ICS: Panama Canal changes could raise transit costs 30 percent

A 'freshwater charge' of $10,000 will be assessed for any vessel over 125 feet long
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Courtesy Panama Canal Authority

The following is text of a news release from the International Chamber of Shipping (ICS):

(LONDON) — The Panama Canal Authority has said it will impose a "freshwater charge" on ships passing through the canal from Feb. 15. The charge will be set at $10,000 for any vessel over 125 feet long. There also will be a variable surcharge based on the level of Gatun Lake at the time of transit. The International Chamber of Shipping calculates this move will increase costs to ships passing through the Panama Canal by up to 15 percent.

The new freshwater charge comes ahead of significant changes in the Panama Canal Authority 2020 tolls modification, which is due to become effective on April 1. This toll modification could see additional cost increases of up to 17 percent for ships passing through the canal.
 
If the charges are combined, some ships passing through the Panama Canal could face price hikes of over 30 percent by April 1. The period between the announcement of the new freshwater charge and its date of implementation is only a month, giving little time to consider the decision and its potential effects. All stakeholders were engaged in the decision-making process for the toll modification last year, and the Panama Canal Authority at this time agreed to defer increases to allow shipowners to factor in the rise.
 
For shipowners, the proposed fees amount to yet another rise in toll charges. 
 
“While we have worked with the Panama Canal Authority to manage the upcoming implementation of toll modification rise on April 1, the introduction of the freshwater charges have taken the shipping industry by surprise," said Guy Platten, ICS secretary-general. “The industry is currently facing increased price pressures globally, as demand has been hit hard by coronavirus and markets are adjusting to the new regulations on sulfur levels. 
 
“It is therefore highly inadvisable for the Panama Canal Authority to put increased strain on industry and the wider global economy at this time. Shipping already operates on the slimmest of margins. Cost hikes in this range, without sufficient warning, places undue pressure on the industry at a sensitive time when we are being asked to invest in a low emissions future.

“We encourage the Panama Port Authority to consider postponing the introduction of the freshwater charge to give industry a chance to better prepare.”

Categories: Industry News, Maritime News