Trouble in Panama


Yesterday I drove from Panama City to Colon, crossing this narrow country in an hour and ten minutes driving parallel to the Panama Canal. My vehicle was never to return, I had my problems getting back too.
All shiny and clean my old Mitsubishi was bound for the port of Manzanillo, Colon to be stuffed into a twenty foot CMA-CGM container bound for the port of La Guaira, Venezuela aboard the vessel Torben Maersk.
Maersk is the largest shipping line in the world but even it sees the value in berthing its ships on both the Pacific and the Caribbean sides of the Isthmus. The average price of a canal crossing is sixty thousand dollars and takes one to two days. The alternative is to round the Cape of Good Hope or transport trans-isthmus by road or rail. Passing between Tierra del Fuego and Antarctica is no piece of cake; apart from the notorious weather, the cost in time and diesel to round the sub-continent of South America is a serious logistical factor. Road and rail options are a logistical nightmare.
But container ships are not the only vehicles that run on diesel; trucks, trains, buses and taxis do, too. Or rather, in my case, they sometimes don’t.
The trip from Panama to Colon takes about an hour by road in a private vehicle or taxi. For most Panamanians private vehicles are not an option; they travel using public transport that used to compete with road or rail. The trans-isthmian rail line is now privatized like many of the ports on either side of the canal. The giant Hong Kong Taipan Hutchinson, the same conglomerate to be the first to bring third generation mobile phone service to many parts of Europe, has widely diversified interests but it still keeps an eye on international transport from China to the rest of the world. Hutchinson leases two of the four ports on either side of the Panama canal. Traveling between these ports by train now costs $50.00 for passenger service, my taxi driver used to pay $1.30 before privatization. If you earn $200 a month as many do in Panama, commuting by train to work would cost you five times more than you are paid.
You can squeeze four or more people into a taxi across the Isthmus for about $30 each way, cheaper than the train but still breaks the budget, so that leaves the old stalwart: the chicken buses.
These beautiful if somewhat uncomfortable old diesel buses began their lives transporting children to and from school in the United States (which explains the minimal leg room). They now belch their black fumes along the fifty mile trans-isthmian highway competing intensely for passengers. Their bizarre competitive tactics include racing each other to bus stops often cutting off the loser bus with great skill and admirable humor, shouting destinations at each stop and honking for passengers with increasingly elaborate and tuneful horns and spraying their vehicles in unique and somewhat non-PC artworks depicting busty women and macho Spanglish mottos. An economist desperate for examples of the beauty of the free market might hail this ingenuity but this ‘free’ market is in danger! The buses between Colon and Panama are on strike!
Many Colon port employees live in Panama City. Yesterday they sported a look of resigned concern. Many did not know how they were getting back home last night. I was lucky, I had enough cash for a taxi.
Ironically a full one third of all world shipping traffic is the transportation of oil. Many oil tankers are now too large to pass through the Panama canal (one of the reasons the Panamanians are spending close to $100 Million dollars to build a fine new bridge across to widen critical points) but thousands do. Even with all this available oil Panamanian gas stations charge about $2.30 for gasoline and $1.60 for diesel. Something’s got to give and it is not going to be the availability of oil, at least not for long.
Only Tuesday this week the governments of the richer nations of the world (Panama doesn’t qualify) pleaded with OPEC to raise production to reduce the upward pressure on oil prices, at least temporarily, which, they said, was endangering world economic recovery.
Have you ever wondered what this recovery is all about? And while we are on the topic, why do we find ourselves in such a cycle of hidden collapse and seemingly endless recovery? It seems like a lot of pain for relatively little gain. These topics are beyond the scope of a short essay like this but the price of energy does play a factor and the price of energy is going up! Why? Because it is still being produced from a finite and quickly collapsing supply. What do the rich countries of the world do? Instead of replacing the supply lines with something sustainable, they suggest foreshortening the demise of the supply. Where is the logic in that?
Consider my vehicle passing from Colon to the port of Caracas, Venezuela. The charges of such container transport depend on a myriad of factors including: twenty foot dedicated or forty foot shared, customs and documentation costs, competition on the route including freight forwarding distortions and an obscure little charge listed on my bill as “BAF”. The BAF charge on my twenty foot container for this trip is $125.00, BAF is an obscure term for the price of diesel for the ship. Separating it from the cost of the freight protects CMA-CGM line from fluctuations in oil prices but as my saleswoman in Maersk pointed out: “It keeps going up!”
So BAF bears a direct relationship to the cost of the energy to drive the ship. If we continue with the insanity of using diesel the price of BAF will do more to end the globalization of world trade than any protest in Washington or revolution in Iraq.
As I rode back to my hotel in Panama today I asked the driver why his window was smashed. He blamed the demonstrations in the city the night before. Seems an angry demonstrator had attacked taxis with stones as they drove by presumably because they had yet to join the strike.
An omen of things to come?