The Panama Canal Authority recently approved a new tariff system expected to raise fees by upwards of 8 percent. Increases come after many believe shipping companies exploited the pandemic and subsequent supply chain crisis, posting $150 billion in profits in 2021.
“The spot rate for a 40-foot container to the U.S. from Asia topped $20,000 last year, including surcharges and premiums, up from less than $2,000 a few years ago, and was recently hovering near $14,000,” Bloomberg news recently reported. “What’s more, tight container capacity and port congestion mean that longer-term rates set in contracts between carriers and shippers are running an estimated 200 percent higher than a year ago, signaling elevated prices for the foreseeable future.”
Changes to the Panama Canal fee system are not expected to cause shipping delays. The collection structure reduces the number of tariffs from 430 to 60. Vessels will reportedly pay different fees depending on the type of locking system they employ — Regulars, Supers, and Neo-Panamax. According to the canal authority, Neo-Panamax container vessels can expect to pay $200,000 when carrying less than 10,000 twenty-foot equivalent units and $300,000 when exceeding that threshold. Neo-Panamax ships carry as many as 14,000 containers, almost triple the number of other vessels.
“We are going to review the booking system for more simplification and respond to the market,” Panama Canal Authority Administrator Ricaurte Vasquez reportedly said.
Of particular concern in the U.S. are the increases in energy transportation. Liquid petroleum carriers moving 46,000 tons of propane are expected to see an increase of $5.20, roughly 0.9 percent. Oil tankers with 450,000 barrels of crude using regular locks would incur an increased fee of $0.20 per barrel. Coal and bulk grains would also experience fee hikes of up to 0.7 percent above existing costs.
Panama Canal officials indicate they plan to use portions of the increased fees to expand and improve infrastructure. An estimated $2 billion in water projects are in the works. Digital transformation and purchasing carbon-neutral equipment by 2030 also rank among the canal’s reinvestment goals.
“Our ability to maintain a safe, reliable route amid rising climate and supply chain challenges hinges on making strategic investments and adjustments to our business structure today,” Panama Canal vice president of finance Victor Vial reportedly said. “Ground-breaking investments are already underway to capitalize on these changes and strengthen the Panama Canal’s role in connecting smarter, more sustainable supply chains.”
Approximately 6 percent of the world’s cargo passes through the Panama Canal, serving 80 countries and supporting 140 maritime routes. The United States remains its largest customer, with 60 percent of imported or exported cargo passing through the canal. Panama Canal authorities plan to gradually roll out the fee system starting in January 2023. American consumers are unlikely to notice the resulting price hikes per se. But they will be passed along and add to inflation.
Sources: seatrade-maritime.com, ajot.com, bloomberg.com
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