COVID-19 impact bites into Panama Canal’s FY 2020 projections

The Panama Canal closed its 2020 fiscal year with an annual tonnage of 475.1 million Panama Canal tons (PC/UMS), a 4% drop compared to projections, mainly due to the impact of COVID-19 on global trade.

The canal authority ended its fiscal year with 13, 369 transits, a 2% lower than initially projected.

The drop in activity reflects an expected 5% contraction in world trade volumes in 2020 due to the pandemic, with an expected 8% fall in the United States, the waterway’s main client.

“The fiscal period that ran from October 1, 2019 to September 30, 2020, painted two different pictures for the Panama Canal, with a first semester that exceeded expectations, followed by another that saw a pandemic begin to disrupt lives and economies worldwide,” the authority said.

As disclosed, the height of the pandemic’s impact on the waterway occurred between May and July as transits declined by 20%, mainly due to reductions in passenger ships, vehicle carriers, and LNG tankers.

Transits and cargo movement, however, normalized in August and September.

Containerships remained the leading segment at the Panama Canal, registering 166.3 million tons PC/UMS or 35% of the canal’s FY20 tonnage, followed by:

• Bulk carriers: 80.9 million tons
• Tankers/chemical tankers: 69.2 million tons
• LNG: 46.4 million tons
• LPG: 44.6 million tons

“Although the waterway’s results are similar to those achieved in FY2020, marking just a 1% increase in overall PC/UMS tons, expectations for FY20 were more optimistic as the waterway’s performance in the first half of the year was above projections,” the canal authority pointed out.

In March 2020, the impact of the pandemic began to take effect, impacting the passenger segment, which due to the health measures implemented that ended the cruise season early, closed 10% lower than expected.

Vehicle carriers and LNG saw PC/UMS tonnage around 21% and 15% below projections, respectively.

The negative impacts on these segments were partially offset by the strong performance of the liquefied petroleum gas (LPG) and bulk segments, which registered PC/UMS tonnage 27% and 21% higher than projected.

In order to keep the canal open during the pandemic, the water authority implemented heightened health and safety measures, including remote working for non-essential employees.

“The canal’s priority was to ensure the well-being of the nearly 10,000 men and women who make up our team and reaffirmed their commitment by adapting to the changes imposed by this pandemic in order to guarantee the continuous operation of the waterway,” said Panama Canal Administrator Ricaurte Vásquez Morales.

The Panama Canal Authority has decided to extend its temporary relief measures to December 31, 2020, offering further support for the industry’s recovery.

The measures include the suspension of advance payments for transit reservation fees and other changes to the waterway’s reservation system.