10 Reasons Panama Should be Your Latin American Distribution Center

Panama is the gateway to Latin America. Since its inception, Panama has been the go-to country for companies that want to expand into the huge, fast-growing Latin American market.

Below are 10 reasons why companies locate their Latin American Distribution Center in Panama:

• The Colon Free Trade Zone is the largest FTZ in the Western Hemisphere and the 2nd largest FTZ in the world.

• In addition to the Colon FTZ, Panama has other special economic zones like Panama Pacifico, City of Knowledge as well as over 10 free zones.

• Free Trade Zones are designated areas that eliminate traditional trade barriers, such as tariffs, and minimizes bureaucratic regulations. Free trade zones enable importers and exporters to operate under better economic conditions.

Because of it’s strategic location, distribution capabilities, and favorable business environment, hundreds of multinational companies have located offices and distribution centers in Panama.

  •  Experience. Panama has been a hub for global trade for over 100 years and they have developed world-class expertise in logistics, supply chain, and operations.
  • World Class Processes. Panamanian distribution centers use the latest operational best practices for managing distribution centers including:
    • Industry key performance indicators
    • Customs-Trade Partnership Against Terrorism (C-TPAT/BASC)
    • Compliance to OSHA regulations
    • Warehousing technology
  • A Panama Based DC can respond quickly to market changes and demands in Latin America, offering customization processes like light assembly operations, close to the markets keeping your customers satisfied.
  • Same Money. Panama uses U.S. currency so there are no fluctuations.
  • Great Business Relationships. 55% of Panama trade is with the United States and the two countries have free trade agreements and treaties that are very favorable.
  • Business in Paradise. Panama has beautiful weather in a region that is not affected by natural disasters.
  • Tourism is Big. Panama is a top tourist destination with world class hotels and accommodations.
  • Business-oriented government, Panama has the unique characteristic in the region that the public and private sector works together to develop country growth strategies.
  • Panama has an impressive infrastructure, with some of the best port and airport facilities in the western hemisphere.
  • Emerging Tech, Panama is transitioning towards more knowledge-intensive activities and it is proving to be a strong adopter of global standards and technology.
  • Security is a big problem in Latin America. Some 3PLs in Latin America have been forced to hire their own security companies.
  • Panama is very safe and secure in comparison. Panama does not suffer from violent crime, truck hijackings and theft that is prevalent in the region.
  • Safe Passage. The Panama Canal has more traffic and fewer security issues than other major canals like Suez Canal and Kiel Canal.*

* Lloyd’s List Intelligence Casualty Statistics. / Analysis: Allianz Global Corporate & Specialty

  • Streamlined Customs. Panama’s customs process is faster and less restrictive than the U.S. on shipments from Asia.
  • Less Expensive. It is much less expensive to ship goods bound for Latin America to Panama (compared to shipping to U.S. then on to Latin America).
  • Labor Advantage. Panama has a very skilled workforce that is less expensive than their U.S. counterparts. Panama companies also understand the Latin American market better than U.S companies.
  • Natural Advantage. The Panama Canal and its perfect location makes Panama a natural transportation hub.
  • Trade Focus. From its beginning, Panama has been focused on trade, distribution, transportation and logistics.
  • Building on Success. Panama has invested heavily in Its’ ports, airports, businesses, customs, free trade zones and canal to fortify it’s position as Latin America best distribution center.

Unlike many countries in the region, Panama is far less exposed to natural disasters, and its location connecting the Atlantic and Pacific offers a key strategic position to assist during emergencies. The Government of Panama and the United Nations Office for Project Services (UNOPS) have constructed a Regional Logistics Centre for Humanitarian Assistance, a Humanitarian Hub, with the aim of increasing the capacity of governments and international agencies in the region to respond to natural disasters and other humanitarian events.

The guarantee of the provision of human resources and supplies and materials is life or death. “The capacity that Panama has as a logistics, maritime and air transport hub and additional financial hub, deserved its evolution towards a humanitarian hub.

Panama is better equipped than Miami for servicing the Latin America Region.

Port Miami Panama
TEU Capacity 2 Million 12 Million
Location Access to the Atlantic Ocean, Direct Routes from Europe and Africa Access to both the Atlantic and Pacific Oceans, Direct Routes from Asia, Australia, Europe, Africa, the U.S.
Legal Tender USD USD, PAB
Transshipment 1-2% of Cargo 83-85% of Cargo
Import Countries 65 160
Export Countries 75 100
Shipping Times Savannah, Charleston, Norfolk, Houston: 1-2 Days Lazaro Cardenas Terminal, Mexico: 8-9 Days Santos, Brazil: 14 Days San Antonio, Chile: 11-12 Days Callao, Peru: 7-8 Days Cartagena, Colombia: 3-4 Days Kingston, Jamaica: 2 Days Savannah, Charleston, Norfolk, Houston: 3-4 Days Lazaro Cardenas Terminal, Mexico: 3-4 Days Santos, Brazil: 10-11 Days San Antonio, Chile: 5-6 Days Callao, Peru: 3-4 Days Cartagena, Colombia: >1 Days Kingston, Jamaica: 1-2 Days

The current version of the LSCI is generated from the following six components:

  1. The number of scheduled ship calls per week in the country.
  2. Deployed annual capacity in Twenty-Foot-equivalent Units (TEU): total deployed capacity offered at the country.
  3. The number of regular liner shipping services from and to the country.
  4. The number of liner shipping companies that provide services from and to the country.
  5. The average size in TEU (Twenty-Foot-equivalent Units) of the ships deployed by the scheduled service with the largest average vessel size.
  6. The number of other countries that are connected to the country through a regular service between two countries; it may include other stops in between, but the transport of a container does not require transshipment).

  Data Credit: UNCTAD

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Hundreds of Multinational Companies Have Moved to Panama

image credit: Panama SEM

image credit: CEPAL

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