Colón is a sea port on the Caribbean Sea (Atlantic) coast of Panama. The city lies near the Caribbean Sea entrance to the Panama Canal. It is the capital of Panama's Colón Province and has traditionally been known as Panama's second city. Colón was originally located entirely on Manzanillo Island, surrounded by Limon Bay, Manzanillo Bay, and the Folks River. Since the disestablishment of the Canal Zone, the city's limits have been redefined to include the former Canal Zone towns of Cristobal, Rainbow City, Margarita, and Coco Solo, as well as the former U.S. Army base of Fort Gulick.
In 1948, the southeastern corner of Manzanillo Island was designated as the Colón Free Trade Zone. The Free Trade Zone has since been expanded through land reclamation on the Folks River and annexation of parts of France Field (now Enrique Adolfo Jimenez Airport) and Coco Solo.
Since the late 1960s, Colon has been in serious economic and social decline. In recent times, the unemployment rate has hovered around 40%, and the poverty rate is even higher. Drug addiction and poverty have contributed to crime and violence, which successive Panamanian governments have not addressed effectively.