Jul 26, 2010 | Atlanta, GA
Panama is edging closer to its longtime ambition of becoming a trade hub for the Americas — with key assistance from the Supply Chain & Logistics Institute (SCL), a unit of Georgia Tech's Stewart School of Industrial and Systems Engineering.
Under an agreement negotiated with the Panamanian government, SCL will establish and operate a Logistics Innovation and Research Center (PLIC) in Panama by the fall of this year. The center's activities will be built around three main areas: applied research, education and competitiveness.
The center will gather data pertaining to logistics and trade and develop analytics to facilitate showing the value and capabilities of Panama. This knowledge base will also drive educational programming in logistics for students and professionals. In addition, the center will facilitate stronger industry and infrastructure linkages, leading to new logistics services and jobs.
With its strategic location, multi-modal transportation access, and deep-water ports situated on each coast, "Panama is a natural place for a trade hub," said SCL Executive Director Don Ratliff. "It is well suited for free enterprise growth with convenient air and sea transportation to the rest of Latin America, has an outstanding financial district, and good commercial development infrastructure.”
And there's the canal, presently undergoing a multi-billion-dollar expansion. When completed in 2014, the waterway's capacity will be doubled and allow much bigger cargo ships.
"There's a lot of entrepreneurial spirit in Panama," said Jaymie Forrest, SCL's managing director. "Panama is poised for economic growth in the area of logistics and supporting services.”
A bilingual workforce is another plus, she added, along with Panama's Colon Free Zone, a manufacturing, warehousing, and re-export center that is the second-largest free-trade zone in the world after Hong Kong.
But for all of Panama's hard assets, it lacks the high level of integration necessary for trade-hub status. There is lack of logistics services and supporting infrastructure such as public warehousing, temperature controlled faculties, logistics technology and the human capital experienced in supply chain operations. This is a good opportunity for Georgia Tech to transfer knowledge and apply value.
A value assessment to determine priorities in terms of infrastructure improvement will be one of the center's top orders of business. Ongoing improvements in logistics and the application of relevant new technologies will ensure Panama's competitiveness and build its stature as a trade hub.
Besides the immense economic advantages for Panama, a world-class trade hub, there is also expected to provide new opportunities for U.S. companies serving the logistics industry and, perhaps most importantly, boost American exports.
"We manufacture more products by value than any other country in the world," said Ratliff. "Many of these products are exportable, but they're made by small- and medium-size enterprises that simply don't have the capabilities to export to small countries." Nor is it economically worthwhile for these companies to develop and maintain individual trade relationships with separate Latin American countries representing markets of just four or five million people each, he added.
Typically, government-sponsored trade assistance is limited to marketing and does not address logistics needs, transportation, value-added product-support services and a host of other topics that constitute the practical demands of international trade. The Panama Center will be designed to meet these needs while providing, in effect, a single point of access for these smaller markets.
"If we're going to increase exports, which everyone believes is a good idea, then we have to make it so that exporting to a number of small countries is the same as exporting to one large country," Ratliff explained.
As the largest research group in the world focused on supply chain and logistics, SCL is the ideal partner for Panama's trade-hub development. In recent years, SCL has leveraged its traditional expertise to embrace issues surrounding international trade. SCL founded The Logistics Institute (TLI) Asia-Pacific in 1998 at the request of the government to improve logistics education. Based in Singapore, the center supports Singapore's Asian trade hub with research, education, and consulting expertise in global logistics and supply chain management. The learning’s from TLI-Asia Pacific offers a template for Panama in many ways.
In Central America, SCL established a regional presence in 2009 with its Trade-Chain Innovation and Productivity Center, which opened in Costa Rica to support increasing trade exports and improving logistics performance while supporting some of the countries strategic initiatives and planning investments.
The Panama center is expected to serve as a springboard for logistics innovation and research throughout the Americas, according to Forrest.
SCL's emerging leadership role in international trade also dovetails with Georgia Tech's 25-year strategic plan, which calls for leveraging Tech's global engagement as a means of securing a larger international footprint. Logistics was identified as one of four high-potential industry sectors warranting particular emphasis in research and industry partnerships. The other sectors are energy, healthcare, and transportation.
"What Panama wants to do and what we want to do are very compatible," Ratliff said. "They have all the right parts -- we'll help bring them all together."
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Industrial and Systems Engineering