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INDUSTRY RESISTS PANAMA CANAL CHARGE HIKE

Wednesday, July 31, 2019 

The International Chamber of Shipping (ICS), the Asian Shipowners’ Association (ASA) and the European Community Shipowners’ Associations (ECSA) - which together represent some 90% of global tonnage - have joined forces in a submission to the Panama Canal Authority (ACP), which proposes to adjust tolls for a variety of ships, taking effect on 1 January 2020.

ICS says that ACP is conducting a public consultation on its proposal to revise Canal tolls for containerships, vehicle carriers, dry bulk carriers, tankers, chemical carriers, LPG and LNG vessels, passenger vessels and small vessels. The proposed new toll charges are anticipated to enter into effect on 1 January 2020, which ICS points out is the same day as the IMO ‘Global Sulphur Cap’ regulation enters force. 

Although the six-month consultation period is in line with previous toll changes, the industry considers this to be an absolute minimum, and is asking for the consultation period to be extended to 12 months. This would provide shipping companies and operators - already under considerable financial pressures - with sufficient time and room to manoeuvre in terms of negotiating any future contractual agreements, which are likely to be impacted by changes to future toll charges.

The global shipping industry is therefore very concerned that the implementation of the new toll charges on 1 January 2020 – the same day that the IMO regulation takes effect – will have a negative impact not only on shipowners and operators, but also on world trade.

This is especially pertinent at a time of heightened concerns about several issues affecting the industry, including:

  • Higher insurance premiums due to rising geopolitical instability in some key regions;
  • Increasing economic uncertainty due to proliferation of protectionist trade measures worldwide; and 
  • Ongoing escalation of trade disputes and increase in trade tariffs between major trading nations. 

These concerns are expected to continue to have a negative impact on the global shipping industry in 2020.  For these reasons, ICS, ASA and ECSA request that the ACP at the very least postpone the timing for implementation of the proposed new toll increases by at least six months (June 2020). 

The industry recognises and supports the need for economic sustainability of the Panama Canal, as one of the most important shipping routes, but reminds ACP that the economic sustainability of the Panama Canal is inextricably linked to that of shipowners and operators that use the Canal. While appreciating that charges for containerships and general cargo ships will remain unchanged, ICS, ASA and ECSA are that other sectors such as dry bulk (iron ore), tankers, chemical tankers, LPG & LNG carriers, PCC & ROROs and cruise ships would likely suffer a 5% to 15% increase in tolls.

Recognising that larger and newer ships have a more favourable environmental footprint, the industry has made a number of suggestions such as that there should be no distinction in toll charges between Panamax and Neopanamax vessels. 

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