Is working from home likely to become a permanent change?
So far it’s a temporary measure we are doing to ensure social distancing. Personally, I love working from home. I work longer hours and harder but I have more flexibility with my lunch time or if I need to work out in the morning. I think I actually put in more hours. For example, having to drive to work, that time you have gained. Having to get dressed up to go to work, that time is gained. You can be more casual. You eat healthier because you eat all your meals at home. Working at home has definite advantages.
How did you make decisions with stringent measures regarding health and safety so early, already in January, when the world was struggling to understand the scope of the problem?
In the beginning, we took drastic measures and went to the bare minimum of employees. We asked ourselves ‘What was the critical number of people we need to not shut down?’ We reduced our workforce to 3,600 but soon we realised that that was a bit tight. Little by little we increased the number. For instance, you can stop maintenance for a while but not forever. We saw that we needed maintenance people to come in two days a week, every week. We shut down 100% of dredging, 100% of preventative maintenance and only had running maintenance. Each week we learned something new and adapted.
This process also gave us a good idea of things we could improve upon in the long term. At times, there was some idleness or not full workloads, but this gave us the opportunity to evaluate and better utilise resources, and refocus on some areas. It was a good learning experience to see how a company could run with 50% of its workforce.
What is the impact of COVID-19 on world trade from the Canal’s perspective?
We had multiple things going on at the same time so it’s difficult to differentiate what was the biggest impact. 2019 was one of the driest years in 70 years at the Panama Canal. Water levels were low. As a result, on 15 February, we implemented a new, freshwater charge for all vessels transiting in the Canal: a $10,000 flat rate for the biggest vessels with a length overall greater than 300 feet, $5,000 for the 200-300 foot range and $2,500 for the smaller vessels under 200 feet in length. In addition to that, there is an adjustable rate that is a percentage of how many tolls you pay according to the lake level. The idea was to restrict traffic a bit because we didn’t want to implement draught restrictions for our customers. We wanted the lake level at a good elevation to provide a competitive draught. In addition, there are the US-China conflicts. Add that to the freshwater fees raising our tolls, and COVID-19, and yes there has been a reduction in trade. The impact to the Canal has occurred with a two or three month delay from when the pandemic hit. In March, there was maybe a 1% decrease in arrivals, 5% in April and then 14% in May, which is basically COVID-19 causing a drop in trade. At first, production stopped in certain areas of the world, and then consumers were buying less because the economies in the world were affected.
To what extent is the Cascade Effect affecting the Panama Canal?
Roll on/roll off is one of the main segments that’s been impacted. Of course we’ve had a dramatic number of cancellations in cruise vessels. Panama was just established as a home port so even though that doesn’t impact the Canal, it impacts the country.
Another impact was the drop in fuel prices which came in the middle of everything. When fuel costs are low, there are some sea routes that become more competitive than the Panama Canal. Add to that low charter rates and that affects us. As of now, however, fuel prices are coming back up. Container vessels are less loaded, coming with less containers than normal. The Cascade Effect has also meant less port calls in our ports. There are many blank sailings now – also an effect of the coronavirus – and less transits through the Canal because 72% of the ships that transit the Panama Canal do make port calls. If you have a drop in transit, then you have a drop in port calls.
Looking back to the Panama Canal Expansion, how did your role change throughout the course of the project?
From 2002 to 2006, we were a small team of four or five people working with 120 other professionals from the Canal. We were integrating everything – environmental, engineering and financial issues – into one single proposal, and developing a communication strategy. We needed this communication plan because to expand the Panama Canal with a third set of locks required a national referendum. We analyzed it for five years. We had contractors from the USA – Parsons Brinckerhoff – who helped us put the project together with 120 studies and $40 million that we managed as a team. In 2006, they created an office to implement the execution, create the organizational structure, and everything that had to be put into place if the referendum were positive.
Luckily, the referendum was positive and after that they created the position of Vice President of Engineering that was going to lead the project. I was the manager for resources and was in charge of safety, environment, historical documentation, budget, control, and legal. It was quite intense and that was my role from 2007 until 2012.
In February 2012, my boss got promoted to Administrator and I became the lead of the project. From February 2012 until June 2016, which was the inauguration of the new locks, I headed the project. All of the engineering of the Panama Canal was under the same Vice Presidency. Then from June 2016 until January 2019, I became head of engineering, which encompassed all of the engineering of the Panama Canal. During this time, we also had to build a bridge on the Atlantic side because there was no bridge. To cross from one side of the country to the other, you drove on top of the lock gates. In February 2019, I became Chief Operating Officer.