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Container ships to benefit from proposed Panama Canal toll changes

THE proposed changes to the Panama Canal transit tolls would provide further incentives for container ships and hike prices for other vessel types

Container ships to benefit from proposed Panama Canal toll changes

THE proposed changes to the Panama Canal transit tolls would provide further incentives for container ships and hike prices for other vessel types

26 June 2019 - 19:00

THE proposed changes to the Panama Canal transit tolls would provide further incentives for container ships and hike prices for other vessel types.

The Panama Canal Authority (ACP) is proposing toll changes to be effective January 1, 2020. It announced its preferred changes on June 14, with a public comment period to extend until July 15, after which a decision will be finalised, reports New York's FreightWaves.



Panama Canal locks cater to two different vessel sizes. The original 'Panamax' locks can handle container ships up to a maximum capacity of around 4,500 TEU, as well as smaller and medium-sized dry and liquid bulk ships.



The latest toll proposal keeps pricing the same for container ships but expands the loyalty programme that provides discounts to the highest-volume users.



Currently, container shipping users that transit between 450,001 TEU and 999,999 TEU of total capacity in a 12-month period receive a US$1 per TEU reduction in tariffs for one month; those with 1,000,000 TEU-1,499,999 TEU receive a $2 reduction; and those with 1.5 million TEU or more, a $3 reduction.



The new proposal calls for the $3 reduction to apply to volume from 1.5-2 million TEU; for a $3.25 per TEU reduction for customers with 2,000,001-3,000,000 TEU; and for those with over 3 million TEU, it creates a 'Loyalty Plus' plan providing a $5 per TEU reduction, based upon the number of TEU exceeding 3 million.



The ACP disclosed that liner customers have saved over $95 million in tolls since the loyalty programme was established in 2016. There are currently three customers with 1.5 million TEU or more per year in volume, two with 1 million TEU to 1,499,999 TEU, and four with annual capacity between 450,001 TEU and 999,999 TEU.



In contrast to its strategy for container ships, which seeks to incentivise more transits, the ACP is proposing price increases for most other categories.



The plan calls for tolls to increase 10 per cent for crude and product tankers through the Panamax locks and 8 per cent through the Neopanamax locks, plus a variable factor; 8 per cent for chemical tankers; 8 per cent for LPG carriers through the Panamax locks and 15 per cent through the Neopanamax locks; and for LNG carriers, 8.5 per cent when laden, 9 per cent when in ballast, and 8 per cent on the return transit of a round-trip.



Tolls would rise 5-15 per cent for vehicle carriers; for cruise ships and other passengers vessels, 2-3 per cent for the Panamax locks and 12 per cent for the Neopanamax locks; and for dry bulkers, 14-17 per cent for carriers of iron ore using the Neopanamax locks and 25-27 per cent for certain vessels ballasting through those locks. There would be no toll increase for bulkers using the Panamax locks (bulkers now represent the most important vessel category for the original Panamax locks).



These toll changes mark the second time the ACP has revised its pricing since the expansion project was completed. In October 2017, the ACP provided special backhaul incentives for container shipping customers, while increasing tolls for LNG and LPG ships by 14 per cent and 29 per cent respectively.



According to the latest figures from the ACP, container ships account for 47 per cent of Neopanamax locks transits, LPG ships (VLGCs) for 24 per cent, and LNG carriers for 13 per cent.



As global trade volumes continue to rise, the combination of continued Neopanamax locks toll increases for non-container ships and rising incentives for container ships could equate to more boxes being routed to the East Coast. Ships bringing more containers to East Coast ports could steal market share away from cross-country intermodal rail shipments of containers from California to the eastern states.


WORLD SHIPPING

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