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Sunday, May 9, 2021

Panama Canal Delays Fee Increases

Maritime Activity Reports, Inc.

April 14, 2021

© Matthias Koch / Adobe Stock

© Matthias Koch / Adobe Stock

The Panama Canal Authority (ACP) announced Tuesday that it will postpone increasing canal transit fees following calls from the shipping industry to reconsider the rate hikes amid a spate of global supply chain disruptions.

The higher rates for the canal's transit reservation system were scheduled to take effect on Thursday but will now start on June 1, allowing the maritime industry more time to prepare for the adjusted booking fees, ACP said. The proposed changes represent a minimum cost increase per transit reservation of $20,000 (up 57%) and a maximum cost increase of $58,500 (up 167%).

Nearly 14,000 transits made through the Panama Canal last year, making the 82-kilometer waterway connecting the Pacific and Atlantic Oceans one of the world's busiest shipping routes. The canal's transit reservation system is an optional service allowing ships to pay an additional fee to guarantee transit on a specific date. ACP said rising demand for these slots prompted the canal to reflect the value of this service in tariffs to meet current demand and supply.

A joint letter sent on March 17 by the International Chamber of Shipping (ICS), Asian Shipowners’ Association (ASA), and European Community Shipowners' Association (ECSA), expressed concerns over the "significant increase" of the fees and stated that the initial April 15 start date gave too short notice for the maritime industry and canal users to adjust amid the ongoing crew change crisis and other COVID-19 pandemic related disruptions.

"The Panama Canal values its customers' input, as it looks for ways to bring value and improve our service on a constant basis," said ACP administrator Ricaurte Vásquez Morales. "We always take into account how the changes we make may affect our customers and will work alongside them to ensure that their feedback is heard, and our goals are aligned."

ICS secretary general Guy Platten said, "We are reassured to see that ACP has responded to industry's calls to postpone its proposed transit reservation price increases until June 1, giving industry time to fully prepare for these changes. The increases represent a significant rise in cost, especially considering the ongoing economic impact of the COVID-19 pandemic.

"We appreciate that the fee change is designed to adapt to changing supply and demand for the Panama Canal's service and we look forward to establishing a productive dialogue with the ACP to develop a long-term pricing strategy to provide industry with predictability on transit cost. We hope to be able to hold a virtual meeting with the ACP to discuss and gain further clarity on these issues."

Martin Dorsman, secretary general of ECSA, said, "On behalf of the European shipowners, I welcome the decision of the ACP to postpone the application of the new booking fees. Especially in these times of high uncertainty, it is important for the shipping industry to be able to better prepare for these changes."

ASA secretary general, Yuchi Sonoda, said, "ASA is appreciative that the ACP will continue to review on the voices of canal users in their future canal operations and managements, based on a higher economic stability and transparency."

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