Ships to Face 30% Higher Costs at Panama

The Panama Canal will begin collecting a freshwater surcharge from ships using the waterway from 15th February, as part of actions to address a scarcity of rainfall after the surrounding area recorded its fifth driest year of the last seven decades in 2019.

The charge will be set at $10,000 for any vessel 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 International Chamber of Shipping (ICS) calculate 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 1st, 2020. This Toll modification could see additional cost increases of up to 17% for ships passing through the Canal.
 
If the charges are combined, some ships passing through the Panama Canal could face price hikes of over 30% by April 1st. 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.
 
For shipowners, the proposed fees amount to yet another rise in toll charges.
 
Guy Platten, Secretary General ICS said: “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. 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 sulfur levels."
 
Guy added: “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, places 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.”