ICS: Ships Transiting Panama Canal May Face Over 30 Pct Price Hikes

Ships transiting the Panama Canal could face price hikes of over 30% by April 1, 2020, due to new charges imposed by the Panama Canal Authority (ACP), the International Chamber of Shipping (ICS) said. 

Last month, the ACP introduced a series of new measures beginning February 15 to sustain an operational level of water and provide reliability to users while it implements a long-term solution to water.

Imposed on February 15, the freshwater charge of USD 10,000 applies to vessels over 125 feet long. There will also be a variable surcharge based on the level of the Gatun Lake at the time of transit.

The ICS calculates that this move will increase costs to ships passing through the Panama Canal by up to 15%.

The new freshwater charge comes ahead of significant changes in rates to the Panama Canal Authority 2020 Tolls Modification, which is due to become effective on April 1, 2020. This toll modification could see additional cost increases of up to 17% for ships passing through the waterway, according to the ICS.

If the charges are combined, some ships passing through the Panama Canal could face price hikes of over 30% by April 1. The period between the announcement of the new freshwater charges and their 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, the ICS added.

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 1st, the introduction of the freshwater charges’ have taken the shipping industry by surprise,” Guy Platten, Secretary General ICS, commented.

“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 sulphur 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, place 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,” Platten continued.

Established in 1921, ICS is the principal international trade association for the shipping industry, representing shipowners and operators in all sectors and trades.