October, 2006

Expansion project approved
From the Administrator:

Expansion project
approved
Panama votes "si"
to Panama Canal
expansion
Traffic Report -
Fiscal Year 2006
Number of Transits
by Market Segment
FY 2005- FY 2006
Scheduled locks
maintenance work
Smooth sailing:
Panama Canal ties
safety record
Panama hosts
Caribbean Shipping
Association
Conference
Canal tolls to be
reassessed

WORLD LEADER in
services to the
maritime industry and
in sustainable
development for the
conservation of the
Panama Canal
watershed.

CORNERSTONE of
the global
transportation system
and driving force for
the progress,
development and
growth of Panama.

MODEL of excellence,
integrity and
transparency in our
conduct; committed to
the integral
development of our
human resource team.

On October 22, 2006, the people of Panama
overwhelmingly approved the expansion of the
Panama Canal. After 92 years of serving world
commerce, the Panama Canal will be expanded. This
expansion will accommodate surging demand for the
Canal's routes and services, particularly the rapid
growth in traffic from Asia, through the Canal, to the
United States and back known as the "All-Water
Route."

Expansion entails building a third lane of traffic along
the waterway through the construction of a new set
of locks. The project will double the Canal's capacity
and allow more traffic, including the passage of wider
ships that are becoming increasingly popular in the
maritime industry.

An expanded Canal would benefit the people of
Panama and world trade, and would help maximize
Panama's strategic location to become the great
maritime hub of the Americas.

The vote of the people
guarantees that the Canal will
grow, better serve its
customers, allow more traffic
and remain an essential
artery of world trade.

The project will not interfere
with or disrupt current Canal
traffic. During the
construction process, no
current lanes will be closed,
and since all construction sites are outside of the
waterway's existing channels and operating areas, the
ACP is confident that there will be no major transit
delays due to the expansion project.

The future begins now, and we are certain that with
the expansion of the waterway,the Canal will continue
to guarantee safe and reliable service to the
international shipping community, which we are
honored to serve.

Panama votes "si" to Panama Canal expansion

Panamanians voted "Sf' ("Yes" in Spanish) in a national
referendum on the Panama Canal expansion. The
enthusiasm and energy was apparent as each voter
played their part in this historic event that
determined the direction and future of the Canal and
Panama. By law, expansion, or the "third set of locks
project," must be put to a vote in a popular
referendum. The Panama Canal Authority (ACP)
presented its formal proposal to the Panamanian
government in April, 2006. In the end, 78 percent
voted for expansion.

"Today, Panamanians made history. We are honored
by their trust and humbled by the responsibility in
front of us," said Dr. Ricaurte Vasquez Morales,
Chairman of the ACP's board of directors and
concurrent minister for Canal affairs. "We spent years
studying, researching and preparing and we are ready.
This project will be done efficiently and transparently.
With this vote, the Canal will be able to grow with
demand, improve service, spur economic growth in
Panama and maintain the Canal's competitive
advantage," Vasquez concluded.

The Panama Canal is nearing maximum capacity and
needs to grow with demand. The result of
comprehensive analyses and studies by the ACP
reflects that the expansion is estimated to cost $5.25
billion and will be paid by Canal customers through a
system of graduated toll increases.

continues...

, w m mi'/

Location of the new locks

Profile of the Third Set of Locks

Lane with restrictions (10Od)

Lane w-restrictions (10d)

Lane Outage (30 Hrs.)
Lane Outage (36 Hrs)
Lane Outage (3d)

Centerwall culvert outage (8d)
Lane Outage (60 Hrs)
Lane Outage (60 Hrs)

Nov. 7-17
Dec. 13-15
Dec. 20-22
June 13-22

32-36 (10d)
26-28
26-28
32-36

Tentative
Tentative
Tentative
Tentative

I

I

...continues

"We are proud and energized by the confidence in us that
Panamanians showed today. The project will benefit the people of
Panama, the shipping/maritime industry and world trade. Panama's
geographic location is its destiny we aim to be at the center of
global trade and become a great maritime hub," said Alberto
Alemin Zubieta, ACP Administrator/CEO. "Expansion will be a
principles-driven project we are committed to transparency,
efficiency and environmental sustainability. This will guide our
vision and direction."

The ACP will provide regular updates on expansion and the
contracting process, and will continue its environmental
conservation efforts along the Canal Watershed to protect this
precious water resource for the city of Panama and the Canal.

Number of Transits by Market Segment
FY 2005- FY 2006

Containers _ _ _
Dry Bulk
Refrigera Led Cargo

Tanker-
General Cargo
VehicleCarrie-

others
0 Sao 1000 1500 2000
TransiLs

FY2006
FY2005

2500 3000 3500

Traffic Report Fiscal Year 2006
During fiscal year 2006, 14,194 vessels transited through the
waterway. Of these, 12,772 were oceangoing vessels. Transits of
Panamax vessels (those 100 feet and more in beam) increased 7.9
percent to 6,078 transits from 5,633 transits, compared to the
same period of Fiscal Year 2005. Panamax vessel transits
represented 47.6 percent of total oceangoing transits. A primary
reason the ACP wants to expand the Canal is to handle the
projected growth and continue to provide a reliable service to its
customers.

