Joseph Bonney | Sep 28, 2010 2:19PM EDT
Rising tolls at the Panama Canal are causing some industry officials to question whether increased costs will cause carriers to avoid the canal after a third set of locks allows transits by bigger ships after 2015.
By announcing a series of toll increases the Panama Canal Commission has signaled it intends to maximize revenue instead of cargo volume, Frank Harder, president of the Tioga Group, told the annual East Coast Maritime Conference sponsored by The Journal of Commerce.
Tampa Port Director Richard Wainio, a former chief economist and executive at the old Panama Canal Commission, said Panama has done a “great job” operating the canal since taking over from the U.S. but that continued toll increases could meet resistance from customers.
“They obviously have pushed that curve very significantly, further than we would have recommended,” Wainio said. He said total fees for a Panamax container ship can be “well over $300,000. If you double and triple the capacity of those ships and you raise tolls at the same time, just do the math … I think they should be very careful.”
“I think it would be foolish for anybody to undersell the sophistication of the Panama Canal Authority as it relates to pricing,” said James R. Brennan, partner in Norbridge. “I think you have to assume they know what they are doing.”
Wainio agreed that Panama officials are “very sophisticated” about pricing and said they appear to have room to raise rates further before affecting demand. “I do think they know what they are doing,” he said. “Just be careful, that would be my message.”
-- Contact Joseph Bonney at jbonney@joc.com.
