Despite fewer deep-draft transits, Panama Canal sails steady

Despite the climate challenges experienced during 2023 and 2024, the Panama Canal closed FY2024 with a total revenue of 4.99 billion PAB (approximately $4.89 billion), around 209 million PAB above budget and 18 million PAB more than the previous year.

According to the Panama Canal Authority (ACP), this trend is reflective of not just the entity’s ‘robust’ growth but also of ‘efficient’ financial and operational management despite the climate challenges experienced across the past two years.

The results, which were presented at the 16th annual New York Maritime Forum (NYMF) held on October 15, 2024, showed that the transoceanic route operation costs had gone down by 5%. The net income increased by 300 million PAB, in comparison to the previous fiscal year, the ACP stated.

In addition to this, whilst reflecting on this year’s financial performance results, Vice President of Finance for the ACP Victor Vial shared that—despite the challenges during the pandemic and adverse climate conditions—the Panama Canal remained ‘resilient’ with revenue growth increasing by 1% and potentially reaching 5 billion PAB for 2024 by the year’s end.

In the context of net income, the number totals 3.45 billion PAB doubled over four years, with an expected increase of 131% over five years.

As for deep-draft transit, the entity has revealed that there were 9,944 ship transits, among which 2,856 were Neo Panamax and the remaining 7,088 Panamax. In total, the number of goods transported by tonnage reportedly equals to 423 million. Compared to 2023, however, deep-draft transits have fallen by 21%.

Although the financial results are considered stable, a number of events did affect the ACP’s operations. For instance, the ACP experienced ‘decreased’ canal operations in this year’s deep-draft transits due to the impact of the drought season.

As disclosed, this was due to the water-saving measures that were temporarily adopted last year to preserve Panama’s ‘profitability and reliability’ as a maritime route, despite the challenges posed by El Niño and the minimal rainfall.

More specifically, as understood, during the drought that affected the region this year, the ACP implemented draft and transit adjustments to ensure sustainable water use.

On the other hand, among financial strategies implemented to achieve projected revenue and keep business stable despite reduced ship transits, ACP included the Freshwater Surcharge (cargo por agua dulce or CAD), improved water yield through structural and operational upgrades, and maritime service ‘enhancements’.

“Our financial strategies are complemented by environmental initiatives to ensure the canal’s sustainability in the future. This approach ensures our operational resilience and strengthens our financial position for a new era of investments,” Ricaurte Vásquez Morales, Panama Canal Administrator, commented.

As 2024 inches to a close, ACP’s financial results for this year have projected that in FY25, the entity could expect 12,582 deep-draft transits. The total projected tonnage transported is anticipated to be 520 million PAB, while the unit revenue is likely to be 10.63 PAB per ton. As for the operating revenue, the expected number is 5.62 billion PAB.

In the past several years, the Panama Canal has shifted and adjusted its investment strategies, pivoting them toward ecologically responsible solutions and operations—in line with global climate neutrality targets set for 2050.

Three years ago, the Panama Canal introduced the ‘first’ greenhouse gas (GHG) classification system as part of the entity’s net zero goals. This ’emissions fee’, applicable to all vessels over 38.1 meters length overall (LOA), was envisioned to ‘strengthen’ investments by guaranteeing environmental performance standards and aid in making the canal’s operations carbon neutral.

The three factors that the classification system comprises, as explained, are the energy efficiency design index (EEDI), efficient operational measures like the use of bow thrusters, and the utilization of zero-carbon biofuels or carbon-neutral fuels.

Fast forward to January 2024—just days after naming its ‘first-ever’ chief sustainability officer to guide the waterway’s environmental sustainability agenda—the ACP set aside $8.5 billion for capital investments, and a handsome chunk of that was intended for decarbonization initiatives. This development was described as having outpaced the colossal investment made in the previous waterway expansion, performed back in June 2016.

Out of the said amount, the biggest portion ($3.5 billion) was reportedly allocated to infrastructure and equipment, such as the installation of a photovoltaic plant, and the purchase of electric vehicles and hybrid tugs.

In addition to a projected financial injection for the improvement of the water management system, the ACP unveiled then that the remaining funds of more than a billion dollars would shoulder digital transformation and decarbonization-focused improvements at the waterway.