The chart below illustrates a
vessel transits by fiscal year.

monthly breakdown of Panamax

Trniso Pana esl
10I bar and over0

Month
October
November
December
January
February
March
April
May
June
July
August
September

FY2005

493
482
469
475
438
483
486
492
459
463
480
413

5.633

FY2006
481
480
505
500
477
524
489
539
517
523
526
517

6.078

-2.4%
-0.4%
7.7%
5.3%
8.9%
8.5%
0.6%
9.6%
12.6%
13.0%
9.6%
25.2%

7.9 o

Nowadays,a total of 43 liner services transit through waterway on a
regular basis, seven services more than last year. The demand for
the Canal service has been continuously increasing as trade
between Asia and the East Coast of the United States keeps
growing. The East Coast ports, especially Savannah, Norfolk, New
York and Charleston are making million dollar investments to keep
with the projected growth in the demand.

Smooth sailing:
Panama Canal ties safety record

For the second time in two years, the Panama Canal has tied its
safety record. The total number of accidents in FY2006 (October
2005 September 2006) decreased 16.7 percent to 10 accidents
from 12 accidents in FY2005, highlighting the Panama Canal
Authority's (ACP) dedication to efficient and safe service. Total
Canal transits in FY2006 increased to 14,194 from 14,011 transits in
FY2005. Even with an increase in transits, the number of accidents
dropped.

In both FY2006 and FY2004 there were a total of 10 accidents. Prior
to 2004, the last time the Canal had this number of accidents was in
fiscal year 1923; however, in that year there were only 3,967 transits.
In the last 10 years, the Panama Canal has been working hard to
keep accidents at a minimum. The reduction in the accident rate is
the result of the implementation of new safety measures and
improvements to the waterway.

Container vessels continue leading the waterway's traffic. A total of
3,290 containerships transited in fiscal year 2006, a 14 percent
increase from the previous fiscal year. Dry bulk vessels recorded
2,752 transits followed by reefers with 2,096 transits.

-
, m mi~

The Georgia Ports Authority
Congratulates the People of Panama
The Georgia Ports Authority (GPA) offered congratulations to the
people of Panama for passing a referendum Sunday that will fully
modernize the Panama Canal.The $5.25 billion improvement of the
Panama Canal will occur simultaneously with the Savannah Harbor
Expansion Project (SHEP).

"The future of the global economy relies on the use of the new and
larger ships and the expansion of the Panama Canal," said Senator
Mack Mattingly,Chairman of the GPA."The Panama Canal expansion
and the Savannah Harbor Expansion Project are inextricably linked."

"The number one priority for the Georgia Ports Authority is
deepening the Savannah River from 42 to 48 feet," Mattingly
continued. "And since so much of our trade relies on the flow of
traffic through the Panama Canal,the news today is indeed music to
our ears."

Doug J.Marchand, Executive Director of the Georgia Ports Authority
(GPA), agreed. "The Panama Canal expansion project is not only
critical to the world economy, but also to Georgia's economy. The
Port of Savannah is home to more direct services to and from Asia
via the Panama Canal than any other port on the East Coast.This is a
big win for Panama and for Georgia."

Panama hosts Caribbean Shipping
Association Conference
From October 16-18, Panama City hosted the 36th Annual
Conference of the Caribbean Shipping Association (CSA). More
than 250 representatives of the Caribbean Shipping community
attended the event. Alberto Alemin Zubieta, Panama Canal CEO,
presented the expansion proposal at the conference.

The annual CSA conference provides its members an opportunity to
discuss the latest trends and issues in cargo and cruise shipping,
terminal and port operations and port industrial relations. A key
highlight of this particular conference was a tour of the Panama
Canal. CSA members took a partial transit through the waterway
onboard a ship starting on the Pacific, going through the locks
and ending at Gamboa.

Canal tolls to be reassessed
In the coming weeks, the ACP will initiate a consultation and
hearing process aimed at revising Canal tolls. As always, customers
will be welcome to participate in the process and submit their
comments and recommendations to the ACP's proposal.

The current pricing structure for container vessels will be kept in
place until the last phase, slated for May 2007, is implemented. The
new pricing proposal will take into consideration the impact of the
Canal tolls on the main routes and on commodities, as well as on
Canal customers.

We wan you comet fo mor inforatio

Your comments and suggestions are very important to us. If you need additional
copies mailed to other officials within your corporation, please contact us at the
address indicated in the next box.

Panama Canal Authority
Corporate Planning and Marketing (PM)
PO. BOX 526725 Miami FL. 33152-6725

Tel. (507) 272-7961
Fax. (507) 272-1416
e-mail: customerelations@pancanal.com

SEE THIS NEWSLETTER ON THE ACP WEB SITE AT: www.pancanal.com
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