THE proposal to change the charging structure for vessels passing through the Canal is bound to be met with annoyance and disappointment given that such exercises rarely result in cost reductions for the consumer.
The Panama Canal Authority (PCA) is currently running a public consultation, which closes on May 17, with a public hearing three days later, to obtain a variety of views, but in all likelihood the proposed changes will appear as a new tariff to be gradually introduced between January 2023 and 2025.
The current toll structure certainly needs revision, it uses price bands, which apply different rates to each additional level of cargo capacity of ships, meaning more than 400 different rates. Add to this the complexity of 144 rates related to the loyalty programme, eleven special rates for return trips and more than ninety rates for ships in ballast, and confusion surely reigns, according to London's Handy Shipping Guide.
The aim then is to produce a simpler and fairer, more understandable tariff which reflects the economic value the Canal provides to each of its different types of customers. There are to be no sudden rate changes thus giving sufficient time for users to adjust their affairs accordingly.
The Authority proposes a more uniform and simplified structure which will eliminate pricing bands and introduce single tariffs according to locks utilised and the type and size of vessel.
As they stand the current proposals are in brief that the TEU is maintained as the unit of measurement for the calculation of tolls. The current pricing bands are replaced with those capacity tariffs by vessel size category (regular, super or neopanamax) based on the total TEU allowed (TTA), which is related to the value that the Canal provides to each market segment and size category. Tariffs of loaded TEU (TTL) are maintained and a new tariff that recognises the repositioning value of empty containers is introduced (TTE) and the return voyage tariff for loaded containers (TTLR) is eliminated.
The loyalty programme will be radically altered and on January 1, 2025, it will disappear completely, whilst there will also be changes in the calculation of deck borne containers. Boring deeper into the figures reveals the old adage that rate changes go up but very rarely come down. The new rates will generally be based on a minimum for the ship, so US$100,000 for a 'super' size general cargo carrying ship (a neopanamax is $300,000).
Then comes the real pain as a 'capacity tariff' adds $2 per box capacity ($3 by 2025) so a super container vessel with 20,000 TEU capacity gets a bill for another $40,000, plus further charges for containers on deck, reefers etc. The increases affect all classes, an LPG carrier or oil tanker, an automotive carrier or bulk tanker, all will pay more and this will directly link to the cargo.
Analysts say container ships will be among the most affected, as will passenger vessels. Cargoes like grain, soya, fuel and cars will also be hard hit. It is estimated the average container ship, the largest users of the waterway, will see an average 8 per cent rise in costs.
So the question arises, is the Public Consultation a real chance to gather information and make a just and logical plan for the future. Or are we just to see the PCA plans rubber stamped no matter how loudly the ship operators wail?
SeaNews Turkey
The Panama Canal Authority (PCA) is currently running a public consultation, which closes on May 17, with a public hearing three days later, to obtain a variety of views, but in all likelihood the proposed changes will appear as a new tariff to be gradually introduced between January 2023 and 2025.
The current toll structure certainly needs revision, it uses price bands, which apply different rates to each additional level of cargo capacity of ships, meaning more than 400 different rates. Add to this the complexity of 144 rates related to the loyalty programme, eleven special rates for return trips and more than ninety rates for ships in ballast, and confusion surely reigns, according to London's Handy Shipping Guide.
The aim then is to produce a simpler and fairer, more understandable tariff which reflects the economic value the Canal provides to each of its different types of customers. There are to be no sudden rate changes thus giving sufficient time for users to adjust their affairs accordingly.
The Authority proposes a more uniform and simplified structure which will eliminate pricing bands and introduce single tariffs according to locks utilised and the type and size of vessel.
As they stand the current proposals are in brief that the TEU is maintained as the unit of measurement for the calculation of tolls. The current pricing bands are replaced with those capacity tariffs by vessel size category (regular, super or neopanamax) based on the total TEU allowed (TTA), which is related to the value that the Canal provides to each market segment and size category. Tariffs of loaded TEU (TTL) are maintained and a new tariff that recognises the repositioning value of empty containers is introduced (TTE) and the return voyage tariff for loaded containers (TTLR) is eliminated.
The loyalty programme will be radically altered and on January 1, 2025, it will disappear completely, whilst there will also be changes in the calculation of deck borne containers. Boring deeper into the figures reveals the old adage that rate changes go up but very rarely come down. The new rates will generally be based on a minimum for the ship, so US$100,000 for a 'super' size general cargo carrying ship (a neopanamax is $300,000).
Then comes the real pain as a 'capacity tariff' adds $2 per box capacity ($3 by 2025) so a super container vessel with 20,000 TEU capacity gets a bill for another $40,000, plus further charges for containers on deck, reefers etc. The increases affect all classes, an LPG carrier or oil tanker, an automotive carrier or bulk tanker, all will pay more and this will directly link to the cargo.
Analysts say container ships will be among the most affected, as will passenger vessels. Cargoes like grain, soya, fuel and cars will also be hard hit. It is estimated the average container ship, the largest users of the waterway, will see an average 8 per cent rise in costs.
So the question arises, is the Public Consultation a real chance to gather information and make a just and logical plan for the future. Or are we just to see the PCA plans rubber stamped no matter how loudly the ship operators wail?
SeaNews Turkey
