Ecuador’s purchases from Panama tripled in first seven months of 2021 over same period in 2020

RIO DE JANEIRO, BRAZIL – In the last year, Panama took a more vital role as a distributor of products for the region and, especially, for Ecuador amid rising shipping freight costs. This increase is due to the shortage of containers, responsible for moving 80% of world trade.

Read also: Check out our coverage on Ecuador

Between January and July this year, Ecuador acquired USD$1.092 billion from Panama, three times the amount recorded in the same period of 2020 and higher than in 2019, when there was still no Covid-19 presence, and there were no problems in maritime transit.

With this performance, the Central American country became Ecuador’s third-largest supplier, surpassing Colombia, traditionally in that place.

On the other hand, during the same period, purchases from the United States grew only 16% and from China, 33%. Panama mainly purchases raw materials for industry, but also consumer goods.

Alberto Acosta Burneo, the editor of Análisis Semanal, said that imports are increasing across the board because the Ecuadorian economy is recovering. “Imports are increasing because local production is gradually improving, so there is a growing demand for more and more inputs,” he said.

In addition, Panama has a particularity. “It is a cargo transfer hub,” explains Xavier Rosero, executive vice-president of the Ecuadorian Federation of Exporters (Fedexpor). For example, says Rosero, what is produced in the region, particularly in Central America, crosses through the Panama Canal, facilitating distribution to other countries in the continent. 6% of the world’s trade passes through this canal.

For the commercial sector, Panama is an option that makes it possible to shorten travel times from China, whose ports are heavily congested in terms of logistics. From that destination, up to US$12,000 is currently paid to move a 40-foot container due to the crisis in the shipping sector.

The Guayaquil Chamber of Commerce (CCG) in Ecuador points out that the main products usually purchased from Panama are medicines, computers, televisions, and clothing.

However, Miguel Angel Gonzalez, president of the CCG, explains that this option is only a stopgap. “Worldwide freight rates continue to rise, and this cost will translate into a higher price for the end consumer,” he said.

Toys arriving in the country, whether from Panama or other destinations for Christmas, will be 30% more expensive, warns Gonzalez.

Panama is not the only destination that has been reactivated. According to the CCG, importers have also opted to bring products from other Central American countries such as Nicaragua, Guatemala, and Costa Rica.

Another factor fueling the growth of purchases from Ecuador to Panama is the time of arrival of goods. According to Byron Gonzalez, general manager of the logistics company Cargowshipping, products take a week to arrive in Ecuador from this destination and 45 days from China.

The company works with eight shipping companies in the world. Since last June, importers in Ecuador have been demanding 30% more freight to bring products from Panama, Mexico, and the United States.

Despite this, smaller segments of the commercial, textile, and automotive sectors cannot stop importing to Asian countries. For example, semiconductor chips, household appliances, and wires are primarily manufactured in China, and there are no options in the region.

Alex Manrique, the representative of Importadora Manrique, said that, in his specific case, bringing some inputs from Panama does not represent a profit. The importer explains that a box of masks in Panama costs USD 0.80, which in Ecuador can be sold for US$1, which is not profitable because the remaining 0.20 must be deducted from the import and marketing costs.

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