Friday , 22 November 2019
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Global shipping industry responds to proposed modifications to Panama Canal Tolls

The global shipping industry has responded to the Panama Canal Authority (ACP)’s consultation on a proposal to adjust the Panama Canal tolls for vessels.

While charges to containerships and cargo ships will remain unchanged, ACP has proposed toll increases for other sectors such as dry bulk (iron ore), tankers, chemical tankers, roll-on roll-off cargo and cruise ships among others.

The International Chamber of Shipping (ICS), the Asian Shipowners’ Association (ASA) and the European Community Shipowners’ Association (ECSA), who together represent over 90% of the world’s merchant tonnage, all contributed to the response.

With the tolls scheduled to be implemented on January 1, 2020 – the same day as the International Maritime Organisation (IMO)’s sulphur regulation – the associations have requested ACP postpone the date until June 2020.

For shipping lines, the cost of IMO’s new regulation is expected to range between US$30bn and US$50bn per year as they will need to switch to fuel with a sulphur content of 0.5% or use alternative mitigation technologies.

Uncertainty over worldwide availability of compliant fuels has meant ship operators have been unable to properly budget for the likely spike in fuel costs and, as a consequence, an additional bunker price spike is anticipated during initial implementation.

The associations argued that the timing of ACP’s toll implementation will have a negative impact not only on ship owners and operators but also on world trade.

By delaying implementation, shipping companies and operators will be able to adequately plan and adjust commercial activities accordingly.

Although the industry fully supports the need for economic sustainability of the Panama Canal, it has asked the ACP to consider and take account of the challenging economic situations that the global shipping industry is currently operating in.

Tolls for dry bulk, tankers, chemical tankers, liquefied petroleum gas (LPG), liquefied natural gas (LNG), pure car carriers (PCC), ro-ro and cruise ships would increase by 5-15%.

ICS, ASA and ECSA said that this could significantly undermine future trade growth as the market for the segments facing the proposed toll increases, such as dry bulk carriers, remains difficult and any increase would make the already volatile operating conditions worse.

The associations have suggested that there should be no further distinction in toll charges between Panamax and Neopanamax vessels and has urged extra caution against toll increases for ships in ballast conditions.

ACP has proposed significant increases to toll charges for the use of the Neopanamax locks for PCC, dry bulk carriers, tankers, LPG carriers and cruise ships.

The associations have suggested that any toll increases for bigger ships using the Neopanamax locks should be aligned with those for the use of the Panamax locks, noting that the environmental performance of bigger ships is higher than that of smaller ships.