• Honduran and Nicaraguan truckers restricted from loading cargo in Panama

    11 March 2019

    The integration of Central America’s ground transportation services took a major step backward in February 2019 after the governments of Panama and Honduras imposed temporary restrictions on cross-border operations for truckers from the other country. Frictions between truckers from Panama and the rest of Central America originated in the 1990s due to Panama’s efforts to protect its local truck transportation sector, especially in the Colón Free Trade Zone. Cargo Transporters associations in Panama have long argued that opening up the Colón Free Trade Zone to international truckers will completely disrupt the local sector. The Colón Free Trade Zone is not only the largest free port in the Americas and second largest in the world, but it also has a large trade imbalance with the rest of the Central American countries. According to the Logistics Business Council of Panama, more than 400 containers arrive at the Colón Free Trade Zone from Central America per month, while only 100 containers are moved from the Colón Free Trade Zone to the rest of Central America. This trade imbalance creates a large pool of Central American truckers arriving at Panama eager to take merchandise back to their countries, even at minimum premiums.

    For many years, truckers from Honduras and the rest of Central America have complained that by not letting Central American truckers pick up cargo in the Colón Free Trade Zone, Panama is effectively violating the principle of reciprocity and non-discrimination for international freight services established by the Central American Integration System (SICA) in 1991. However, Nicaragua was the first country in the region to impose retaliatory measures on carriers from Panama. On September 30, 2002, the General Directorate of Customs Services of Nicaragua issued a Technical Memorandum -CT/071/2002- to ban all Customs Administrators and Delegates and all Authorized Customs Agents in the country from releasing cargo to Panamanian motor carriers, regardless of the destination of the goods in question.

    The effects of Nicaragua’s retaliatory measure against Panamanian truckers have been minimal, if any, especially considering that Nicaragua’s exports to Panama only amounts to approximately USD 2.67 million (EUR 2.35 million) per year. However, the dispute between Panamanian and Central American truckers took a turn for the worse on February 1, 2019 when Honduras decided to join Nicaragua and banned Panama-domiciled carriers from loading cargo in its territory. Although the restrictions set by Decree No. DGIEPC-078-SDE-2019 only apply to cargo loaded at free trade zones in Honduras, different media sources have indicated that the measure is being implemented throughout the country. The same applies in the case of Nicaragua. This measure has the potential to have a greater impact as total annual exports from Honduras to Panama are around the USD 35.6 million range, with paper and paperboard (39.28%) and plastics (9.85%) being the two most important products.

    After Honduras announced its restrictive measure, a series of cargo transporter protests broke out in Panama demanding the federal government to retaliate. On February 16, 2019, a group of 80 truckers affiliated with the Unitary Cargo Transportation Union of Panama blocked the entry of Central American truckers at the border between Costa Rica and Panama. The protest caused the shutdown of the Paso Canoas Customs post for several hours. After this incident, the government of Panama announced its decision to adopt restrictive measures against carriers from both Honduras and Nicaragua. The official decrees from the Panamanian Custom Authority were issued on February 18 and 19 and effectively prohibit the loading of cargo in the country’s fiscal warehouses, free trade zones, and ports for motor carriers from both Nicaragua and Honduras. This measure only applies to export operations in the Panamanian territory, and not to import of cargo whose carriers are of Honduran and Nicaraguan nationalities. Impacts associated with this new trucking restrictions include longer waiting times at the Panama-Costa Rica border, due to the constant protests of Panamanian truckers demanding an effective implementation of the policy, as well as diminished trucking capacity at the Port of Balboa, the PSA Panama International Terminal, and at the Panama Pacifico Free Trade Zone. Contrary to the restrictions imposed by Honduras and Nicaragua, Panama’s move is likely to have a greater impact in trucking capacity in the medium to long term, as exports from Panama to Honduras and Nicaragua reached over USD 758 million in 2016. Pharmaceutical, apparel, footwear, and electronics are the sectors that could see the greatest impacts, as companies in these sectors tend to rely the most on ground transportation to move goods over long distances across the region.

    The presidents of Honduras and Panama are expected to meet in the new few days to find a solution to this conflict. However, most analysts agree that a successful resolution is very unlikely in the short-term. Interestingly enough, Costa Rica is perhaps the most significant player in this crisis. If Costa Rica decides to support either the Panama or the Honduras and Nicaragua side, shipping lanes in the regions would be severely disrupted, making transloading operations a necessity at each border-crossing. If this occurs, border wait times in the region are likely to increase and shippers may end up having to pay additional fees to transload freight.

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