Full Speed Ahead
Any further delays to widen the Panama Canal could have far-reaching cost implications for all parties involved in the construction project and the shipping companies and exporters who use the Canal, a marine risk expert warned.
The Panama Canal Authority (ACP) signed a deal this month to end a four-month dispute — and a two-week work stoppage — over $1.6 billion in cost overruns claimed by the Grupo Unido por el Canal consortium (GUPC) carrying out the work. The dispute had threatened to derail the whole project, which now is expected to cost nearly $7 billion.
Under the terms of the agreement, the Authority and the Spanish-led construction consortium will each invest an extra $100 million in the project.
Zurich North America, which holds $400 million surety bond on the project, “worked diligently with the ACP and GUPC to reach an agreement on the matter and fortunately the two sides have had a successful negotiation,” said Michael Bond, head of surety, Zurich North America. “We congratulate both of them on effectively reaching a favorable outcome. Zurich was glad to have played a role in a solution that brought the project forward.”
When the Canal expansion is completed in December 2015, the new third lock will house 12 giant lock gates designed to allow larger cargo ships through, and double the shipping lane’s capacity.
But Douglas Sakamoto, class underwriter, marine, Liberty Specialty Markets, warned that any further interruptions could result in shipping delays, increased costs and lost shipping tolls.
“The forecast for work to be completed has changed from 2014 to 2015, which is still not a massive delay when compared to the dimension of the work and the expectation in terms of international trade turnaround,” Sakamoto said.
“However, a longer delay could impact several international trade industries since there are lots of related ongoing investments, such as work on several international ports to adapt them to the new vessels, and orders placed for the new-Panamax vessels.
“If the work can’t be completed for any reason and costs still continue increasing, there are a number of serious implications such as the termination of the agreement with the current consortium, and the bond policy may be required in order to provide the extra amount needed to complete the work.”
When done, the Panama Canal Authority is expected to double the $1 billion in revenue it currently receives from shipping tolls.
With more than 13,000 ships passing through the Canal every year, Sakamoto said, construction delays could mean restrictions in the amount of goods producers can export as well as increasing the time it takes to ship the goods.
He noted that producers of commodities, such as LNG, which are exported from the U.S. Gulf Coast to target markets like Asia and the west coast of Latin America could be affected.
In addition, grain producers in the Brazilian ports of Itaqui, Suape and Pecém would also lose out on shorter shipping times, he said.
Shipping companies that have invested heavily in new-Panamax vessels orders several years ago would similarly miss out on vital revenue, Sakamoto said.
International port authorities that have poured vast amounts of money into developing their ports for larger vessels and cargo volumes would also be adversely affected, Sakamoto said.
Pressure to meet the new deadline for completion of 2015, he said, could also impact labor force costs and suppliers.
“The Panama Canal construction project has been highly debated,” said a spokesman for Allianz Global Corporate Specialty, “but it’s actually not unusual for a large construction project to run over/get delayed. In fact, that’s why with project cargo coverage, there is a particular element called ‘delay in start up’ protection to help mitigate that risk.”
Work on the Canal project is now 70 percent complete; however the delay has come at a considerable cost to Sacyr, the Spanish building company that is leading the consortium, which saw its share price drop 6.9 percent this month following a breakdown in initial talks.
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5 Steps for Insurance Firms to Recruit Better College Graduates
It’s no secret that most college students simply aren’t aware of insurance careers. Our own research* has found that only 2 percent of millennials consider themselves “very familiar” with the insurance industry, and fewer than 10 percent said they were interested in joining the profession.
That harsh reality means insurance employers can’t just post entry-level job openings online and wait for the applications to roll in — especially if they’re trying to attract the best and the brightest. You need to be proactive if you want to compete with industries that young people know much better.
One effective way firms can get a jump start on the competition is by introducing students to their organization before students graduate. Here are five steps to get started.
Focus your efforts
Nearly 40 colleges and universities offer undergraduate RMI-major programs, and many more offer RMI minors, graduate programs and individual classes, according to a 2014 study by St. John’s University and the International Insurance Society. Many of these schools are also MyPath partners, and you can learn more about them by visiting our site.
But there are other ways to reach prospective applicants, too. Check for business-focused student groups or clubs, especially Gamma Iota Sigma (GIS), the insurance, risk management and actuarial science organization. GIS has more than 65 chapters across the United States with ambitious students who are already familiar and involved with the insurance field. Find a chapter near you by visiting their website, and offer to send a guest speaker or host an informational lunch. (Trust us, no college students are turning down free food.)
Use your connections
Internships are another great way to generate awareness of your company. They truly are the simplest win-win, because you get support for your team, the interns gain valuable professional experience, and there’s always the chance they’ll spread the word about your organization on campus. If you’re looking for high-caliber interns, you can become a MyPath partner and post your internships on our database for tens of thousands of users to find.
Put your best foot forward
Ideally, your social media presence should have a personal feel and give students an idea of what it’s really like to work for your company. As we know, careers in insurance organizations are often misrepresented, so it’s imperative to make that extra effort to show your workplace is rewarding and fulfilling.
Rein in your strongest applicants
If you’re making an offer, specifically refer to topics discussed during the interview process or send a handwritten note. Millennials especially want to understand how they fit in to the mission of the organization and want to feel appreciated as a unique addition to the group. Some firms even ask the CEO or another exec to give the applicant a call extending a job offer. If you’ve done a good job up to that point, that applicant may actually become the CEO one day.
Want more ideas for recruiting young professionals? Visit the MyPath website to get more articles like this, including “How Employers Can Make Their Offices More Millennial Friendly” and “4 Myths About Millennials That Smart Employers Should Ignore.” You can also sign up to become a MyPath partner yourself to connect with millions of young people around the U.S.
*Research from The Griffith Insurance Education Foundation, “Millennial Generation Attitudes About Work and The Insurance Industry” (Malvern, Pa.: The Griffith Foundation, 2011).