
the Panama Canal in association with the communities
and local authorities. This joint participative and
integrated management approach with stakeholders
has played an important role in the conservation of the
environment and in the protection of water sources.
During the year 2012, the mature and secondary forest
cover was mainly reduced in the Chagres Nationa
Park, at the margins of the interoceanic route and the
headwaters of the Ciri Grande and Trinidad rivers
This was mainly due to the high precipitation during
Vegetable Cover and Soil Use in the Watershed, 2008 and 2012Cover Surface (ha) 2012 2012% Surface (ha) 2008 2008%
Mature Forest 84,082.2 24.3 85,609.2 24.80
Secondary Forest 82,217.9 23.8 82,941.9 24.00
Bushes and Stubble 31,279.2 9.1 31,213.6 9.00
Reforestation 8,212.8 2.4 6,330.5 1.80
White grassland 6,474.8 1.9 6,946.8 2.00
Crops 3,218.4 0.9 1,996.4 0.60
Grassland 75,823.7 22.0 77,874.7 22.60
Bare soil 1,461.2 0.4 406.6 0.10
Population 10,397.2 3.0 10,218.7 3.00
Mining 859.3 0.2 488.3 0.10
Water 41,292.6 12.0 41,292.6 12.00
TOTAL 345,319.3 100.0 345,319.3 100.0
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the climatic phenomenon La Purisima in the year 2010 and
the strong rains in the year 2011, as well as the construction of
infrastructure in the Transisthmian Corridor during the last ve
years. The 2009-2012 period showed a deforestation rate of -0.27
in comparison with the 2003-2008 period.
Water Quality and QuantityThe Panama Canal, as the water resources administrator for
the Panama Canal Watershed, is responsible for ensuring the
quality and availability of water for human consumption as well
as for the operation of the Panama Canal by means of complex
forecasting systems, together with water quality monitoring and
ood control and prevention programs.
Water QualityThe Water Quality Surveillance and Monitoring Program in the
Panama Canal Watershed comprises natural water at stations
located on tributary rivers and reservoirs in Gatun, Miraores and
Alhajuela. This generates the water resources physico chemical
and biological conditions data for better decision-making
regarding policies, programs, and projects that contribute to
sustainable use and efcient water management. With regards to
the monitoring of drinking water quality, samples were analyzed
for daily, monthly and quarterly assessments of processes with
products of the three water treatment plants managed by the
Panama Canal, Miraores, Mendoza and Monte Esperanza. These
included, among others, testing for metals, organic compounds,
pesticides, cyanobacteria, protozoa and other
biological indicators. In addition, wastewater
quality was followed up on by participating in
the characterization and monitoring of different
sewage discharges generated in the operations
of the Canal.
Production of Drinking WaterThe water resources of the Panama Canal
Watershed are the source for the water used by
the treatment plants managed by the Canal,
beneting approximately more than half a million
people in the cities of Arraijan, Colon, La Chorrera
and surrounding areas; as well as Panama City,
the district of San Miguelito and the Transisthmian
Corridor towns. The Mendoza Treatment Plant,
with a production capacity of 40 million gallons
per day, produces 31 million gallons supplying
water to 125,000 recipients who have lived for
more than 15 years without continuous access to
safe drinking water.
Climate ChangeRecently the Republic of Panama has experienced
some extreme climate events related to the
climate change that our planet lives today.An
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example of this was the climatic event that took place
in December 2010, La Purisima, caused by the 2010-
2011La Nia phenomenon, which brought heavy rainfall
for more than 21 days, causing harm to human and natural
systems, related to the loss of human lives, millionaire losses
in agricultural production, infrastructure, and a reduction
in drinking water production for the provinces of Panama
and Colon.
The Panama Canal has started looking for alternatives
to face the challenges and opportunities of climate
change through an integrating vision regarding social,
economic and environmental matters, including nancial
mechanisms to implement actions that facilitate the
application of mid to long term adaptation measures
based on a sustainability culture oriented towards risk
prevention.
Under this approach, the Canal is bound to reduce the
Watersheds social and natural systems vulnerability, the
adverse impact of climate change and other risks related
to global warming, in order to increase the populations
adaptation capacity to those events. The Green Route
Program includes concrete actions implemented by the
Panama Canal in the adaptation and mitigation of the
effects of global climate change.
The Green Route: The Routethrough PanamaIn a green economy framework, we are implementing a
comprehensive carbon management plan that includes
the development of a greenhouse gases baseline (GHG
for our operations and the establishment of a strategy fo
the reduction and compensation of these emissions. We
are trying to mitigate the impact of our activities and to
reduce its carbon footprint in a proactive way, through
the execution of reforestation projects and recovering
degraded areas.
The route through Panama is considered the green
maritime route of the world, because of its contribution
to fuel use reduction per transported cargo unit by the
vessels that transit through the Canal in comparison with
other immediate alternative routes, reducing in this way
the CO2emissions of the world maritime sector. With the
Panama Canal Expansion, we expect to have twice the
cargo that transits today avoiding the emission of more
than 160 million tons of CO2during the rst 10 years of the
new set of locks, between the years 2015 and 2025. The
Panama Canal offers the maritime industry a valuable
alternative for the transportation of great volumes o
cargo through an all water route, with safety, low costs
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and effective Canal waters time, in addition to reducing CO2
emissions and contributing with the international efforts to reduce